The chances of US climate change legislation passing this year received a major boost after President Obama secured victory in his historic battle to pass healthcare reforms late last night.
The successful House vote on the legislation following over a year of intense and fraught negotiations will clear a path for the administration to turn to its next large piece of administrative business: climate change.
Some senior Democrat Senators have suggested that following such a long battle to pass healthcare legislation the Senate will have "no appetite" to deal with a climate change bill that is likely to prove equally contentious.
However, both the administration and Democrat leaders in the Senate and House of Representatives remain adamant that they want to pursue a vote this year and with the party still behind in the polls ahead of November's mid-term elections the race is now on to move the legislation forward as quickly as possible.
The key healthcare vote comes just days after the compromise version of the climate change bill being prepared by the bi-partisan trio of Senators Democrat John Kerry, Republican Lindsey Graham, and independent Joe Lieberman, received a further boost when both environmental and industrial groups signaled their support for the proposed legislation.
In a surprise move, Bruce Josten, the top lobbyist at the US Chamber of Commerce, told reporters last week that the work being done by the three senators was "largely in synch" with the business group's views.
Josten stopped short of fully endorsing the bill, but following a meeting with the Senator's last Wednesday he struck a markedly different tone to the outright opposition to previous versions of the bill that the Chamber adopted last year.
"The fairest comment would be, directionally speaking, the way they are trying to conform and shape this bill I would suggest is largely in sync with what most people in American industry think is the direction you are going to have to go if you are going to have a successful program," he told reporters.
"[The Senators] are being very constructive, they are trying to figure out how to make this work for the American economy, the different sectors of the economy that are going to be affected one way or another, and I think just as, if not more importantly, for the American consumer."
Significantly, a coalition of 20 environmental groups released a statement on Friday signaling that they were "encouraged" by the progress being made towards a final version of the bill. The statement warned that "legislative details are important, and are not settled yet," but suggested that the group - which included influential organisations such as the Sierra Club, Natural Resources Defense Council, and the Union of Concerned Scientists – is largely happy with the direction of the bill.
The moves follow a week in which Kerry, Graham and Lieberman have met with industrial and environmental groups to talk through draft versions of the compromise bill ahead of its expected later this month.
As a result fresh details of the structure of the bill have emerged, including confirmation that the proposed carbon cap-and-trade scheme for energy firms will emulate the early phase of the EU emissions trading scheme by awarding free emission allowances to participating firms.
On the campaign trail, Obama had said that he would like to see 100 per cent of emission allowances auctioned. However, after already agreeing to scale back the scheme to only cover utility firms, the bi-partisan group of Senators look set to further limit the potential impact on energy bills by initially allocating pollution permits for free.
The compromise version of the scheme is also reportedly expected to allow energy companies to purchase carbon offset credits from the developing world to help them comply with their emission caps.
Critics of free allocation argue that it limits the financial incentive for firms to curb carbon emissions and can result in sizable windfall profits. However, the approach would reduce inflationary pressure on energy bills and still ensure firms pay a penalty if they exceed their imposed emission caps.
The Senators have also signaled that the scheme will incorporate a price floor and a price ceiling, thought to stand at $10 and $30 a tonne respectively and designed to provide investors with certainty over future prices. And they said the scheme would become more demanding over time, with the bill proposing that industrial plants will be brought into the cap-and-trade regime from 2016.
Additional details of the draft bill emerged last week, including controversial proposals for a tax on oil designed top drive up fuel prices and incentivise motorists to switch to more efficient vehicles; a $10bn fund to drive investment in low carbon technologies, including clean coal; up to $54bn in loan guarantees for new nuclear power plants; and proposals for a carbon tariff on imports from countries without carbon regulations in place.
There were also reports that a proposed renewable energy standard designed to ensure a set amount of energy is generated from renewable sources could be expanded to cover all low carbon energy sources, including nuclear.
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