The omnibus energy/cap-and-trade legislation is one of the major initiatives currently undergoing a substantial political reassessment. While health care remains the top legislative priority and little of any consequence will be taken up on Capitol Hill until health care plays itself out, important work on energy is being done behind the scenes. This week, it was reported that Sens. Barbara Boxer (D-Calif.) and John Kerry (D-Mass.) were about to introduce a carbon cap-and-trade bill subject to a $28-per-ton cap.

Cap-and-trade provisions were included in the House energy bill back in June 2009. But it is not at all clear that cap-and-trade will make it into a final Senate bill. Discussions among the Democratic leadership in the Senate suggest a possible strategy in which other energy provisions in the bill, including the renewable energy standard (RES) provisions, would be considered separately from cap-and-trade. Under this scenario, cap-and-trade would be set aside for the balance of 2009 and would be taken up in 2010. Introduction of the Boxer-Kerry cap-and-trade provisions will provide a political reality check for cap-and-trade. But some in the Democratic Caucus are rethinking the wisdom of forcing such controversial provisions onto the Senate floor, given the continuing recession and the approach of the 2010 mid-term elections.

This scenario of splitting the energy legislation is backed by conservative Democratic senators, including the newly appointed Chairman of the Senate Agriculture Committee, Blanche Lincoln (D-Ark.). Sen. Lincoln has expressed her opposition to cap-and-trade, and will not be as likely to compromise as would her predecessor, progressive Sen. Tom Harkin (D-Iowa).