One of the more surprising aspects of the mammoth Senate climate proposal (that's a big honking pdf, by the way) released today was the bit on transportation. Kerry and Lieberman took a very different tack on this subject than the House did—and it's a stunning improvement. For starters, the cap-and-trade program would generate about $7 billion in revenues from selling carbon permits to oil companies and refineries. That money would then get split evenly in three ways:

1) One-third would go toward federal grants for big transportation projects. This could include anything from new freight rail lines to, say, a marine highway system that could replace existing truck infrastructure—something that California got $130 million to build in the stimulus.

2) Another third would go toward the Highway Trust Fund. The catch here is that money would specifically have to go toward projects that decreased greenhouse-gas emissions. So the money couldn't just be used to build gobs of new highways out to the exurbs. This is a good idea, by the way, since as Robert Puentes likes to point out, the Highway Trust Fund keeps running out of money—partly because people are driving less and gas-tax revenue is declining.

3) The last third would go toward local land-use planning. This is the most intriguing bit. As Elana Schor notes, the concept here has its origins in a green transportation bill authored by Delaware Senator Tom Carper. States and metro areas would develop their own plans to reduce transport emissions—by investing in rail or promoting denser development or building sidewalks or curbing sprawl or whatever they wanted to do—and plans that were more ambitious would get more money.

Meanwhile, the climate bill also requires the Department of Transportation to develop a national plan for reducing emissions from the transport sector—everything from coordinating electric-car infrastructure, for instance, to setting standards so that, say, electric utilities and automakers are working together.

Now, as far as curbing oil use goes—and that's a major goal of this bill, after all—these items are utterly crucial. It's unbelievably difficult to curb greenhouse-gas emissions from transportation. Sure, there are biofuels, but right now ethanol is arguably worse for the planet than gasoline, and futuristic algae fuels are nowhere near ready. Electric cars are promising, but they require a fair bit of new infrastructure and coordination. And it's all well and good to make combustion engines more efficient, but if urban development continues to sprawl out, and people keep driving greater and greater distances, then fuel-efficiency won't amount to much. So it's significant that the Senate climate bill's taking a holistic approach to this issue.

(This may explain, by the way, why so many smart-growth organizations like Transportation For America are so excited about the Senate climate bill, even as a variety of environmental groups are hemming and hawing.)