This post might get a tad wonky, but bear with me, it's important. Politico is reporting today on a critical development in the Senate energy-bill talks. Remember, a cap on carbon pollution isn't dead yet. There's still a strong possibility that Harry Reid will include a cap-and-trade system that just covers electric utilities in the final climate bill. But before he can do that he needs to get utilities on board. Power generators have long been in favor of cap-and-trade—partly because it gives them the certainty on carbon pricing they need to start making investments again—but that was back when the cap covered the whole economy. How will they respond if they're the only target?

Now we know: Utilities may agree to the proposal, but not without extracting some heavy concessions. And what they're demanding could turn the bill into a disaster. According to Politico, utilities would support a cap if they get relief from various EPA regulations governing a whole swath of different pollutants—not just heat-trapping gases like carbon-dioxide, but also sulfur-dioxide (which causes acid rain), and harmful emissions like mercury and nitrogen oxide. Just last week the EPA unveiled sweeping new rules to crack down on smog- and soot-forming pollutants like SO2 and NOx. These sorts of pollution rules get updated continuously under the Clean Air Act, and utilities are always fighting them every step of the way. Now they see a way out.

But as Dave Roberts says over at Grist, what utilities are proposing looks like a terrible trade-off from an environmental perspective. That new EPA rule on smog and soot, for instance, would likely force utilities to shut down many of their aging, creaky coal-fired plants in the next few years. Many of these old plants were grandfathered in under the original Clean Air Act and have been spewing harmful pollutants (and greenhouse gases) into the air for decades. These plants made a lot of money for their utilities because they've long since been paid off and are cheap to operate. And utilities don't want to shut them down. A weak utility-only cap-and-trade system, however, could allow a lot of the dirtier coal-fired plants to stay running for a long time. Now, in general, cap-and-trade is pretty good way to reduce carbon emissions. But it's looking more and more likely that the cap being proposed would do much less than existing EPA regulations to clean up the air.

After all, carbon dioxide isn't the only pollutant out there. It doesn't make much sense to allow power plants to keep churning out a whole bunch of other toxins that cause a lot of health problems—like mercury or nitrogen oxide—so long as they're making headway on greenhouse gases. Now, one possible compromise would be to fold in proposed legislation by Tom Carper and Lamar Alexander that would set up a separate cap-and-trade system for sulfur-dioxide, nitrogen-dioxide, and mercury. Many clean-air groups like that approach. But that would actually have to get included in the energy legislation. Otherwise, utilities are just getting a free pass.

In any case, environmental groups seem to be opposed to the utility deal at the moment. A lot of greens have been pushing for cap-and-trade for a long time, and it would be a major victory for them if they got it this year, but it seems that even the groups most committed to compromise can see that this trade-off just isn't worth it.

(Flickr photo credit: davipt)