Senators John Kerry and Joseph Lieberman unveiled the American Power Act, a comprehensive climate and energy bill, today. The third author of the bill, the Republican Senator Lindsey Graham of South Carolina, did not attend the ceremony, though Senator Kerry said in the morning that he expects Graham to “issue a statement today … [h]e supports this effort.”

The prevailing wisdom on the bill is that it is unlikely to gather the 60 votes needed to avoid a filibuster. In addition to losing the full support of Senator Graham, the bill may be hurt by the oil disaster in the Gulf of Mexico. Offshore drilling was to lure undecided Republicans to support the bill, but Senators Kerry and Lieberman have now added a provision that allows a potentially vulnerable state to prevent new offshore drilling 75 miles from its coast.

But all this is ultimately a set of conjectures and informed guesses. The debate is only beginning, and the Gulf of Mexico disaster could swing it either way.  While it may be difficult to use offshore drilling as a carrot for moderate Republicans, this is the first time in quite a while that the social cost of fossil fuels is widely discussed and debated in the media.

So, instead of offering yet another conjecture on the political feasibility of the bill, I am going to briefly comment on the substance. For background, as Senator Kerry himself explains, the bill, 1,000 pages long, is a complex compromise.

For the best summary I have found so far, see a slideshow by the Huffington Post. In addition to capping carbon emissions from power generation (from 2013) and manufacturing (from 2016), it offers subsidies to nuclear power and clean coal technologies, something that many in the environmental movement oppose. It also sends two thirds of the emissions revenues back to consumers through energy bill discounts and rebates. It offers additional assistance for the poor, and it puts a price on carbon in the transportation sector, accompanied by subsidies for clean vehicles, public transportation, and so on. The bill allows offsets in uncovered programs, such as agriculture.

This is not an ideal bill, but I am in support of it. It does put a price on carbon in the key sectors, and given that the price of clean energy technology is rapidly decreasing in any case, I doubt it would have noticeable adverse macroeconomic effects. For the same reason, I expect that emissions offsets will not crowd out real emissions reductions in the key sectors.  It is less vulnerable to litigation than direct regulation by the EPA based on the Clean Air Act, and it will create some certainty over carbon pricing that is so badly needed to induce long-term investments by the private sector.

I honestly do not see a realistic alternative to it anytime soon. To gain 60 votes, any climate and energy bill must appeal to centrist Democrats and Republicans. To be effective, it must somehow facilitate the deployment of clean energy and put a price on carbon. Compared to the status quo, the American Power Act is a great improvement.

Finally, and perhaps most importantly, it is also useful to recall that federal climate policy does not end here. If the Kerry-Lieberman bill passes, it will undoubtedly be modified many times in the coming years. The question is whether these modifications occur agains the backdrop of the status quo or incomplete, but nevertheless helpful, legislation. If the former, the polluters have a continued incentive to fight against legislation, as passing ambitious legislation will always be hard in the US Senate. If the latter, the polluters must begin to reduce emissions and deploy clean energy — or go out of business. And as the carbon intensity of the economy decreases, the opposition to new legislative initiatives will weaken.

The American Power Act is a first step. But as such, it is important.