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					                 The CLEAR Act
                    Carbon Limits and Energy for
                        America’s Renewal
                                     \




                         CARBON PRICING CONFERENCE
                                May 21, 2011


Office of Senator Maria Cantwell
         What is the CLEAR Act?
• A simple, revenue neutral, market-based way to reduce
  CO2 emissions while protecting household incomes.
• An innovative policy that limits fossil carbon upstream as
  it enters commerce, sends consistent, economy-wide
  price signals on fossil fuels, and recycles most of the
  revenues to households.
• A source of funding for new clean energy investments,
  mitigation of a broad suite of greenhouse gases, climate
  change adaptation, and other climate-related priorities.
• A policy that safeguards the climate by cutting
  greenhouse gases in keeping with state-of-the-art
  science.

Office of Senator Maria Cantwell                   The CLEAR Act
              Key Points to CLEAR
• Gradual reduction of greenhouse gases that meets
  internationally agreed 2050 goal
     – 80+% reduction of greenhouse gases relative to 2005 levels
     – Allows for reasonable transition period, key for industry support
• Does not pick technology or special interest winners or losers
• Upstream point of regulation, 100% auction
     – No free allowances, windfalls to historic polluters
     – Very easy to administer, does not grow government
• Monthly dividend checks to every American
     – Addresses public concern over transition costs
• Congress decides annually how to spend $20-$40 billion on
  mitigation, adaptation, R&D, and transition assistance
     – Trillions not divided up in a one-time back of the room deal.
Office of Senator Maria Cantwell                              The CLEAR Act
                        Policy Overview
• Emissions certainty--upstream cap on fossil carbon achieves broad, economy-
  wide coverage of fossil carbon.
    – Carbon cap in conjunction with additional measures to reduce non-CO2
      greenhouse gases meet global warming emissions reduction standards:
          •   20% emissions reduction (from 2005 level) by 2020;
          •   30% emissions reduction (from 2005 level) by 2025;
          •   42% emissions reduction (from 2005 level) by 2030;
          •   83% emissions reduction (from 2005 level) by 2050.

• Price certainty--100% auction establishes accurate price signal and protects
  consumers from industry windfalls.
    – Price safeguards (floor & ceiling prices) act as insurance against price volatility and excessive
      costs. Policy does not add to federal deficit

• Equal monthly dividends to all individuals residing legally in the U.S. from 75%
  of auction revenues -- keeps all but the wealthiest 20 to 30% (who use the
  most energy) whole.
• Dedicated energy and climate fund from 25% of auction revenues pays for key
  climate programs.

  Office of Senator Maria Cantwell                                                     The CLEAR Act
 Upstream Cap on Fossil Carbon
                                                                                   Upstream cap covers all
                    COAL       NATURAL GAS                PETROLEUM
                                                                                   fossil carbon entering
 Upstream                                                                          the economy,
                Mining/ Imports     Production Wells/         Production Wells/    completely and
                 (500 companies)        Imports                   Imports          equitably
                                      (750 natural gas/        (750 natural gas/
                                      petro companies)         petro companies)    Only a few thousand
                                                                                   entities with
                                                                                   compliance obligation
Midstream                                                                          ensure minimal and
                                                                                   accurate regulation
                   Rail, Barge,    Pipelines, Processing,      Refining, Mobile
                  Trucking, and    Boilers, Furnaces, and     Sources, and Power
                  Power Plants         Power Plants                 Plants
                                                                                   Price signal passed
                                                                                   downstream, leaving all
                                                                                   midstream user revenue
Consumers                                                                          neutral
                                                                                   Price signal passed
                                                                                   through to end
                                         Products,                                 consumers who are
                                      Electricity, and                             reimbursed with
                                         Gasoline                    Dividend      monthly dividend
Office of Senator Maria Cantwell                                                        The CLEAR Act
                   Consumer Dividend
• Auction revenue averages $120 billion annually

• 75% of auction revenues goes to consumers monthly
  dividend check to offset energy costs
    – distributed tax-free on an equal per capita basis returned to
      all individuals residing legally in the U.S.

• Annual refunds for a family of four will average $1,100

• 70 to 80% of the American public will incur no net costs,
  regardless of what state they live in
• Several existing government programs validate dividend
  distribution is logistically possible and very cost-effective
Office of Senator Maria Cantwell                         The CLEAR Act
         Refund Covers Consumer Costs
                    $300         Nationwide Net Impact by Income Deciles
                    $200
Annual Net Impact
  Per Individual




                    $100

                      $0

                    -$100
                                       Equal per capita dividend†
                    -$200
                                       Dividend + state level CERT funding*

                    -$300
                                 1            2            3           4            5            6       7            8           9           10
 † CLEAR distributes 75% of auction revenues on an equal, per-capita basis nationwide.                Income Decile
 * State allocations from the Clean Energy Reinvestment Trust (CERT) Fund (comprised of 25% of          Source: Boyce and Riddle, University of
 total auction revenues) are based on estimates by Boyce and Riddle and divided equally per capita.     Massachusetts, Amherst, March 2010. Assumes a
                                                                                                        $25/ton permit price.

       Office of Senator Maria Cantwell                                                                                       The CLEAR Act
Clean Energy Reinvestment Trust
            (CERT)
• 25% of auction revenue expected to be $30
  Billion annually
• Money to go through normal appropriations
  process with built-in oversight functionality
• Legislation calls for money to be spent on
  adaptation, mitigation, R&D, and transition
  assistance
• Allows for money to go to new solutions as
  they are created

Office of Senator Maria Cantwell          The CLEAR Act
                     Carbon Leakage
The CLEAR Act requires border equalization fees for the
  “production-process carbon” in imported, energy-
  intensive commodities as long as they are:
     • Consistent with all trade agreements to which the United
       States is a party, including World Trade Organization
       (WTO) obligations
     • Applied only to imports from countries without
       comparable carbon limits or fees
     • Restricted to industries with demonstrable disadvantages
       and international exposure

Office of Senator Maria Cantwell                        The CLEAR Act
            Carbon Sequestration
The CLEAR Act also offers robust incentives for the
  commercialization and adoption of carbon capture
  and sequestration technologies:
  • A midstream entity sequestering carbon would be granted carbon shares
    commensurate with the amount of fossil carbon that is embedded or
    sequestered, which can then be monetized.
  • These “bonus” carbon shares are issued in addition to shares auctioned
    under the CLEAR Act’s upstream cap because this fossil carbon is
    permanently prevented from release into the atmosphere.
  • Compensation is provided to manufacturers who purchase fossil fuel
    feedstocks used to produce goods (like plastics or fertilizer) that
    permanently embed carbon and prevent its release to the atmosphere.




Office of Senator Maria Cantwell                                  The CLEAR Act
                    Carbon “Offsets”
The CLEAR Act provides direct funding for a wide
  variety of agriculture, forestry and energy efficiency
  projects, but treats them as additional mitigation
  activities, rather than substitutes for emissions
  reductions, commonly known as “offsets.”
 • Treating these projects as additional allows the CLEAR Act to achieve its
   mitigation targets while avoiding excessive reliance on questionable
   international agriculture and forestry activities.

 • By prohibiting the use of offset-like activities to satisfy compliance
   obligations, the CLEAR Act achieves a true decarbonization of the
   economy and ensures that emitters change their behaviors and practices
   to reduce carbon intensity.


Office of Senator Maria Cantwell                                     The CLEAR Act
Pacific Northwest
Carbon Pricing Conference
May 21, 2011

				
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