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U.S. Climate Bill Comparison by Paul Bledsoe of the National Commission on Energy Policy

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U.S. Climate Bill Comparison by Paul Bledsoe of the National Commission on Energy Policy Powered By Docstoc
					                                                            Kerry-Lieberman                                 Boxer-Kerry Chairman’s Mark –                                  Waxman/Markey H.R. 2454 –
                                                           American Power Act                                      October 26, 2009                                      Passed by House of Representatives
Economy-wide                       •      Percent change from 2005 emissions:                      •   Percent change from 2005 emissions:                         •     Percent change from 2005 emissions:
Reduction Goals                                 o 2013: -4.75%                                               o 2012: -3%                                                       o 2012: -3%
                                                o 2020: -17%                                                 o 2020: -20%                                                      o 2020: -20%1
                                                o 2030: -42%                                                 o 2030: -42 %                                                     o 2030: -42%
                                                o 2050: -83%                                                 o 2050: -83%                                                      o 2050: -83%
                                   •      Supplemental Reductions from international               •   Supplemental Reductions - 10% from reducing                 •     Supplemental Reductions - 10% from
                                          forestry                                                     international deforestation in 2020                               reducing international deforestation in 2020
Cost Containment                   •      Cost Containment Reserve: In 2013, the minimum           •   Market Stability Reserve: In 2012, the minimum price        •     Allowance Auction Reserve: In 2012, the
Mechanism(s)                              price is set at $25 (2005$). For 2014-2050, the              is set at $28 (2005$). For 2013-2017, the minimum                 minimum price is set at $28 (2009$). For
                                          minimum price will escalate above the set price at           price will escalate above the set price at 5% real.               2013-2014, the minimum price will escalate
                                          5% real. The Cost Containment Reserve is initially           Beginning in 2018, the price will escalate at 7% real             above the set price at 5% real. For 2015, the
                                          filled with 4 billion allowances, borrowed from all          per year. In years 2012-2016, the number of                       price is set as 60% above the 36 month
                                          vintage years in the program. Entities cannot                allowances that can be auctioned from the strategic               average price. The cumulative quantity of
                                          purchase reserve allowances for more than 15% of             reserve is limited to 15% of the allowances established           allowances in the auction reserve is estimated
                                          their compliance obligation and cannot bank or sell          for the reserve that year. In 2017 and beyond,                    to be 2.72 billion. In years 2012-2016, the
                                          allowances purchased from the reserve.                       allowances auctioned from the reserve are limited to              strategic reserve auction is limited to 5% of
                                   •      Banking Allowances – Unlimited                               25% of the allowances established for that year.                  the emissions allowances established for the
                                   •      Borrowing Allowances – Unlimited borrowing one               Entities cannot purchase reserve allowances for more              reserve for that year. In 2017 and beyond,
                                          year into the future. Entities may borrow                    than 20% of their compliance obligation. The                      allowances auctioned from the reserve is
                                          allowances 2-5 years into the future to satisfy up to        cumulative quantity of allowances in the auction                  limited to 10% of the allowances established
                                          15% of their compliance obligation but must pay              reserve is estimated to be 3.52 billion.                          for that year.
                                          8% interest annually on borrowed allowances to do        •   Banking Allowances – Unlimited                              •     Banking Allowances
                                          so.                                                      •   Borrowing Allowances – Unlimited borrowing one              •     Borrowing Allowances
                                   •      Price Floor: Sets a floor price of $12 per ton, rising       year into the future. Entities may borrow allowances        •     Price Floor: Sets a floor price of $10 per ton,
                                          by 3% real each year.                                        2-5 years into the future to satisfy up to 15% of their           rising by 5% real each year.
                                                                                                       compliance obligation but must pay 8% interest
                                                                                                       annually on borrowed allowances to do so.
                                                                                                   •   Price Floor: Sets a floor price of $10 per ton, rising by
                                                                                                       5% real each year.




                                                                      
          1
            Covered emissions sources are required to reduce emissions by 17% by 2020.  Supplemental, non‐covered emissions reductions account for the additional 3%. 
                                                                                                                                                                                                         1 
          Current as of May 14, 2010 
                                            Kerry-Lieberman                                       Boxer-Kerry Chairman’s Mark –                                Waxman/Markey H.R. 2454 –
                                           American Power Act                                            October 26, 2009                                    Passed by House of Representatives
Offsets                   •    2 billion offset credits are allowed annually (75%        •   The President will establish, and periodically modify, a    •   2 billion offset credits are allowed annually
                               domestic projects and 25% international projects).            list of eligible offset projects.                               (divided evenly between domestic and
                               If the number of domestic offsets is likely less than     •    2 billion tons of offset credits are allowed annually          international projects). If domestic offsets are
                               1.5 billion credits, the limit on international offsets       (75% domestic projects and 25% international                    unavailable, the cap on international offsets
                               may be increased by up to 1 billion tons.                     projects).                                                      will be raised to 1.5 billion tons.
                          •    Domestic offsets credits can be submitted on a 1 to       •   If the number of domestic offsets is likely less than 900   •   Percentage of compliance obligation that can
                               1 basis for emissions allowances. International               million credits, the limit on international offsets may         be satisfied by offset credits declines over
                               offset credits are treated the same from 2013-2018;           be increased by up to 750 million tons.                         time relative to emissions cap. The allowed
                               after 2018, 1.25 international offset credits must be     •   Domestic offset credits (and international credits for          percentage ranges from 30% to 63%, which
                               submitted for every 1 emission allowance.                     the first 5 years for the program) can be submitted on a        amounts to an average of 1.2 billion tons each
                          •    Level of compliance obligation that can be satisfied          1 to 1 basis for emissions allowances. Beginning in             year.
                               by offset credits is determined pro rata based on an          2018, 1.25 international offset credits must be             •   Domestic offsets credits can be submitted on
                               entity’s share of the prior year’s covered emissions.         submitted for every 1 emission allowance.                       a 1 to 1 basis for emissions allowances.
                          •    International offsets are limited to credits from         •   Level of compliance obligation that can be satisfied by         International offset credits are treated the
                               sector-based projects, credits issued by an                   offset credits is determined pro rata based on an               same from 2012-2017; after 2018 1.25
                               international body, or credits from reduced                   entity’s share of the prior year’s covered emissions            international offset credits must be submitted
                               deforestation efforts.                                    •   International offsets are subject to the same                   for every 1 emission allowance.
                                                                                             requirements as domestic offsets, and, in addition, can     •   An Agriculture and Forestry Related Offsets
                                                                                             only occur in a developing country that is a party to bi-       program is created to oversee large
                                                                                             or multilateral agreements with the US before offset            agricultural offsets program (administered by
                                                                                             credits can be issued. The bill also specifies additional       USDA GHG Emission Reduction and
                                                                                             requirements for sector-based credits, credits issued by        Sequestration Committee)
                                                                                             an international body, and forestry offsets.                •   Major methane sources not available for
                                                                                                                                                             offsets (landfill gas and coal bed methane
                                                                                                                                                             regulated by source-specific standards)




                                                                                                                                                                                              2 
          Current as of May 14, 2010 
                                            Kerry-Lieberman                                            Boxer-Kerry Chairman’s Mark –                                   Waxman/Markey H.R. 2454 –
                                           American Power Act                                                 October 26, 2009                                       Passed by House of Representatives
Allowance Allocation      Summary: A mixture of free allocation to regulated sources        Summary: A mixture of free allocation to regulated sources and       Summary: A mixture of free allocation to
                          and energy intensive industry, allocation to non-industry         energy intensive industry, allocation to non-industry sources        regulated sources and energy intensive industry,
                          sources (e.g., low-income households, states), energy             (e.g., low-income households, states), energy technology,            allocation to non-industry sources (e.g., low-
                          technology, adaptation and other programs. Free allocation        adaptation and other programs. Free allocation to covered            income households, states), energy technology,
                          to covered entities is phased out over about 20 years. The        entities is phased out over about 20 years. Allocation for deficit   adaptation and other programs. Free allocation to
                          Cost Containment Reserve is filled at the outset of the           reduction, the Market Stability Reserve Fund, and supplemental       covered entities is phased out over about 20 years.
                          program with allowances from each vintage year ranging            allowances for 6 industries, decreases the total supply of
                          from 1.5% in the early years of the program to 5% in 2030-        allowances available for allocation/auction to other purposes
                                                                                                                                                                 Details: Beginning in 2012, unless specified
                          2050.                                                             by about 16-30% over the course of the program.
                          Allocation for public benefit:                                    Allocation for public benefit:                                       otherwise, allowances are distributed as follows:
                          •    Utility consumers – allowances distributed to                •     Utility consumers – allowances distributed to electricity      Allocation for public benefit:
                               electricity and NG LDCs (and states for heating                    and NG LDCs (and states for heating oil/propane                •    Utility consumers – allowances distributed to
                               oil/propane consumers) to offset rate increase and                 consumers) to offset rate increase and support energy               electricity and NG LDCs (and states for
                               support energy efficiency programs                                 efficiency programs                                                 heating oil/propane consumers) to offset rate
                                     o     Total allocation around 45% and phases out                   o     Total allocation around 46% and phases out by           increase and support energy efficiency
                                           by 2029                                                            2029                                                    programs
                                     o     Allocation to NG LDCs begins in 2016,                        o     Allocation to NG LDCs begins in 2016, when                    o Total allocation around 42% and
                                           when facilities are covered by emissions cap                       facilities are covered by emissions cap                            phases out by 2029
                          •    Consumer protection: 10-12% of allowances auctioned                      o     Supplement allocation to small LDCs through                   o Allocation to NG LDCs begins in
                               annually to fund various relief programs for                                   2029                                                               2016, when facilities are covered by
                               disproportionately impacted consumers, including a per       •     Energy Refund for low-income households – 15%,                                 emissions cap
                               capita energy refund and assistance for low-income                 increasing to 18.5% in 2030
                                                                                                                                                                 •    Energy Refund for low-income households –
                               households                                                   •     Worker Assistance and Training: 2% for two years, 0.6%
                                                                                                                                                                      15% for duration of program
                          •    Universal Trust Fund: 8.1% in 2026, increasing to                  in 2014-2015, and 0.5% to 1% thereafter
                               77.8% in 2035 and thereafter. 25% to deficit                             o     Allocation for nuclear worker training: 0.5% in    •    Worker Assistance and Training: 0.5% to 1%
                               reduction, 75% to consumers rebates.                                           2012-2013, and 0.05% in 2014-2015                       after 2022
                          •    Energy Efficiency and Renewable Energy: 2-2.5% for           •     State Investment in Energy Efficiency, Renewable Energy,       •    Domestic/International Adaptation: 3% after
                               the first 6 years, phasing out in 2021                             and Adaptation: A number of small allocations to states             2012, 6% after 2022, 12% after 2027
                          •    Energy R&D: 2% for 2013-2021                                 •     International Adaptation and Clean Technology                  •    State Energy and Environment Development
                          •    Transportation Infrastructure and Efficiency: 12% in               Development: 2% in 2012-2021, 4% from 2022-2026, and                (SEED) Accounts: 10% in 2012, and
                               2013 declining slowly through 2034 with one-third of               8% in 2027-2050                                                     declining to 5% 2026-2050
                               allowances auctioned for the Highway Trust Fund.                         o     0.25% supplemental allocation from 2012-2026       •    International Clean Technology
                          •    Clean Vehicle Technology: 1% in 2013-2020 and 0.5%           •     Energy R&D: 4% in 2012-2013, 2% in 2014-2015,                       Development: 1% after 2012, 2% after 2020,
                               in 2021                                                            declining to 1.9% for remainder of program                          4% after 2027
                          •    Deployment of CCS Technology: 0.8% in 2017                   •     Clean Transportation Measures and Vehicle Technology:          Allocation for private purposes:
                               ramping up to 10% from 2030-2034                                   ranges from 1% to 3% throughout program with an
                                                                                                                                                                 •    Merchant coal generators: no more than 10%
                          •    Adaption: 1.5% in 2019 ramping up to 6% in 2030-                   additional 1% supplemental allocation
                                                                                                                                                                      of allowances available to electricity sector
                               2034                                                         •     Deficit Reduction: 10% of allowances in 2012-2029, 22%
                                                                                                                                                                 •    Rural electric cooperatives: 0.5% in 2012,
                          •    Deficit reduction: Initially, 7% of allowanced                     from 2030-2039, and 25% in 2040-2050
                                                                                            Allocation for private purposes:                                          declining over time through 2030
                               auctioned specifically for deficit reduction, declining to
                               4.7% in 2035-2050.                                           •     Merchant coal generators: no more than 10% of allowance        •    Clean vehicle technology: 3% for 3 years, and
                          Allocation for private purposes:                                        available to electricity sector                                     1% through 2025
                          •    Merchant coal generators: no more than 14.3% of              •     Domestic Refiners: 2.25% of allowances from 2014, when         •    Domestic Refiners: 2% through 2026
                               allowances available to electricity sector                         facilities are covered by cap through 2026.                    •    Trade-vulnerable Industries: 15% in 2014
                          •    Domestic Refiners: about 4% of allowances through                        o     Carve outs for mid- and small-sized refiners            (first year under cap), 13.4% for 2017-2026,
                               2025, phasing out by 2029                                    •     Trade-vulnerable Industries: 4% in 2012-2013, 15% in                declining through 2035
                          •    Trade-exposed Industries: 2% in 2013-2015, 15% in                  2014-2015 (first years under cap), 13.5% for 2017-2025,
                               2016-2025 (first years under cap), declining through               declining through 2034 with 0.5% supplemental allocation       Remaining unallocated allowances will be
                               2029, with supplemental allocation of 0.5% for three               throughout program                                             auctioned to offset the federal deficit through
                               years for industrial energy efficiency and 1% for 8          •     CCS Deployment: 1.75% from 2014-2017, 4.75% in                 2025, after which proceeds are distributed as a tax
                               years for low-carbon industrial technology R&D                     2018-2019, 5% 2020-2050 to support deployment of
                                                                                                                                                                 reduced to all households.
                          •    Early Action: 1% in 2013-2015                                      utility-scale CCS
                                                                                            •     Early Action: 2% in 2012-2013
                                                                                                                                                                                                      3 
          Current as of May 14, 2010 
                                           Kerry-Lieberman                                       Boxer-Kerry Chairman’s Mark –                                 Waxman/Markey H.R. 2454 –
                                          American Power Act                                            October 26, 2009                                     Passed by House of Representatives
Market Oversight          •    The CFTC has jurisdiction over the trading of GHG        •   States it is the sense of the Senate that there shall be a   •   FERC will be responsible for regulation of
                               instruments. The CFTC must establish position                carbon market oversight program to provide effective             spot markets for allowances and offset credits
                               limits as well as establish registration and reporting       and comprehensive market oversight that lowers                   (and provided specific enforcement powers)
                               requirements for market participants. The CFTC               systemic risk, protects consumers, and fosters a well-       •   An interagency panel will be established to
                               also has emergency suspension authority.                     functioning market.                                              determine regulation pertaining to allowance
                          •    Market participation is limited to entities registered                                                                        derivatives, with default authority designated
                               with and regulated by the CFTC and covered                                                                                    to the CFTC.
                               entities. Off-exchange trading of GHG futures is                                                                                   o Authorized to write regulations
                               prohibited.                                                                                                                             setting up a wide array of
                          •    Greenhouse gas instruments are regulated under the                                                                                      provisions for regulation, including
                               Commodity Exchange Act in the same manner as                                                                                            margin requirements, position
                               agricultural commodities.                                                                                                               requirements, anti-fraud penalties,
                          •    The CFTC will establish rules for the registration                                                                                      reporting and record-keeping, etc.
                               and operation of GHG instrument trading                                                                                   •   Gives FERC “cease and desist” authority to
                               organizations and GHG clearing organizations.                                                                                 prevent market manipulation.
                               Real-time publication of trading information is                                                                           •   Creates an Office of Consumer Advocacy in
                               required.                                                                                                                     FERC to represent customer interests on rate
                                                                                                                                                             and service issues.
State-Federal             •    State/regional cap-and-trade programs are                •   State/regional cap-and-trade programs preempted from         •   State programs preempted from 2012 to 2017.
Harmonization                  preempted throughout the federal program.                    2012-2017. State/regional allowances issued before               Preemption limited to a cap-and-trade
                          •    Allowances from certain state programs can be                December 31, 2011 can be exchanged for federal                   program for emissions covered by the federal
                               exchanged for federal allowances. Allowances                 allowances in the amount sufficient to compensate for            cap and does not limit a state's ability to
                               issued by California, RGGI, and the Western                  the cost at auction of obtaining those allowances.               implement their own vehicle emission
                               Climate Initiative qualify.                              •   In the event that the legislated national cap-and-trade          requirements or low carbon fuel standard.
                          •    Federal allowances will be awarded to entities to            program is delayed, allows state cap-and-trade
                               compensate for the cost of obtaining the state               programs to continue until the control period at least 9
                               allowances, determined by the average auction price          months after a Federal allowance auction is held.
                               for state emission allowances in the year obtained.      •   States retain the authority to implement non-cap-and-
                                                                                            trade stationary and mobile source emission standards
                                                                                            or limits
International             •    Provides emission allowance rebates to energy-           •   Provides emission allowance rebates to energy-               •   Provides emission allowance rebates to
Competitiveness                intensive, trade-exposed industries. Eligible                intensive, trade-exposed industries. Eligible industries         energy-intensive, trade-exposed industries.
                               industries are determined by energy or carbon                are determined by energy or GHG intensity as well as             Eligible industries are determined by energy
                               intensity as well as trade exposure. Rebates are             trade exposure.                                                  or carbon intensity as well as trade exposure.
                               phased out by 2030.                                      •   International trade measures – TBD. States the sense             Rebates are phased out after 2020 upon
                          •    In 2020, the President can establish an international        of the Senate that there will be trade provisions,               Presidential/EPA determination that
                               reserve allowances for eligible sectors (i.e., border        including a border measure that is consistent with               commensurate action has been taken in
                               adjustment) if a bilateral agreement that includes           international obligations of the US and designed to              countries with competing industries.
                               comparable action has not entered into force.                work in conjunction with provisions that allocate            •   International reserve allowances required
                                                                                            allowances to energy-intensive and trade-exposed                 (i.e., border adjustment) if there are still
                                                                                            industries.                                                      competitive imbalances. Reserve allowance
                                                                                                                                                             provision would be implemented around
                                                                                                                                                             2020.
Coordination with the     •    Preempts a variety of Clean Air Act authorities for      •   Retains some existing Clean Air Act authority to             •   Preempts a variety of Clean Air Act
Clean Air Act                  greenhouse gases                                             regulate greenhouse gases for sources regulated under            authorities for greenhouse gases
                                                                                            the cap, including new and existing stationary sources.
                                                                                        •   Preempts the EPA from implementing performance
                                                                                            standards for emissions sources that are outside of the
                                                                                            cap and eligible for offsets until 2020.

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          Current as of May 14, 2010 

				
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