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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.
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Covered emissions sources are required to reduce emissions by 17% by 2020. Supplemental, non‐covered emissions reductions account for the additional 3%.
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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)
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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
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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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U.S. Climate Bill Comparison by Paul Bledsoe of the National Commission on Energy Policy
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