Wednesday, May 12, 2010

Kerry-Lieberman Climate Bill

The Kerry-Lierberman Climate Bill (formerly Kerry-Lieberman-Graham, before Republican Lindsay Graham got cold feet, see here and here) was formally introduced in the Senate today (see here). The "American Power Act," a short summary of which is available here, includes the following features:
  • a federal cap-and-trade program for the largest carbon emitters (i.e., those that emit more than 25,000 tons per year of carbon), totaling about 7,500 energy and industrial facilities
  • the cap-and-trade program is phased in, first, for utilities, then, in 2016, for industrial sources, with a goal to reduce greenhouse gas emissions 17 percent (from 2005 levels) by 2020 and more than 80 percent by 2050
  • most (if not all) allowances are to be auctioned to the utility sector; producers and importers of refined products must purchase allowances under the cap at a fixed auction price
  • carbon allowances have price floors of $12 (rising by 3 percent over inflation per year), and price ceilings of $25 (rising by 5 percent over inflation each year) 
  • separate state cap-and-trade programs are preempted, but EPA regulations under existing statutes are not
  • farmers are exempted from the program but can benefit from a new "multi-million dollar benefit stream," in the form of a domestic carbon offset program 
  • until 1916 (when industrial sources are phased into the cap-and-trade program), all revenues generated by the cap-and-trade program are to be used to offset electricity and natural gas rate increases for consumers
  • border tax adjustments are phased in if the international community does not adopt a new global agreement on greenhouse gas reductions
  • $5 billion clean energy manufacturing tax credit
  • $2 billion per year plus incentives for development of carbon capture and sequestration technology
  • incentives for new nuclear plant development
I have not read the entire bill yet, but I will be doing so soon, and will probably have more to write about it after I do. Feel free to read it for yourself (here); it's only 987 pages long. I am unlikely to love the bill; I already deplore the offset provisions, which, unless accompanied by very strict monitoring and verification provisions, are little more than an invitation to fraud, which would undermine the environmental integrity of the legislation. Nevertheless, let me be clear about one thing: 

THE SENATE SHOULD PASS THIS BILL. IT SHOULD BE RECONCILED WITH THE WAXMAN-MARKEY BILL ALREADY PASSED BY THE HOUSE. THE RECONCILED LEGISLATION SHOULD BE PASSED AND SIGNED BY PRESIDENT OBAMA AS SOON AS POSSIBLE

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