Sens. Lieberman and Warner have unveiled the skeleton of their cap-and-trade legislation, America’s Climate Security Act.
Cap
“The bill will specify an annual aggregate tonnage cap, expressed in terms of Co2 equivalence, for each year from 2012 through 2050. The cap that the bill will specify for 2012 will be the 2005 emissions level.” And: 10% below 2005 by 2020, 30% by 2030, 50% by 2030, 70% by 2050.
Allowances
- Each year 20% of that year’s National Emission Allowance Account for free to covered entities within the industry sector.
- In 2012 20% of the NEAA will be allocated to the electric power sector. A portion of that 20% will be free to new entrants to the electric power sector. The allocation will be at 20% from 2012 – 2017, then transition to 0% by 2035.
- 10% will be allocated to load-serving entities to defray energy-cost impacts on low- and middle-income consumers and to promote demand-side energy efficency, some of it for free to rural electric cooperative facilities.
- 8% will be allocated to covered entities who have taken pre-enactment action to reduce greenhouse gas emissions. That 8% will transition to 0% by 2020.
- Each year 4% will be allocated to state governments, half based on population, half on historical state emissions.
- Each year 4% will be allocated to US coal mines.
- Each year 7.5% will be allocated to farmers, foresters, and other landowners to store carbon in soils, crops, and forests.
- Each year 2.5% will be allocated to the transportation sector.
Allowances for Auction
- 24% in 2012 will go to auction under the aegis of the Climate Change Credit Corporation; rising to 52% by 2035.
Auction Proceeds
- 20% for a public-private partnership for power-sector technologies including CCS
- 20% for public-private partnership for CCS
- 20% for transportation sector technologies and reducing miles traveled
- 10% for environmental mitigation
- 10% for SO2, NOx, mercury emission reduction from coal plants
- 10% to state and local for low-income community mitigation
- 10% for international mitigation
CCS
CCS regulations and a legal framework for the Federal assumption of liability for geological storage will be proposed by a study group within two years of enactment.
Carbon Market Efficiency Board, Banking
- Up to 15% of the allowances a covered entity must submit may be comprised of borrowed allowances, with an interest rate set by the Board.
- Up to 15% of the allowances that a covered entity must submit may be comprised of offset credits.
- Up to 15% of the allowances that a covered entity must submit may be comprised of allowances purchased on a certified foreign greenhouse gas emissions trading market.
- the Board may increase the number of emissions credits if the average daily closing price of an emissions credit exceeds the upper end of the range predicted by the CBO prior to the start of the program.
- The Board may adjust the terms and interest rates of the emissions loans “as needed to avoid significant harm to the economy” and “in the event of more extreme economic circumstances” to raise the cap temporarily provided that subsequent year’s caps are tightened so that cumulative reductions are unchanged.
Offsets
“The bill will set forth detailed, rigorous requirements for offsets, with the purpose of ensuring that they will represent real, additional, verifiable, and permanent emissions reductions.”
Foreign Tariffs
The President will be authorized to require that importers of GHG-intensive products submit emissions allowances of a value equivalent to that of the allowances that the US system effectively requires of domestic manufacturers, if it is determined that nation has not taken commensurate action to reduce GHG emissions.