New Lieberman-Warner Draft Circulated
An aide to Sen. Joe Lieberman (I-Conn.), a lead co-author of the bill, said one of the biggest changes involves an “upstream” cap placed on the heat-trapping greenhouse gas emissions that come from natural gas processors. With the new bill’s natural gas section, more than 80 percent of the greenhouse gas emissions that come from the U.S. economy will be covered under the legislation.Some of the other changes (see line-by-line comparison):Previously, the bill dealt with about 75 percent of the U.S. economy.
Another change in the legislation speeds up by five years the end date for the free emission credits given out to power plants, manufacturers and other industrial sources. Free credits will now be phased out at the start of 2031, rather than the start of 2036.
- Hydrofluorocarbons (HFCs) are separately capped (all allowances freely distributed), to “remove the financial incentive for companies to shut down their plants that use HFCs and move them to countries that don’t have similar limits” (s. 1202, 3901, 3906, 10001-11002)
- 25% of energy R&D funds explicitly allocated to renewable energy projects (an increase from a failed Sanders amendment in subcommittee markup) (s. 4401, s. 4406)
- 0.5% of annual emissions allowances to go to a “program for achieving” methane emissions reductions from landfills and coal mines (s. 3907)
- 1% of annual emissions allowances to go to states for mass transit funding, distributed following federal highway aid apportionment rules (s. 3304)
- Per the request of international aid groups, the national-security requirement for the Climate Change and National Security Fund has been dropped (s. 4801-4804)
- SEC requirement of corporate disclosure of climate risks dropped (s. 9002)
- Interagency Climate Task Force headed by EPA Administrator to submit a report “make public and submit to the President a consensus report making recommendations, including specific legislation for the President to recommend to Congress” in 2019 based on the triennial National Academy of Sciences reports
- Details added to Climate Change Worker Training Program (s. 4602-4606)
- Details added to Adaptation Fund (including combatting ocean acidification) (s. 4702)
- Details added to eligibility for carbon sequestration bonus allowances (s. 3602)
Cap-and-Trade: Will Congress Give Away Its Appropriations Authority?
Lieberman-Warner (S. 2191), the Senate global warming emissions cap-and-trade bill undergoing markup next week, generates a emissions trading system with an estimated lifetime (from inception to 2050) net worth on the order of three to four trillion dollars, in the form of emissions credits given away for free and revenues generated from the auction of the remaining credits.
L-W establishes two independent entities to administer the allocation and appropriations of such funds, taking the direct appropriations authority away from Congress for the lifetime of the bill.
Carbon Market Efficiency Board (Title II, Subtitle F; sec. 2601-2605)
The authority to change the percentage of offsets or foreign credits used and the terms of borrowing allowances against future years is vested in the Carbon Market Efficiency Board, a executive-branch entity with seven members who each serve staggered 14-year terms. The Board is appointed directly by the President and is not part of any existing department.
Climate Change Credit Corporation (Title IV, Subtitle B; sec. 4201-4203)
The Climate Change Credit Corporation, a non-profit private federal corporation, will administer the auctions, the revenues thereof to be split into four distinct funds in the Treasury, the Energy Assistance Fund, Climate Change Worker Training Fund, Adaptation Fund, and the Climate Change and National Security Fund.
The Corporation has five members appointed by the president, no more than three from one political party, who serve five year terms. The Corporation has complete authority of the allocation of the Energy Assistance Fund (55% of the revenues, over one trillion dollars) within general allocation ranges for particular technologies (28% for CCS, 20% for vehicles, etc.).
The remaining funds are put under the jurisdiction of existing programs or Cabinet secretaries.
International Aid Groups Call for "Robust Permit Auctions" to Support Adaptation
We urge you to take action to dramatically reduce greenhouse gas emissions in the United States that are contributing to these impacts on impoverished countries, while also putting in place substantial assistance for those countries to adapt to the widespread and serious consequences of climate change. In particular, a significant proportion of any revenue generated from climate policies, such as auctions of emission permits, should be directed to the adaptation needs of poor people and impoverished countries. To maximize those resources, policies to reduce U.S. greenhouse gas emissions should ensure that the responsibility to pay for emissions reductions and adaptation costs are borne equitably by those who are most responsible for those emissions, such as through robust permit auctions.
The present version of Lieberman-Warner allocates 5% of auction revenues to a Climate Change and National Security Fund “to enhance the national security of the United States” and “assist in avoiding the politically destabilizing impacts of climate change in volatile regions of the world.” The August draft outline allocated 10% of auction revenues to international aid; the initial draft legislation cut those revenues to 5% and allocated 3% of emissions allowances to fighting tropical deforestation; in subcommittee markup a Barrasso amendment was adopted to instead allocate those emissions allowances to states.
EE News reports:Under the Lieberman-Warner legislation, an auction could create tens or even hundreds of billions of dollars per year in new revenue depending on how much industry pays on the market for greenhouse gas credits. If the credits sold for $10 per ton of carbon dioxide, a 10 percent slice for international adaptation would equal $1 billion.Senate Environment and Public Works Committee Chairwoman Barbara Boxer (D-Calif.) supports including international assistance for adaptation as part of the climate bill. But a Boxer aide said today that no decision has been made on changes in the distribution of the Lieberman-Warner bill’s auction revenue.
Enviro Groups Call on EPW to Strengthen, Approve Lieberman-Warner
Eight environmental organizations sent a letter calling on the Senate Environment and Public Works Committee to “continue the process of strengthening S. 2191, and to deliver the bill to the full Senate the first week of December.” The signatories included four members of US-CAP (NRDC, ED, NWF, Nature Conservancy), as well as the Union of Concerned Scientists, National Environmental Trust, Defenders of Wildlife, and the Wilderness Society.
The letter does does not specify how S. 2191 needs to be strengthened, though testimony of group representatives before the committee has generally agreed on the call for an 80% reduction by 2050 in emissions and opposition to any safety-valve/price-cap amendments.
In addition, a NWF representative has stated that the National Wildlife Federation supports 100% auction, and the Union of Concerned Scientists has called for 100% auction, with revenues going to efficiency and to “counteract the negative societal impacts of a carbon price.” NET has called for U.S. climate legislation to “auction a significant percent of allowances” to avoid windfall profits. NRDC has opposed grandfathering of emissions allowances to firms and believes “allowances should be held in trust for the public and distributed in ways that will produce public benefits.”
Groups who have directly responded to Lieberman-Warner with a call for 100% auction or outlined climate legislation principles (such as Sierra Club, Audobon, Physicians for Social Responsibility, U.S. PIRG, Friends of the Earth, Rainforest Action Network, and Greenpeace) were not involved in the letter.
The full text of the letter is below.
Defenders of Wildlife • Environmental Defense • National Environmental Trust
National Wildlife Federation • Natural Resources Defense Council
The Nature Conservancy • Union of Concerned Scientists • The Wilderness SocietyMembers of the Environment and Public Works Committee
United States Senate
456 Dirksen Senate Office Building
Washington, DC 20510November 15, 2007
Dear Members of the Environment and Public Works Committee,
We are writing to follow up on the letter of October 31, 2007, which highlighted the mounting urgency of global warming and the need for prompt action by the Senate Environment and Public Works Committee. Time is running out for effective action on global warming, and we need to get started now. The longer we delay, the greater the impacts and risks, and the more dramatically we will have to cut emissions in future years to achieve the same results.
We are encouraged that the committee has been holding hearings on S. 2191, America’s Climate Security Act, and that a markup has been scheduled for December 5. We believe that Senators should continue the process of strengthening the bill in committee and throughout the legislative process. We ask Senators to support those efforts and to defeat efforts to weaken the bill.
It is vitally important that the full Senate take up the issue of global warming. If not weakened in committee, this legislation provides a sensible framework for engaging the full Senate in an open debate and votes on global warming. We therefore ask members of the committee to continue the process of strengthening S. 2191, and to deliver the bill to the full Senate the first week of December.
Sincerely,
Robert Dewey
Vice President, Government Relations and External Affairs
Defenders of WildlifeElizabeth Thompson
Legislative Director
Environmental DefenseGeoffrey Brown
Legislative Director
National Environmental TrustJeremy Symons
Executive Director, Global Warming Program
National Wildlife FederationDavid Hawkins
Director, Climate Center
Natural Resources Defense CouncilCathleen Kelly
Director of Climate Change Policy
The Nature ConservancyAlden Meyer
Director of Strategy and Policy
Union of Concerned ScientistsLinda Lance
Vice President for Public Policy
The Wilderness Society
Notes from the Latest EPW Lieberman-Warner Hearing
Sen. Boxer convened the third full Environment and Public Works Committee hearing on Lieberman-Warner (S 2191) this morning.
Some highlights:
Fred Krupp of Environmental Defense strongly praised Lieberman-Warner as having “the right framework to address the challenge of climate change in a way that makes sense for the environment, entrepreneurs, and the economy.” He emphasized the heavy potential costs of delay. Krupp said that early reductions can take place primarily with energy efficiency and terrestrial sequestration. He called for three specific changes to the bill:- 80% target by 2050
- an “Ocean Trust” of ocean and coastal adaptation funds as proposed by Sen. Whitehouse (D-R.I.)
- increased support for international adaptation
ED opposes amendments to weaken the emissions cap by changing targets or establishing a price cap, and opposes limits on offsets.
Krupp’s written testimony did not mention allocation at all.
Eileen Claussen of the Pew Center on Climate Change also strongly praised Lieberman-Warner. Her written testimony defends the giveaways to the coal industry in the bill:While the use of a well-designed cap-and-trade program ensures the lowest overall cost, many important sectors of the economy will face real transition costs that can and should be dealt with through the allowance allocation process. Allocation, contrary to the impression some stakeholders may be creating, has no effect on the greenhouse gas reductions mandated by the cap. Given this, we should use the allocation process, in the early years of the program, to address the legitimate transition costs some sectors will face as we move to a low- greenhouse gas economy. . . The best hope, at the moment, lies with carbon capture and sequestration, which most experts believe will take at least a decade to deploy throughout the power sector. While we need not wait until then to begin cost-effective reductions, it would be appropriate to allocate initially a significant amount of allowances to this sector to help with transition. The bill does this and also appropriately uses bonus allowances and a clean coal technology program funded out of auction proceeds to accelerate CCS deployment and speed and smooth the transition. There is is a similar need for transition assistance in other sectors of the economy, most particularly energy-intensive industries that face significant foreign competition. As the need for transition assistance diminishes, the allocation of free allowances should phase out, which the bill does as well.
The Pew report she references calls for a total investment in CCS of 8 to 30 billion dollars, far lower than what is in Lieberman-Warner (about $400 billion explicitly for CCS, with another $100 billion to coal power, plus another $500 billion in research money that could go to coal, nuclear, renewables, and efficiency R&D.)
S.2191, to direct the Administrator of the Environmental Protection Agency to establish a program to decrease emissions of greenhouse gases
- 12-05 Full committee markup
- 11-15 Third full committee hearing
- 11-13 Second full committee hearing
- 11-08 First full committee hearing
- 11-01 Subcommittee markup
- 10-24 Subcommittee hearing
- Fred Krupp, President, Environmental Defense
- The Honorable Eileen Claussen, President, Pew Center on Global Climate Change
- Ron Sims, King County Executive, State of Washington
- Kevin Book, Senior Analyst and Vice President, Friedman Billings Ramsey & Company, Inc.
- Christopher Berendt, Director, Environmental Markets and Policy, Pace
Kevin Book is a pro-nuclear energy analyst. Chris Berendt ([email protected]) advises companies how to incorporate emissions management into their business.
10:16 Voinovich There is no reason to disregard CRA International’s analysis. Anne Smith is a highly regarded economist. I have seen nothing that would dispute with this analysis. We are staring down the barrel of a gun. In fact we are staring down two barrels. The evidence suggests this bill will do nothing to help climate change. In states like Ohio, we’re all too familiar with the results. Natural gas prices are up 300% since 2001. End-of-pipe technologies don’t exist. Solving this problem will require a wholesale technology revolution. This bill will be a gigantic administrative undertaking by the EPA. I suggest my colleagues slow down. There are alternatives that must be considered before we move forward.
Boxer My staff walked your staff through a different model yesterday from the Clean Air Task Force. Sen. Lieberman has asked the EPA to do a model.
Inhofe The costs of the bill will be a trillion dollars a year. It will require a wholesale transformation of our society. Manufacturing will be forced overseas.
10:24 Vitter I have very serious concerns about the bill. I agree with Sen. Voinovich about the need for more time. Every day I hear from Louisiana constituents about energy prices. I’d like to see a clear consensus on what this does to energy prices.
11:19 Krupp Not only will it ease the burden on the American economy if we act faster, it will get other nations to move faster. To achieve a cumulative emissions budget between now and 2020 if we act now we would have to average a 2% reduction each year. But if we wait two years we would have to have a 22% reduction instead of 15% because we would have to start from a higher level and cut to a lower level. There’s enormous benefit by acting early.
11:21 Inhofe Would you support new LNG plants?
Book? Yes, we have to have to do it safely. We would support increased funding by Congress to deal with nuclear.
Inhofe You have said a tax is more effective than a cap-and-trade.
Book There is already a SEC, IRS, and EPA. You can use a tax because we have a tax system.
Some folks are going to suffer more than others. The instability of the oil market is due to the maximum capacity. The only thing to do is to find more oil.
Boxer When you say a carbon tax is more honest, I disagree. In cap-and-trade, the free market sets the price.
Inhofe CRA International said this bill would be much more aggressive than $300 billion per year. I think a tax would be more honest.
Boxer This would be quite a switch, you supporting a tax, me supporting the free market.
Inhofe It would be great if you switched the gavel, too.
11:29 Carper Nuclear?
Claussen I think nuclear has to be part of the solution. I think the best thing to do for nuclear is to establish a cap-and-trade system. Nuclear has to solve the problem of waste. I think there are some interim solutions that could move us along the path.
Carper I want to thank the panel for helping us craft this legislation.
Book The world needs more BTUs and nuclear is one of those sources. It has a very high startup costs. Congress has produced significant incentives. It’s not exactly the free market. If we’re not going to use coal, we need nuclear.
Carper Mr. Sims, did you ever run for the Senate?
Sims Yes.
Carper If things had turned out slightly differently, you could have been sitting up here. How can we ensure that investments in transit generate credits or funding within this bill?
Sims We need to reduce total miles traveled.
11:36 Warner You talked, Mr. Sims about the need to reduce vehicle miles traveled. Maybe we need to add incentives to the states.
Sims I would be overjoyed to have states have to reduce overall miles traveled. Incentives for congestion pricing.
Warner Nuclear power will be addressed in our committee deliberations.
Claussen I worked a long time ago on submarines.
Warner I go back a few years myself.
Claussen On Monday Sen. Carper and I were talking about how we see nuclear as part of the solution. We talked about the need for education. If there’s a demand for nuclear, we’ll figure out the way. Again, I think the best way is to put a price on carbon.
11:51 Klobuchar How do we ensure that we can interconnect with other nations?
Claussen Remember that we’re not signatories to Kyoto. We need a global agreement, but I don’t think we’ll get that until we pass a bill. So the urgency of passing this out of committee and getting a law is high.
12:00 Krupp The sooner we have a cap, the sooner we have moral standing. I spent the last year researching all the technologies I could find that could reduce emissions. Doing this two years early will spur a technological revolution.
Lieberman You said the uncertainty created by Congressional inaction is creating problems for developing new energy infrastructure.
Berendt That is correct, Senator. It is very important that we move forward in a way that is functional and liquid. All advanced low-carbon technologies have high fixed costs.
Lieberman That’s why we put added incentives to the power sector to ease the transition.
12:07 Voinovich The AFL-CIO had real problems with this. Duke Energy said its prices would go up 50%. I have also, Mr. Krupp, looked at all the technologies available.
Claussen We work with 45 companies. 37 have already set targets to reduce emissions, and 22 have already met their targets. They’ve done it primarily through efficiency. I think there will be some time for CCS, for more nuclear, because I think we’re going to need that, for renewables. We need both carrots and sticks.
12:18 Craig I recognize the tolerance of the posteriors of those sitting here. I think it is critically important for us to have a EPA/IEA neutral analysis. I don’t disagree that there may be great new economies generated. Reasonable approaches by government can direct economies.
U.S. Chamber of Commerce Comes Out Against Lieberman-Warner
If this bill becomes law, 3.4 million Americans will lose their jobs. American GDP will decline by $1 trillion. And American consumers will be forced to pay as much as $6 trillion to cope with carbon constraints.
The Chamber also released the following commercial:
Other groups, such as Environmental Defense, are supporting its passage and asking their members to lobby in support of the bill.
The Chamber’s figures are cherrypicked from Dr. Smith’s testimony. Her calculations are based on a computer model designed and run by her company. Not modeled are the economic impacts of climate change or the possibility of borrowing credits. Her results have not been peer-reviewed nor were reported with degrees of uncertainty.
Job Losses
Her written testimony:By 2020, our scenarios project between 1.5 million and 3.4 million net job losses. There is a substantial implied increase in jobs associated with “green” businesses (e.g., to produce renewable generation technologies), but even accounting for these there is a projected net loss in jobs due to the generalized macroeconomic impacts of the Bill.GDP
Her modeling finds a net reduction in 2015 GDP of 1.0% to 1.6% relative to the GDP that would occur but for S.2191. The impact rises to the range of 2% to 2.5% thereafter, leading to a loss in the range of $1 trillion by 2050. By way of comparison, the Stern Review estimated the losses due to strong emissions reductions would be about 1% of GDP, and the long-term losses due to inaction from 5% to 20% GDP by 2050 depending on climate feedbacks.
American consumers
It appears the Chamber somehow generated the $6 trillion figure from this testimony:Our scenarios imply that real annual spending per household would be reduced by an average of $800 to $1300 in 2015. If the percentage consumption impacts projected for each future year were to be stated in terms of current real spending power (we use 2010 spending as the proxy for “current” here), these spending impacts would increase to levels of $1500 to over $2500 by the end of our modeled time period, 2050.The number of households in the United States is approximately 116 million. $6 trillion divided by 116 million is over $51,000. The US population in 2050 is estimated to be 404 million. The per-person cost would have to be $15,000 for the total to reach $6 trillion.
S.2191, to direct the Administrator of the Environmental Protection Agency to establish a program to decrease emissions of greenhouse gases
The second full committee hearing on Lieberman-Warner.
- 12-05 Full committee markup
- 11-15 Third full committee hearing
- 11-13 Second full committee hearing
- 11-08 First full committee hearing
- 11-01 Subcommittee markup
- 10-24 Subcommittee hearing
- David Hawkins, Director, Climate Center, Natural Resources Defense Council
- Dr. David Greene, Corporate Fellow, Geography and Environmental Engineering, Oak Ridge National Laboratory
- Robert Baugh, Executive Director, Industrial Union Council, AFL-CIO
- Andrew Sharkey, President and CEO, American Iron and Steel Institute
- Donald R. Rowlett, Director of Regulatory Policy and Compliance, OGE Energy Corp.
11:30 Voinovich This bill will cripple our economy.
11:36 Klobuchar This is a hearing to examine the nuts and bolts of this bill.
11:40 Craig If anybody doesn’t believe this is a complex bill, they should try reading it. I’m glad the Bali or bust approach is out. The bill is not ready for prime time.
11:44 Boxer We will start markup on December 5.
11:44 Whitehouse We are putting a lot of our nation’s wealth through this process. I’m not satisfied with the integrity of this process. My concern is that fairness to low-income folks are not part of this discussion. The bulk of the return has to go to the American consumer and the low-income American consumer more than anyone else. I’m interested in the idea of flowing moneys through the EITC.
11:49 Alexander I think we would be better off with a sector-by-sector approach.
11:53 Cardin I hope we can strengthen the use of public transit. Dr. Greene notes we burn 6000 gallons of oil every second to fuel our transportation sector. That sector is responsible for one quarter of the emissions. I think we need to strengthen the bill’s provisions. We need to make a more significant investment in public transit.
11:58 Inhofe I will raise concerns about the untoward impacts of a cap-and-trade bill. I’ve talked about how the poor will suffer. I expressed how farmers would be hurt. Today I address how blue-collar jobs across America are at risk. Many of the blue-collar jobs rely on energy-intensive manufacturing. We know natural gas is critically important. Rising prices will threaten jobs in automotive assembly, steel, fertilizer.
12:08 Hawkins In all the key areas NRDC shares a number of concerns. But we are ready to work to make this bill better. Noone is under the illusion that the bill will go directly from the committee to the President’s desk. We recommend the committee approve certain strengthening amendments and report the bill to the floor this year.
12:10 Greene Analyses such as those by the IEA show the insensitivities to fuel economy to the price of fuel. The market for fuel economy is not efficient. 39% of households never considered fuel economy in purchase decisions. Land development policies must be considered in reducing transportation sector emissions. A low-carbon fuel standard may be needed.
12:15 Baugh AFL-CIO believes action to reduce global warming and reduce oil dependence are mutually reinforcing. We actively participated in the stakeholder process to develop this bill. I’m here to address five areas in the bill that could be improved. We commend the original draft that made critical commitments to technology. Unfortunately the amendments to restrict automotive and coal funding went in the wrong direction. This sets a standard of 70% below 2005 levels by 2050. That should be subject to presidential reviews. We urge the committee to direct the Corporation to invest in domestic investments. The AFL-CIO supports price-control mechanisms. We believe hoarding of allowances will be damaging. Up to 30% of a company’s allowances may come from offsets or international allowances. We believe that is too high. We’re very concerned about the legitimacy of genuine offsets.
12:21 Sharkey We beat our Kyoto targets already. By recycling and efficiency we’ve dropped our emissions by 30%. We are not standing still. Our products lead the way in reducing carbon emissions. For example by using high-strength steel, auto manufacturers can reduce car weight and increase fuel efficiency. Legislation must consider U.S. competitiveness. Our costs will rise in 2012, costs our foreign manufacturers will not face, if at all, until 2020. Foreign allowances invite subsidies from foreign nations. We are concerns ACSA will encourage fuel switching from coal to natural gas. We believe competitiveness provisions should apply equally to domestic and foreign manufacturers. Why not encourage a race to the top? We must find prudent means of addressing climate change.
12:30 Rowlett Wind is not a suitable replacement for baseload needs. Perhaps agricultural offsets will be needed. We will have to switch from coal to natural gas.
12:35 Hawkins This bill is a good start. The emissions reductions in the short term are strong. The longterm reductions need to be stronger. We believe this bill deserves an affirmative vote in this committee.
Baugh There’s the phase-out period for the industry. Some would like us to have 100% auction, which would say to manufacturers you have to buy allowances, and you have to invest in new technologies. I think it’s important that the allowances are available for doing business. We wouldn’t want to see the phase-out tightened. We have reports coming out with the National Council on Energy Policy.
Lieberman This bill would make very serious demands on industry. With that in mind we created the free allowances. I think it’s significant that the AFL-CIO says any shortening of that phase-out period would be unwise.
12:39 Inhofe Nuclear is going to be necessary. Do you support nuclear power?
Hawkins I’d like to answer in two parts. We don’t support additional subsidies for nuclear power. We don’t object to nuclear power being part of an emissions reduction program.
Inhofe You don’t think India and China are going to reduce their emissions, do you?
Baugh No. We think it’s important the investment be done in domestic firms.
Inhofe If we adopt unilateral mandates can we ensure imported steel have the same regulations?
Sharkey Cover imports at 2012, not 2020. Watch against government subsidized allowances.
Inhofe Can you talk about the problem with an auction approach?
Rowlett Before we choose any kind of resource we have to go to regulators. Nothing is automatic. Everything has to go through state regulatory commissions.
12:45 Klobuchar We’re all concerned about the effects on consumers and the economy. What effect has the Europe cap-and-trade had on the economy?
Hawkins It has had some bumpy spots but we have not seen harm to the European economy. We will see economic opportunity by the technologies stimulated by this bill.
Baugh We do have concern about the jobs. We have a particular sensitivity to energy-intensive industries. How is the investment side of the portfolio directed. Ensure that these are domestic investments.
12:54 Voinovich Do you think the Efficiency Board can moderate price shocks?
Baugh Right now I don’t think so. The volatility is too high. There should be a much more restricted market mechanism.
12:56 Boxer The gloom and doom is belied by the facts. Change is hard, we all know that. But if we do nothing that’s very dangerous. Come to my state and see what’s happening in the venture capital community. I’m going to go back and find the naysayers’ comments for the Clean Air Act, Clean Water Act.
For my view, I would do 100% auction out of the box. I’ll support those amendments on the floor of the Senate. I would hate to see you away from the table. This is going to happen eventually, because it has to happen.
1:02 Barrasso The target date is 2050. If we act and China and India does not, how much cooler will the planet be?
Hawkins I am confident that China and India will engage much faster if we don’t take action. I’m sure they won’t take action if we don’t. Countries pay attention to what the U.S. does and does not do. Every time we bring up advanced technology and ask what they’re doing about it, they ask what we’re doing about it. This is a method that works. We took lead out of gasoline in the 1970s and 1980s. They followed suit. We put scrubbers on smokestacks. They followed suit.
1:07 Carper What can we do to reward actions your industry has already acheived?
Sharkey Rewards for early action would be welcomed.
Carper What allowances are going to be given for free?
Hawkins 20% of the allowance pool is available for free to the industry sector, and 20% to the electricity sector.
Carper I’m concerned the allowances are greater than the historical level of emissions.
Hawkins We think the argument the industrial sector will have trouble meeting these targets is not well founded.
1:12 Alexander You said that increased CAFE standards would be the greatest impact on the transportation sector in reducing oil dependence.
Greene Yes, and reducing greenhouse gases.
Alexander If it’s not baseload or peak, why are you investing in wind?
Rowlett We’re taking proactive action to reduce our footprint.
1:17 Whitehouse Offsets.
Baugh I’m concerned about paying for things people are going to do anyway.
Whitehouse The other question is how you regulate the allowance trading itself.
Baugh Goldman Sachs should not be buying allowances. When does banking become hoarding?
Whitehouse Are you convinced that the governance of the board is adequate?
Baugh We think labor should be represented.
Baugh The cap-and-trade system is an effective tax. This will raise the cost of energy. The question is how do we do it? And how do we make this transition? There are allowances for line-transmission agencies. They’re getting allowances, but there are no requirements for investing in high-efficiency transmission.
1:23 Lieberman Sen. Warner was particularly focused on maintaining the integrity of the systems. The Carbon Market Efficiency Board plays a role much more akin to the Federal Reserve.
Hawkins The acid-rain trading system did not develop the problems that concern Sen. Whitehouse. The problem of hoarding, of speculation simply hasn’t occured.
Lieberman The auctions are going to raise a very significant amount of money. We want to make sure the Corporation will set up systems so that it is spent well. Our intention is to reduce the price impacts and to reinvest the money in technologies that will drive efficiencies, creating more jobs. We have phrased our allocations in term of percentages. Outside groups have converted that to dollars. It’s a tremendous amount of money. In fashioning a system we have within our grasp to create the opportunity to make America energy independent and clean up other forms of air pollution. A lot of money will be on the table. It’s important it be used as a vast venture capital pool.
1:29 Lieberman I adjourn the hearing.
AFL-CIO Letter Lists Concerns With Lieberman-Warner
In a letter to Sen. Boxer, the AFL-CIO lists its concerns with Lieberman-Warner (S 2191), referring back to testimony at the July 24 hearing on the draft legislation.
The AFL-CIO letter criticizes the adoption of the Sanders amendment to limit advanced-vehicle moneys to 35 MPG or higher and the Barrasso amendment clarifying the types of coal eligible for R&D subsidy.
The other delineated criticisms:
- An overly aggressive Phase I emission reduction target, now increased from a 10 percent to a 15 percent reduction of greenhouse gas emissions below 2005 levels by 2020, before the anticipated commercial availability of carbon capture and storage technologies;
- An unequivocal commitment to achieving a 70 perscent national emision reduction below 2005 levels by 2050, regardless of the degree of subsequent participation of major developing nations like China and India in a global climate protection framework;
- The failure to identify “domestic economic development” as a finding of Congress, a purpose of the legislation, and the failure to require that funding from this legislation be dedicated to domestic investments for new technology and the creation of jobs – from production to construction and exports.
- The absense of an effective safety valve price for carbon dioxide allowances, which will have an adverse impact upon investment decisions and consumer and inducstry pricing.
- The need for a restricted and regulated market system that does not fall prey to predatory trading practices, hoarding of allowances, and the creation of carbon billionaires, which an open market and unlimited banking of allowances can lead to.
- The extent of the use of international allowances combined with offsets, and he possibility of double dipping with offsets by providing allowances for activities that would have been done anyway.
- Inappropriate allocations of emissions allowances, such as the 10 percent allocation to “wires companies” to encourage energy efficiency – a goal that may be better accomplished through direct legislation on energy efficiency standards, now incorporated in other provisions of the bill.
EPW Briefing on America's Climate Security Act of 2007
Members of the Senate Environment and Public Works Committee and staff will hold an informal briefing on the provisions of America’s Climate Security Act of 2007 (S 2191).
Contact: Poirier, Bettina – Democratic Staff Director at 202-224-8832