Hill Heat

In summary, US-CAP members Environmental Defense, Pew Center on Climate Change, and Nature Conservancy offer unequivocal praise of Lieberman-Warner.

NRDC (US-CAP) and Union of Concerned Scientists say it’s a starting point that needs fixing.

Friends of the Earth and the Sierra Club say it has major problems; the Sierra Club and League of Conservation Voters say that focus should stay on the Sanders-Boxer bill.

A number of organizations have not yet weighed in. Full quotations and links to the statements are below the fold.

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.

At 10:30 am on Thursday, August 2, in the hearing room of the Senate Environment and Public Works Committee (Dirksen 406), Senators Joe Lieberman (ID-CT) and John Warner (R-VA), the Chairman and Ranking Republican, respectively, of the Senate Subcommittee on Private Sector and Consumer Solutions to Global Warming and Wildlife Protection, will unveil the particulars of the agreement that they have reached on economy-wide climate legislation. This agreement synthesizes ideas contained in other climate change proposals while also incorporating new thinking. It will form the basis of a bill that the two Senators will introduce when the Senate reconvenes in September.

The press conference has been announced for 10:30 AM tomorrow.

Last week, Sen. Mary Landrieu (D-La.) presented the Containing and Managing Climate Change Costs Efficiently Act (S. 1874), a piece of legislation authored by Joe Lieberman’s former environmental advisor, Timothy Profeta, who now heads the Nicholas Institute for Environmental Policy Solutions at Duke University.

The proposal would establish the Carbon Market Efficiency Board which would oversee the emissions trading market established by cap-and-trade legislation. The board would operate much like the Federal Reserve Board, providing information on price and low-emission technology investment trends to Congress and the public, and it would adjust the price of emissions permits when a “market correction” is needed. The first measure is to expand companies’ ability to “bank” permits, or borrow permits against future year reductions. The second measure, to be used if high prices are not relieved by the first measure, is to add a slightly larger number of permits to the market. This temporary increase would be compensated for by reducing available permits in a later year, when more options have been developed.

Profeta testified about the proposal in last week’s hearing. His white paper goes into further detail.

The bill is intended to be folded into the Lieberman-Warner package to be presented as a discussion draft at the end of the week.

John Warner (R-Va.), Lindsey Graham (R-S.C.), and Blanche Lincoln (D-Ark.) are cosponsoring the bill, in a bipartisan show of strength by pro-business Senators. [The League of Conservation Voters/Chamber of Commerce scores for the senators are: Warner 14%/100%, Graham 29%/92%, Landrieu 43%/75%, Lincoln 43%/67%. By way of comparison, Lieberman is 71%/44%.]

From CQ Green Sheets: Senate Environment Presses Ahead on Federal, State Climate Action

Summary: Lieberman & Warner are working on carbon cap-and-trade legislation. Their staff is working hard right now to get the legislation written before the August recess, but they might not make that target. The witnesses at this hearing give a hint as to what the legislation will look like.

Witnesses

• Timothy Profeta, Director, Nicholas Institute for Environmental Policy Solutions, Duke University, former Lieberman staffer and the principal author of the 2003 Lieberman-McCain cap-and-trade legislation
• Blythe S. Masters, Managing Director, JP Morgan Securities, Inc., supporter of carbon trading
• Robert Baugh, Executive Director, Industrial Union Council, AFL-CIO, supports Bingman-like (S 1766) elements like “safety valve” emission cost caps and money for carbon sequestration
• Garth Edward, Trading Manager, Shell International Trading and Shipping Company, supporter of carbon trading
• Margo Thorning Ph.D., Senior Vice President and Chief Economist, American Council for Capital Formation, believes cap-and-trade evil and the European experience a failure

Tomorrow’s global warming hearing, led by Joe Lieberman, will be a prelude to the cap-and-trade legislation now being written by his and John Warner’s staffers. This bill will be the default Senate cap-and-trade bill unless matters dramatically change. See CQ Green Sheets for more.