Wednesday, May 21, 2008

Boxer releases new, improved Senate global warming bill

Sen. Barbara Boxer (D-Calif.) released a substitute global warming bill (PDF) today with significant changes from the version approved last December in the Environment and Public Works Committee.    It includes an $800 billion tax break to help Americans cope with high energy prices, greater use of international forestry programs and a cost-containment program that allows extra greenhouse gas emission allowances to be auctioned off if the price for carbon credits reaches a certain level.

Some of you may not follow the bouncing ball of global warming legislation, so here's my summary.

  • The bill caps annual US greenhouse emissions at 5775 million tons in 2012, reducing the cap every year until it reaches 1732 in 2050 -- a 70% reduction from projected 2012 emissions.
  • Covered facilities are required to obtain allowances for every carbon dioxide equivalent (CDE) of greenhouse gases that they emit
  • Covered facilities include:
    • (A) any entity using more than 5,000 metric tons of coal in a year;
    • (B) natural gas processing plants (except in Alaska)
    • (C) natural gas producers in Alaska and federal waters within the Alaska OCS;
    • (D) natural gas importers, including liquefied natural gas
    • (e) petroleum or coal-based manufacturers of fuel (i.e. refineries) that causes GHG emissions;
    • (F) importers of oil, coke, coal or petroleum based liquids or fuels that cause GHG emissions;
    • (G) any entity manufacturing  more than 10,000 carbon dioxide equivalents of non‐HFC GHG;
    • (H) importers of more than10,000 carbon dioxide equivalents of non‐HFC greenhouse gas; and
    • (I) manufacturers of HFCs.
  • Allowances may be obtained through several means: allocation, regular auctions, cost-containment auctions, domestic offset projects (up to 15% annual US allowances), international offsets and allowances (up to 5% annual US allowances so long as and to the extent that domestic projects are less than 15%).
  • Covered facilities that fail to secure enough allowances must pay three times (3x) the market value of the allowances that they are short and must provide an equal or greater amount of allowances the next year.  They also are subject to enforcement and citizen suits under the Clean Air Act.
  • An advanced clean fuel efficiency standard is set for fleets at the average 2010 GHG emissions in 2010, reduced to the baseline adjusted for renewable fuels in 2012-2022, reduced to 5% less than baseline by 2023, and finally reduced to 10% less than baseline by 2028.
  • A carbon duty or tariff is placed on covered goods from countries that do not make a comparable effort to the United States.
  • An enormous variety of programs are created that either (1) directly allocate allowances to protect the interests of particular groups affected by the cap and trade program or (2) provide for auctions of allowances to create funds for various carbon mitigation and adaptation efforts.
  • State regulations of GHG are protected by a broad savings clause for state regulation of greenhouse gases:   
    (a) IN GENERAL.—Except as provided in subsection (b), nothing in this Act precludes, diminishes, or abrogates the right of any State to adopt or enforce—
    (1) any standard, limitation, prohibition, or cap relating to emissions of greenhouse gas; or
    (2) any requirement relating to control, abatement, mitigation, or avoidance of emissions of greenhouse gas.
    (b) EXCEPTION.—Notwithstanding subsection (a), no State may adopt a standard, limitation, prohibition, cap, or requirement that is less stringent than the applicable standard, limitation, prohibition, or requirements under this Act.
  • EPA may authorize tribes to be treated as states for purposes of the Act.
  • Enforcement will occur through the enforcement and citizen suit provisions of the Clean Air Act.
  • Judicial review will be largely in accord with the judicial review provisions of the Clean Air Act.
  • The President is given authority to make an emergency proclamation modifying provisions of the Act for up to 6 months where the President determines that a national security, energy security, or economic security emergency exists, and that it is in the paramount interest of the United States to modify any requirement under this Act to minimize the effects of the emergency.

Here are some of the details about the allocation and funding programs created by the bill:

  • Allocation programs include:
    • Carbon intensive manufacturers of iron, steel, pulp, paper, cement, rubber, chemicals,
      glass, ceramics, sulfur hexafluoride, or aluminum and other non‐ferrous metals will be allocated 11% of the annual allowances for the first 10 years, with the allocation reduced by 1% per year until it reaches 0 in 2030. EPA may allocate 10% of these allowances to petroleum refiners.
    • Petroleum refiners also are guaranteed their own allocation of 2% of annual allowances from 2012-2017 and 1% of annual allowances from 2018-2030.
    • Natural gas processing plants (Alaska), natural gas producers, and natural gas importers will receive 3/4 of 1% of the annual allowances through 2050.
    • Power plants will be allocated 18% of the annual allowances in 2012, which will reduce to 2.75% of the annual allowances by 2030.
    • States heavily dependent on coal and manufacturing will receive 3% of the annual allowances initially, increasing gradually to 4% for 2031-2050
    • A Renewable Energy Program will be allocated 4% of annual allowances from 2012-2030 and 1% of allowances from 2031-2050.
    • States that led in reducing emissions, as scored annually according to their historical State investments and achievements in reducing greenhouse‐gas emissions and increasing energy efficiency, will be allocated 4% of the annual allowances in 2012, gradually increasing to 10% for 2032-2050.  However, states that have established their own cap-and-trade program.
    • Celluosic Biofuel producers will allocated 1% of annual allowances in the first 2 years, 3/4 of 1% from 2014-2017, and 1% from 2018-2030.
  • Allowance funded programs include:                
    • A Climate Change Worker Training and Assistance Fund funded with 1% of annual allowances for 2012-2017, rising to 2% for 2018-2027, 3% for 2028-2030, 4% for 2031-2019, and dropping to 3% for 2039-2050.
    • A Consumer Assistance Fund will initially be allocated 3.5% of the annual allowances for auction, increasing gradually to 15% from 2035-2050.
    • A Transportation Emission Reduction Fund will initially be allocated 1% of the annual allowances for auction, increasing to 2.75% between 2022-2050.
    • A Energy Efficiency and Conservation Block Grant Program will be allocated 2% of the annual allowances for auction.
    • An Efficient Energy Use Program will auction 2.25% of annual allowances to reward efficient buildings, efficient equipment, and efficient manufacturing (divided equally).
    • A Zero or Low Carbon Generation Technology Fund will provide incentives for manufacturers by auctioning 1.75% of annual allowances 2012-2021, 2% 2022-2030, and 1% 2031-2050.  Advanced research into such technologies will be funded from auctions of .25% of annual allowances over the entire period.
    • A Carbon Sequestration and Storage Early Deployment Program will provide financial support for early CSS projects through a "Kick-Start" Program, funded by auctioning 1% of annual allowances from 2012-2025.  Long-term incentives will be created by allocating 3% of allowances to those projects from 2012-2025, 4% from 2026-2030, dropping to 1% from 2031-2050.  Bonus allowances will also be made available, starting at 2% in 2012 and gradually dropping to 1/2 of 1% in 2050.  The legislation sets the following performance standards to qualify for allowances:  (1) Existing units that commence operation of CCS equipment in 2015 or earlier must treat at least the amount of flue gas equivalent to 100 MW of output and meet a 85%  capture and sequester standard; (2) Existing units that commence operation of CCS equipment after 2016 must achieve an average annual emissions rate of not more than 1,200 pounds of CO2/MWH; (3) New units for which construction of the unit commenced prior to July 1, 2018 must achieve an average annual emissions rate of not more than 800 pounds of CO2/MWH; (4) New units commenced on or after July 1, 2018 must achieve an average annual emissions rate of not more than 350 pounds of CO2/MWH; (5) Units at covered facilities that are not electric generation units must achieve a 85% average annual capture standard.

                   The bill also contains a variety of provisions necessary to create sequestration capacity.

    • Commercial fleet owners who purchase clean hybrid vehicles will be rewarded from 2012-2017 through an auction of 1/2 of 1% of annual allowances
    • A Federal Natural Resources program will fund federal lands firefighting efforts and implementation of a Federal Wildlife Adaption Strategy with funds from auctioning 3% of allowances in 2012, 2.5% from 2013-2022, 3% from 2023-2024, 4% from 2025-2031, and 5% from 2032-2050.
    • International efforts will be funded also through 1% for forestry capacity building, 1/2 of 1% for clean development technology deployment, and most significantly 1% in 2012 gradually rising to 7% in 2039-2050 for international climate change adaptation efforts.
    • Last, but decidedly not least, reduction of the federal deficit will be funded by 5.75% of allowances in 2012, rising gradually to 19.75% in 2031, dropping to 17.75% for 2032-33, and stabilizing at 16.75% for 2034-2050.





 

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