So, Kerry Lieberman (Graham?), also known as the American Power Act, is here. What does it mean?
My immediate reaction is that, in a big picture sense, they got it just about right. The fundamental issue, which was previously acknowledged by Senator Graham (can we start calling him “he who must not be named?”), is that we’re not going to solve the energy independence or climate change problems unless we put a price on carbon. This bill does that.
Frankly, the rest of the issues really only matter either to particularly constituencies or, as a related concern, to particular members of Congress. What are some of these other issues and how would they be handled in this bill? We’ll be getting a more detailed client alert out shortly, and if you can’t wait, you can review the short summary or the section by section analysis, but here’s the very quick version.
Basic cap-and-trade provisions –
Goal is to reduce CO2e by 4.75 percent of 2005 levels by 2013 and 83% by 2050, with interim targets in 2020 and 2030
EPA administrator will set allowance numbers to reach those targets
Only facilities emitting >25,000 tpy CO2e will be subject to the program
Generating facilities are subject to the program in 2013; manufacturing facilities will not be subject until 2016.
Initial price floor of $12/ton and price ceiling of $25/ton
Limits on who can participate in the carbon market to avoid market manipulation
Allowances used primarily to cushion consumers from energy price increases, but also to support various industries
Includes a “WTO-consistent border adjustment mechanism.” In the absence of a global agreement, tariffs will be imposed on countries without similar GHG controls
Nuclear power – lots of help for the nuclear industry
Off-shore drilling – Provides substantial revenue sharing to certain coastal states, but allows states to prohibit leasing within 75 miles of their coastline
Coal – significant support for carbon capture and sequestration
Renewable energy – Does not include a national renewable energy standard, or RES, though does provide for federal assistance to encourage development of renewable energy technology
Preemption – preempts state cap-and-trade programs, but not other state regulation of GHG. Precludes EPA regulation:
No listing of GHG as criteria pollutants based on climate change impacts
No listing as hazardous air pollutants based on climate change impacts
Limitation – but not complete preemption – of GHG regulation under existing NSR authority
Don’t yell at me if this list does not include your favorite provision. This is a blog, not a treatise. As to the big political picture, I still think that, if Senator Graham can be brought back on board, there is a reasonable chance that this bill passes. If not, then I’m pretty skeptical.