Carbon Sequestration Proposals from the 110th Congress

NOTE:  For a full range of Pew Center resources for Lieberman-Warner, including in depth analysis, a longer summary,  a complete timeline, and links to relevant external documents and media, please click here

The Lieberman-Warner Climate Security Act (L-W CSA). This bill would establish a cap-and-trade program within the United States requiring a 70% reduction in greenhouse gas (GHG) emissions from covered sources, which represent over 80% of total U.S. emissions. The bill as amended also includes complementary policies, such as a low carbon fuel standard and provisions aimed at enhancing energy efficiency. Taken together, the bill’s sponsors believe these provisions will reduce overall U.S. GHG emissions roughly 63% by 2050.

The L-W CSA divides the six GHGs into two categories: Group I (carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, and perfluorocarbons) and Group II (hydrofluorcarbons). For all GHGs, the bill uses the common unit of measurement CO₂ equivalent (CO₂e)—the quantity of GHGs that the U.S. EPA has determined makes the same contribution to global warming as one metric ton of CO₂. The L-W CSA would create two separate caps, one covering facilities that produce HFCs and the other covering facilities that:

·  Use more that 5,000 tons of coal annually;

·  Process, produce, or import natural gas;

·  Produce or import petroleum or coal-based fuel that when combusted will emit a Group I GHG;

· Produce for sale or distribution or import more than 10,000 CO₂e of chemicals that are group I GHGs, assuming no capture or permanent sequestration

· Emit as a by-product of HCFC production more than 10,000 CO₂e of HFCs

Overall, the two caps combined are expected to cover over 80% of total U.S. GHG emissions, although some process related emissions are not covered.

Beginning in 2012 and continuing through 2030, the L-W CSA would provide transition assistance in the form of free allowances to electric power generators (19%), manufacturers (10%), fuel producers or importers (2%), HFC producers and importers (2%), and rural electric cooperatives (1%). In addition, 5% of the total emission allowance account will be allocated to early actors from 2012-2017 and 4% for carbon, capture and sequestration activities from 2012-2030. Approximately 30.5% of the total allowance account will be set aside from 2012-2050 for other entities, including states, load-serving entities, farms and forests, coal mines, and others. Starting in 2012, 26.5% of allowances would be auctioned (including 5% for an early auction to be held shortly after enactment), with the proceeds going to energy technology deployment, low-and middle-income energy consumers, adaptation efforts in the U.S., and programs to support energy independence and national security. Over time, the auction will grow so that by 2031, 69.5% of the allowances would be auctioned and the revenue used for these purposes.

The L-W CSA allows covered facilities to satisfy up to 15% of their compliance obligation with specific domestic offsets. An additional 15% can be covered using international emission allowances. Unlimited banking is allowed and owners and operators of covered facilities can borrow up to 15% of their annual compliance obligation from future years. The L-W CSA also creates a Carbon Market Efficiency Board to monitor the carbon trading market and implement specific cost relief measures, including increased borrowing and use of offsets.

The L-W CSA includes a review of the commitments of other major-emitting nations to reduce their GHG emissions. Eight years after enactment the President is authorized to require importers of GHG emission-intensive products from countries that have not taken action comparable to the U.S. to submit credits equal to those required of domestic manufactures.

11/1/07: Reported by the Senate Committee on Environment and Public Works Subcommittee on Private Sector and Consumer Solutions to Global Warming by 4-3; 12/5/08: Reported by the Senate Committee on Environment and Public Works by 11-8.

The Lieberman-Warner Climate Security Act of 2008
 

NOTE:  For a full range of Pew Center resources for this bill, including in depth analysis, a longer summary,  a complete timeline, and links to relevant external documents and media, please click here


·         The Act, if enacted into law, would establish a market-based cap-and-trade program for greenhouse gas (GHG) emissions in the United States, and establish other measures to reduce GHG emissions.

·         This is the first cap-and-trade legislation to proceed to the Senate floor through regular order—that is, through the committee process. A previous version of this bill, then titled S.2191, was passed 11-8 by the Senate Environment and Public Works (EPW) Committee in December 2007. The version that will debated on the Senate floor has been extensively revised from the version passed by the EPW committee.

·         An estimated 87% of U.S. GHG emissions would be subject to the bill’s cap-and-trade program. Those required to submit emissions allowances under the program include: coal-fired power plants and other entities that use more than 5,000 metric tons of coal, natural gas processors and importers, petroleum processors and refiners, manufacturers and importers of more than 10,000 metric tons of GHGs (as measured in CO2 equivalents), and any entity that emits more than 10,000 metric tons (CO2e) of HFCs as a byproduct of the manufacture of hydrochlorofluorocarbons (HCFCs).  The bill establishes a separate cap-and-trade system for HFCs produced or imported (including those in products and equipment).

·         The cap-and-trade program would reduce GHG emissions from covered sectors by 4% below 2005 levels by 2012; 19% below 2005 levels by 2020; and 71% below 2005 levels by 2050.

·         The bill would allocate 75.5% of all allowances for free in 2012— including 18% to power plants, 11% to manufacturers, 2% to petroleum refiners, and 0.75% to natural gas processors (transitioning to zero in 2031); 12.75% to electricity and natural gas local distribution companies for the benefit of energy consumers, and 15% to states, etc. The proportion of allowances auctioned would increase from 24.5% in 2012 to 58.75% by 2032.

·         The bill would establish numerous measures to contain the cost of the cap-and-trade program, including allowing the use of domestic and international offsets, and the banking and borrowing of allowances; establishing a Carbon Market Efficiency Board empowered with certain cost-relief powers; and establishing a “cost-containment auction” of a fixed quantity of allowances each year that will initially be offered only to those with compliance obligations and within a certain price range. The bill also establishes a working group that will create regulations designed to protect the market from fraud and manipulation.

·         The bill would provide funds to compensate low-income energy consumers and assist in worker transition.

·         The bill would provide funding and incentives for development and deployment of geological carbon capture and sequestration (CCS) technology, with a goal of constructing 5-10 commercial coal-burning electricity facilities using CCS.

·         The bill would also provide funds for:  renewable energy; increasing the energy efficiency of buildings, appliances, manufacturing; research into low-carbon electricity generation and advanced energy projects; increasing the use and manufacture of hybrid and advanced vehicles; and increasing the production of cellulosic biofuels. It also includes a low-carbon fuel standard.

·         The bill would provide funds for the states for mass transit projects, and wildlife conservation and adaptation projects, among others.

·         The bill has a number of international provisions, including a measure that would require importers of certain commodities from countries that do not have GHG control programs to submit special allowances, as well as funds for assisting vulnerable communities abroad, promoting international technology development, and conserving forests and wildlife in other countries.

 

Energy Savings Act of 2007. This bill contains various provisions to promote biofuels, energy efficiency, and carbon capture and storage. It establishes a renewable fuel standard of 8.5 billion gallons in 2008, increasing to 36 billion gallons by 2022, and directs the President to promulgate regulations to ensure that motor and heating fuels sold within the United States contain the applicable volume of renewable fuels. The bill requires that renewable fuels produced from facilities built after enactment shall achieve at least a 20% reduction in life-cycle greenhouse gas (GHG) emissions compared to gasoline. In addition, the bill directs the Secretary of Energy to provide grants for the electric vehicle demonstration program. Grant recipients must submit an annual report to the Secretary on data relating to vehicle, performance, lifecycle costs, and GHG emissions. The bill also directs the Secretary to carry out fundamental science and engineering research to develop new approaches to capture and store, recycle, or reuse carbon dioxide.

The Department of State, Foreign Operations and Related Programs Appropriations Act, 2008. This bill amends the Foreign Assistance Act of 1961 to allow funds appropriated for agriculture, rural development, nutrition, population and health, energy, and conservation activities, and for the Economic Support Fund, to be used to support tropical forestry and biodiversity conservation activities and energy programs aimed at reducing greenhouse gas emissions. The bill also appropriates $195 million to support clean energy and other climate change programs in developing countries, including energy conservation, energy efficiency, clean energy technologies, carbon sequestration, and climate change mitigation and adaptation programs.

Note: On 12/17/2007, the substitute House amendments to the Senate amendment changed this bill to the Consolidated Appropriations Act, 2008. The bill was further amended with a subsequent Senate amendment to the House amendments to the Senate amendment. A House Appropriations committee print presents the final corrected version, including the joint explanatory statements. The Act contains: Division A: Agriculture; Division B: Commerce-Justice-Science; Division C: Energy-Water; Division D: Financial Services; Division E: Homeland Security; Division F: Interior; Division G: Labor-HHS-Education; Division H: Legislative Branch; Division I: Military-Veterans; Division J: State-Foreign Operations; Division K: Transportation-HUD; Division L: Supplemental Appropriations. 

6/18/07: Reported by the House Committee on Appropriations by voice vote. 6/22/07: Passed the House by a vote of 241-178. 7/10/07: Reported favorably by the Senate Committee on Appropriations by voice vote. 9/6/07: Passed the Senate by 81-12.

12/17/2007: The House agreed to the Senate amendment with the 1st House amendment by 253 - 154. 12/17/2007: The House agreed to the Senate amendment with the 2nd House amendment by 206 - 201. 12/18/2007: The Senate concurred in the House amendment (No. 2) to the Senate amendment by 70 - 25. 12/18/2007: The Senate disagreed to the motion to concur in the House Amendment No. 1 to the Senate amendment by 48 - 46. 12/18/2007: The Senate agreed to the House Amendment No. 1 to the Senate amendment by 76 - 17. 12/19/2007: The House agreed to the Senate amendment to 2nd House amendment to Senate amendment by 272 - 142. 12/26/2007: Signed by the President (Public Law 110-161).

· Among other provisions, the bill makes a Congressional declaration that it shall be United States policy to engage in international climate negotiations with the objective of creating a new instrument that will come into force by the time that the first commitment period under the Kyoto Protocol ends in 2012. Such an instrument will, at a minimum, require binding mitigation commitments from all major emitting countries. The title also mandates the creation of an Office on Global Climate Change within the State Department.

· The bill also authorizes funds to promote research in solar energy, biofuels, marine renewable energy, and geothermal energy, and authorizes funds for carbon capture and storage research, development, and demonstration.

· In addition, it directs the President to “establish an interagency committee to ensure cooperation and coordination of all Federal research activities” pertaining to human-induced or natural changes in the global environment, including global climate change.

· The bill contains provisions which direct each federal agency to annually inventory and report its GHG emissions, and requires the EPA to promulgate annual greenhouse gas (GHG) reduction targets for the total emissions of all agencies taken as a whole, for each fiscal year from 2010 through 2050.

· The bill also sets GHG emissions standards for federal vehicle fleets, based on the California Code of Regulations, and requires the Secretary of Energy to establish new efficiency standards for federal buildings.

· The bill requires the Secretary of the Interior to develop a methodology for assessing the nation’s capacity to store carbon dioxide in geologic formations. It also requires the Secretary to conduct an assessment of the amount of carbon stored in terrestrial, aquatic, and coastal ecosystems, including estuaries; and to determine the potential for increasing carbon storage in natural ecosystems.

· It also requires the Secretary of the Interior to create the National Resources Management Council on Climate Change to address the impacts of climate change on Federal lands, the ocean environment, and the Federal water infrastructure. It requires the Secretary to promulgate a national strategy for assisting wildlife populations and their habitats in adapting to the impacts of global warming. The title also directs the Secretary of Commerce to develop and implement a national strategy to predict, plan for, and mitigate the impacts on ocean and coastal ecosystems from global warming, relative sea level rise and ocean acidification; and ensure the recovery, resilience, and health of ocean and coastal ecosystems.

· The title also authorizes $250 million to establish a National Integrated Coastal and Ocean Observation System to improve the nation’s ability to measure, track, explain, and predict events related directly and indirectly and indirectly to weather and climate change.

· The Transportation and Infrastructure section of this bill, among other provisions, mandates the establishment of a Center for Climate Change and Environment within the Department of Transportation, which would plan, coordinate, and implement department-wide initiatives and research to reduce transportation-related energy use, mitigate the effects of climate change, and address the impacts of climate change on transportation and infrastructure. The title also directs Secretary of Transportation and the Administrator of the EPA to report to Congress on low-cost solutions to reducing congestion and transportation-related energy use and mitigating the effects of climate change.

· The Energy and Commerce section of this bill contains a number of energy efficiency provisions, among them: improving the schedule for consensus standards, updating appliance test procedures, new efficiency standards for lighting, residential boilers, industrial motors, washing machines, and dishwashers. The title also establishes new efficiency standards for power supplies and transformers for consumer electronic equipment.

· In addition, the bill mandates the creation of an Office of High-Performance Green Buildings, and sets out increased efficiency standards for federal buildings, as well as increased efficiency standards for state residential and commercial building codes. It also authorizes grants to support state implementation of green building codes.

· The title also provides technical assistance and a revolving fund for implementing combined heat and power (CHP) systems and sustainable energy infrastructure. Finally, the title contains a number of provisions promoting creation of a Smart Grid, and mandates the promulgation of a National Action Plan for Demand Response.

· The tax provisions of this bill expand and extend tax credits and deductions for renewable energy, energy efficient appliance credit for a variety of appliances produced after 2007, energy-efficient commercial buildings deduction for five years (through December 31, 2013), and allows electric utilities to depreciate smart electric meters over a five year period. In addition, the bill orders the Secretary of the Treasury and the National Academy of Sciences to review the Internal Revenue Code of 1986 to identify the types of and specific tax provisions that have the largest effects on carbon and other greenhouse gas emissions and to estimate the magnitude of those effects.

Moratorium on Uncontrolled Power Plants Act of 2008. This bill would, upon enactment, prohibit all permitting authorities from issuing a permit for a proposed new coal-fired power plant under the Clean Air Act, unless the permit requires said plant to use technology to capture and permanently sequester 85% of its total annual carbon dioxide emissions. The moratorium would apply until a program to reduce greenhouse gas emissions to 80% below 1990 levels by 2050 is in effect. Any coal-fired power plant that commences construction after the bill’s introduction, and does not install and operate such technology, would not be eligible to receive free or below-market-price emissions allowances under any future program to address global warming adopted by Congress or the EPA.