Proposed Bills on: Agriculture
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.
The cap on facilities producing HFCs would start in 2010 at 300 million metric tons of carbon dioxide equivalent (MMTCO2e) and decline to 90 MMTCO2e by 2037, remaining at that level through 2050. Emissions from all other covered facilities would be capped at 5775 MMTCO2e in 2012, with this cap decreasing annually to 1732 MMTCO2e in 2050. The two caps combined would result in roughly a 19% reduction from 2005 levels in 2020 and a 70% reduction from 2005 levels by 2050.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.
Sponsor: Sen. Joseph I. Lieberman (I-CT) (9 Cosponsors)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.
Combating Climate Change Through Individual Action Act of 2008. This bill would establish tax credits for farmers who incur expenditures in the process of sequestering carbon in soils and in conserving soils. These tax credits would be limited to $10,000 per taxpayer per year. The bill would also establish qualified planting expenditure credits for taxpayers that purchase and plant trees, plants, shrubs, or bushes, as long as such plants are quick-growing, appropriate for the region in which it is planted, and effective in capturing carbon; taxpayers who purchase and install a vegetated roof system would also be eligible for a tax credit. The tax credit would be limited to $5,000 for a taxpayer’s principal residence, and $50,000 for a taxpayer’s business. In addition, the bill would establish a tax credit for: conversion of cropland to pasture for grazing purposes, or to grassland or rangeland; and for reforestation or afforestation of land. The amount of this latter credit would be determined by the efficacy of carbon sequestration and prevention of soil erosion. Finally, the bill would require the Secretary of the Treasury to reassess these credits in the case of any substantial change in the carbon sequestration market, including the enactment into law of a carbon cap-and-trade program.
Sponsor: Rep. Leonard Boswell (D-IA) (1 Cosponsors)
Energy Conservation Through Trees Act. This bill would authorize the Secretary of Energy to provide financial, technical, and other assistance to retail power providers to establish or continue targeted residential tree-planting programs. In order to qualify for assistance, such programs would have to demonstrate that the planting of trees contributes to reduced energy use by increasing shade or providing wind protection. In its finding section, the bill states that the utility sector is the largest single source of greenhouse gas emissions in the United States, producing approximately 1/3 of national emissions—and that heating and cooling homes accounts for nearly 60% of residential electricity usage.
Sponsor: Rep. Doris Matsui (D-CA) (5 Cosponsors)
Investing in Climate Action and Protection (iCAP) Act. This bill would amend the Clean Air Act to establish a cap-and-trade system for greenhouse gas (GHG) emissions, and for other purposes.
The bill would regulate carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulfur hexaflouride (SF6), hydrofluorocarbons (HFCs), and perfluorocarbons (PFCs). The bill would also regulate nitrogen trifluoride (NF3), which is a GHG not covered by the Kyoto Protocol, and, in addition, would regulate any other anthropogenic gas the Administrator of the EPA determines to have a global warming potential equal to or greater than carbon dioxide. According to the bill’s authors, the legislation would cover 94% of U.S. GHG emissions—87% through cap-and-trade.
The cap-and-trade program would reduce covered emissions to 2005 levels by 2012, to 20% below 2005 levels by 2020, and to 85% below 2005 levels by 2050.The cap-and-trade program would cover emissions from: fossil fuel-fired power plants that emit more than 10,000 carbon dioxide equivalents (CO2e) a year; industrial facilities that emit more than 10,000 CO2e a year; producers or importers of petroleum or coal-based fuels, the combustion of which will produce more than 10,000 CO2e a year; natural gas local distribution companies (LDCs) who deliver natural gas that will produce more than 10,000 CO2e a year when combusted; producers or importers of more than 10,000 CO2e a year of HFCs, PFCs, SF6, or NF3, or any other fluorinated gas that is designated by the Administrator as a GHG; and “commercial-scale” geological carbon sequestration sites to cover any leakage.
In addition to the cap-and-trade program, the act will cover an additional 7% of U.S. GHG emissions through financial incentives to farmers and forest managers to reduce GHG emissions and increase storage as well as performance standards for coal mines, landfills, wastewater treatment operations, and large animal feeding operations that emit more than 10,000 CO2e a year. The bill would direct the Administrator to publish and subject to regular review a list of such sources not later than 90 days after enactment, and establish the relevant performance standards not later than 2 years after that.
The bill would also set mandatory performance standards for coal-fired power plants with a generating capacity of 25 megawatts or more, and which derive more than 50% of annual fuel input from coal or petroleum coke. Plants which commence construction on or after January 1, 2009, would be required to capture and sequester 85% of their CO2 emissions. Plants which commence operation before January 1, 2020, would have to be in compliance with the performance standard by either January 1, 2016, or four years after they commence operation, whichever is later.
The bill would auction 94% of all allowances in 2012, transitioning to a 100% auction in 2020.
Allowance auctions would begin in 2010. The bill would establish a number of funds in the U.S. Treasury, and deposit in them the following percentages of revenues from allowance auctions from 2010-2019. Dollar amounts listed in the following table are the bill’s author’s estimates.
|
Fund |
2010-2019 |
2020-2050 |
2012-2050 |
||
|
% of allowance value |
Est. annual funding ($ billions) |
% of allowance value |
Est. annual funding ($ billions) |
Est. cumulative funding ($ billions) |
|
|
General Fund of the Treasury |
51
|
110 |
48
|
110 |
4,290 |
|
Climate Trust Rebate Fund |
7.5
|
7 |
|||
|
Low-Carbon Technology Fund
|
12.5 |
24 |
12.5 |
25 |
963 |
|
National Energy Efficiency Fund |
12.5
|
24 |
12.5 |
25 |
963 |
|
Agriculture and Forestry Carbon Fund |
4.5
|
8 |
5 |
10 |
378 |
|
Climate Change Worker Transition Fund |
1.5
|
3 |
2 |
4 |
147 |
|
National Climate Change Adaptation Fund |
2
|
7 |
2.5 |
9 |
332 |
|
Natural Resource Conservation Fund |
1.5
|
2 |
|||
|
International Forest Protection Fund |
1.5
|
3 |
2 |
4 |
147 |
|
International Clean Technology Fund |
3.5
|
7 |
4 |
8 |
301 |
|
International Climate Change Adaptation Fund |
2
|
4 |
2.5 |
5 |
185 |
Funds from the General Fund of the Treasury and the Climate Trust Rebate Fund would be used for refundable tax credits and rebates to compensate consumers for higher energy prices resulting from the bill. Cash rebates would be directed at low-income households and will be distributed through the Electronic Benefits Transfer system used for food stamps. All households earning under $110,000 would be eligible for some benefit, with benefit levels phasing out gradually for households earning $70,000 to $110,000.
In addition to auctions, 6% of allowances would be allocated to energy-intensive, trade-exposed industries each year from 2012-2019.
Entities would be able to fully bank allowances. Entities would also be able to borrow allowances from future years, and would be required to pay back borrowed allowances within 5 years, at an interest rate of 10% per year.
Entities would be able to meet up to 15% of their compliance obligation with EPA-approved domestic offsets, and an additional 15% of their compliance obligation with EPA-approved international emission allowances or offsets. Eligible domestic offset projects would be limited to: agricultural projects that reduce GHGs resulting from enteric fermentation or manure management in soils, or that increase biological sequestration of carbon through afforestation or reforestation; projects which reduce fugitive GHGs from petroleum and natural gas systems in the US; and projects that reduce GHG emissions from coal mines (agricultural and coal mine projects are only eligible if they are not subject to the performance standards discussed above). The bill would direct the Administrator to promulgate regulations for eligible international offset projects; forestry or land use projects, and projects involving the destruction of HFCs, would not be eligible.
The bill would establish an Office of Carbon Market Oversight (OCMO) within the Federal Energy Regulatory Commission. The OCMO would have the authority to oversee the carbon market to prevent fraud and market manipulation.
The bill would establish a system of international reserve allowances to begin in 2020. If the President determines that a given country has not taken “comparable” action to reduce its GHG emissions, the President would be authorized to require importers of energy-intensive, trade-exposed primary goods from those countries to purchase and submit special international reserve allowances. These allowances would not be able to be used for compliance in the regular cap-and-trade system, and proceeds from the sale of these allowances would be used to supplement the International Clean Technology Fund established by the bill.
The bill contains a provision that would permit California to regulate GHG emissions from the tailpipes of automobiles, as well as other states which have adopted the same standards.
The bill would also amend the Clean Air Act to establish a low-carbon fuel standard. The Administrator would be directed to no later than 2010, establish a methodology for determining the lifecycle GHG emissions per unit energy of all transportation fuels for which such a determination does not already exist. The EPA would establish a fuel emission baseline, and would require transportation fuel providers to reduce, on an annual average basis, the average lifecycle GHG emissions of those fuels, resulting in a reduction of at least 10% from the baseline by 2028. The performance standard used to determine the baseline would be revised in 2033 and every 5 years thereafter. The EPA would set up a market for credits, through which producers who achieve greater lifecycle emission reductions than the baseline would be able to earn credits to trade or sell to other producers, or bank for future use.
In addition, the bill would require the EPA to develop comprehensive regulatory standards for the underground injection of CO2, and would requires the DOE to develop model building efficiency codes that states would be required to adopt and enforce in order to become eligible for funding from the National Energy Efficiency Fund that would be established by the bill.
Sponsor: Rep. Edward J. Markey (D-MA) ( Cosponsors)