After much anticipation and a few missed deadlines, Senators John Kerry (D-MA) and Joe Lieberman (I-DE) released details of their proposed cap-and-trade bill on May 12, 2010. Noticeably missing from the conversation was Senator Lindsay Graham (R-SC), who played a large roll in crafting the legislation but has recently pulled back from its introduction over a fight with Senate Leadership on the handling of immigration issues on Capitol Hill.
The bill is substantially different from the “Waxman-Markey” bill introduced in the House of Representatives last year. The American Power Act, as Kerry and Lieberman have titled the bill, has a number of components that could affect the future of energy use and production in America if passed. Highlights include:
- Revenues from a cap-and-trade system will be dedicated to reducing the national debt and rebated to consumers.
- Manufacturers are exempted from carbon reductions until 2016 and after that period, carbon-heavy industries will receive allowances to offset compliance costs.
- A price collar will be implemented to set carbon prices at a fixed amount over inflation to help create predictability.
- Over $7 billion is dedicated to reducing dependence on foreign oil, including infrastructure investment and tax incentives for clean natural gas (CNG) vehicle conversion.
The bill also addresses nuclear power, CNG production, clean coal, and off-shore drilling. Increased production and encouraging innovation of these fuel sources are matched with increased safeguards and requirements.
According to Kerry and Lieberman, the bill will only affect the largest polluters (7,500 factories and power plants) – those who produce 25,000 tons of carbon or more annually.