On September 30, Senators Boxer and Kerry introduced the Clean Energy Jobs and American Power Act (Boxer-Kerry), the Senate’s counterpart to the Waxman-Markey bill passed by the House of Representatives in June 2009 (H.R. 2454). In the months between the passage of Waxman-Markey and the introduction of Boxer-Kerry, the natural gas industry stepped up its lobbying efforts, sensing perhaps that it had not done as well as it could have in the House bill.

Boxer-Kerry indicates a modestly improving picture for natural gas, although the bill is still unformed in important ways, including with regard to the allocation of allowances. Unlike Waxman- Markey, Boxer-Kerry includes two new sections that may provide subsidies for natural gas:

  • Section 181 creates an EPA program (the Clean Energy and Accelerated Emissions Program) that will provide subsidies to dispatchable power sources that reduce greenhouse gas emissions (GHGs) per megawatt hour below a 2007 baseline.
    • To be eligible, a project must not have received a production tax credit or investment tax credit either in the first year it went into service or in 2009.
    • Projects must also reduce GHGs per megawatt hour by 25% below the 2007 baseline for 2010-2020, 40% for 2021-2025, and 65% for 2026-2030.
    • The bill also directs EPA to give priority to (i) projects that are designed to integrate intermittent renewables, (ii) energy storage projects used to support renewables, (iii) power generation projects with carbon capture and sequestration (CCS) that are not eligible for other incentives, and (iv) projects that achieve the greatest reduction in GHGs per dollar of incentive payment.
    • The program created in section 181 holds promise for the natural gas industry. How meaningful a boost it represents will depend on decisions about the allocation of allowances or appropriations that support it. Those decisions have not yet been made.
  • Section 182 creates an EPA-administered grant program to advance (i) the deployment of low greenhouse-gas-emitting end-use technologies, including carbon capture and sequestration technologies, for natural gas electricity generation; and (ii) low greenhouse-gas-emitting end-use technologies fueled by natural gas, including carbon capture and storage, for residential and commercial purposes, through research, development, demonstration, and deployment of those technologies. These grant programs have yet to receive funding and are not slated to receive an allocation of allowance revenues in the current draft.