Sens. Kerry (D-MA) and Lieberman (I-CT) introduced their climate legislation, the “American Power Act,” this afternoon. The pair worked closely with Sen. Graham (R-SC) on the legislation, but, due to other current political issues, he refrained from taking part in introducing the bill. The senators also worked closely with industry to put together a bill that is intended to have the best chance of moving forward.
The close to 1,000-page piece of legislation calls for a 17 percent reduction in greenhouse gas pollution from 2005 levels by 2020, 42 percent by 2030 and 83 percent by 2050. In general, these goals would be accomplished by a cap-and-trade program covering a significant percentage of the nation’s emissions. In a move designed to assuage industry, the bill places an initial price collar on the price of emission allowances of $12-$25, which will provide certainty regarding compliance costs. These collar prices will increase modestly over time according to a formula in the legislation. The bill is based on five key principles:
- Consumers should come out on top.
- We need energy made in America.
- America needs to regain its competitive edge and lead the global clean energy economy.
- We need a new approach to reducing emissions that recognizes the different needs of our different industries.
- The system must be simple, stable and secure.
According to this summary, the bill also includes 12 titles covering many issues, including expanding nuclear energy and developing and deploying carbon capture and storage technology. These technologies are seen as critical in reaching the greenhouse gas reduction goals.
Nuclear technology is offered a number of incentives to further the development of the technology. The legislation will provide $54 billion in loan guarantees, as well as a manufacturing tax credit for the domestic production of new nuclear plants. Regulatory risk insurance would be provided for 12 projects and a new investment tax credit would be given to promote construction of new generating facilities.
The legislation provides annual incentives of $2 billion for research and development of carbon capture and storage technologies. Incentives are also provided for the commercial deployment of up to 72GW of CCS-equipped power. Tax incentives are provided for retrofitting existing coal-fired power plants; however, the precise figures for the tax credit are yet to be determined. As additional incentive, emission allowances would also be distributed to plants that capture and store CO2 emissions. Distribution would be based on capture-rate, with plants that capture and store a higher percentage of their CO2 being awarded more allowances.
Industrial sources won’t be subject to the reduction plan until 2016, allowing for new technologies to be developed and incorporated. According to the summary, once the sources are covered, the legislation will ensure competitiveness by “fully offsetting direct compliance costs as well as potential electricity and natural gas rate increases. This assistance is distributed in a way that rewards efficiency investments, makes our manufacturing facilities more competitive, and keeps American jobs here at home.”
Another goal of the bill is to reduce U.S. dependence on foreign oil. To help meet this objective, the legislation would provide over $6 billion annually to the transportation sector to increase efficiency and decrease dependence. There are financial incentives for heavy-duty trucks to transition to heavy-duty fleets powered by natural gas. It also calls for investments to be made on electric vehicles.
In what may be a controversial part of the legislation, the bill would promote additional offshore drilling. Coastal states, though, would have the opportunity to prevent drilling within 75 miles of their shores.
Sen. Kerry said, “This is a bill for energy independence after a devastating oil spill, a bill to hold polluters accountable, a bill for billions of dollars to create the next generation of jobs, and a bill to end America’s addiction to foreign oil and protect the air our children breathe and the water they drink.” Sen. Lieberman added, “We are proud to have support from a growing and unprecedented coalition of business, national security, faith, and environmental communities, who are energized to work hard to pass this bill this year.”
For more information on the bill go to http://kerry.senate.gov/americanpoweract/intro.cfm.