More Greenhouse Gas Bills Introduced In U.S. Senate

Already in this young Congress, four significant climate change regulatory proposals are circulating in the U.S. Senate.

On January 16^th, Senator Bernard Sanders (I-VT) and Senate Environment and Public Works Committee Chairwoman Barbara Boxer (D-CA) introduced S. 309, the “Global Warming Pollution Reduction Act.” The plan – the most stringent global warming legislation introduced in the 110th Congress to date – would require the U.S. to cap greenhouse gas (GHG) emissions at 1990 levels by 2020. The national GHG cap would further tighten over the next 30 years until the cap reaches an 80% reduction below 1990 levels in 2050.

On January 17^th, Senators Dianne Feinstein (D-CA) and Tom Carper (D-DE) introduced S. 317, the “Electric Utility Cap and Trade Act of 2007.” The bill would cap GHG emissions from the electricity sector at 2006 levels beginning in 2011, with more stringent cuts phasing in over time.

Earlier this month, Joseph Lieberman (D-CT) and Senators John McCain (R-AZ) introduced S. 280, the “Climate Stewardship and Innovation Act of 2007.” Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM) also has circulated draft legislation that would establish mandatory GHG limits.

These four proposals are instructive as they reflect a wide range of potential approaches to regulating GHG emissions. Numerous other bills are expected.

The key features of the Sanders-Boxer and Feinstein-Carper proposals are described below. A summary of the Lieberman-McCain and Bingaman bills is available on the Van Ness Feldman website.

Sanders-Boxer Proposal

• The Sanders-Boxer bill sets out a portfolio of emissions reduction targets, regulatory programs, and incentives for reducing U.S. GHG emissions. Under the proposal, U.S. GHG emissions would be capped at 1990 levels in 2020. This reduction target would become more stringent over time, eventually reaching an 80% reduction below 1990 levels by 2050. The Environmental Protection Agency (EPA) would be authorized to require additional reductions if scientific review finds it necessary to prevent substantial climate change.
• The bill does not mandate a cap-and-trade program, but instead authorizes EPA to establish such a program if it chooses. The bill directs EPA to implement a series of regulatory programs aimed at reducing emissions, including GHG standards for vehicle emissions, GHG standards for new and existing power plants, energy efficiency performance standards, renewable portfolio standards, and a more stringent renewable fuel standard.
• If EPA chooses to implement a cap-and-trade program, it is directed to consider a declining cap with a “technology-indexed stop price.” Under such a program, the emissions cap would decline by a fixed percentage each year. However, if the annual allowance price were to exceed the technology-indexed stop price, the emissions cap would remain fixed for a certain period. This mechanism, however, would not delay or suspend the obligations to achieve the stringent reduction targets described above.

Feinstein-Carper Proposal

• The Feinstein-Carper bill is narrower in scope and less stringent than the Sanders-Boxer proposal. It would establish a cap-and-trade program for the electricity sector only, capping GHG emissions at 2006 levels in 2011. The cap would become gradually more stringent. It would limit emissions to reach 2001 levels by 2015 and decline at specified rates indefinitely thereafter. The bill would authorize EPA to require additional reductions if scientific review finds it necessary to prevent substantial climate change.  
• The bill directs EPA to distribute emissions allowances to covered electric generating units who then could buy and sell allowances as needed to meet their individual targets. The allowance allocations would be based on “output,” i.e., the amount of electricity generated by a facility. This approach is relatively more favorable to power companies with significant amounts of natural gas, renewable energy and incremental nuclear power generation. In the first year, 85% of total allowances would be allocated at no cost, with the remainder auctioned. The share of allowances auctioned would increase gradually over time until reaching 100% in 2036 and thereafter.
• The bill would award “offset” allowance credits for projects reducing GHG emissions in sectors not covered by the cap, e.g., the commercial and industrial sectors. The bill provides that, if EPA determines that allowance prices are at a level that will cause “significant” harm to the U.S. economy, it may allow covered entities to “borrow” up to 10% of their needed allowances from future years or use up to 50% international credits to satisfy their obligations.
• Senator Feinstein’s office reports that she plans to introduce four more bills addressing climate change and energy issues: (1) a cap-and-trade program for the industrial sector; (2) a bill that increases fuel economy standards by 10 miles per gallon over the next 10 years; (3) a bill to promote bio-diesel, E-85, and other low-carbon fuels; and (4) an energy efficiency bill modeled after California’s energy efficiency programs.
• Both the Sanders-Boxer and Feinstein-Carper bills would impose specific emissions standards on newly constructed electric generating units. The Sanders-Boxer bill would require new generating units to have emissions no greater than that of a natural gas combined cycle facility. The Feinstein-Carper bill would require new coal-fired units to employ “qualified clean coal technologies.”