The Evolution and Anatomy of
Recent Climate Change Bills in the U.S. Senate:
Critique and Recommendations
Kenneth RichardsSchool of Public and Environmental Affairs
&
Stephanie Hayes RichardsBloomington Energy and Environmental Intelligence
The Evolution and Anatomy of
Recent Climate Change Bills in the U.S. Senate:
Critique and Recommendations
• The two major climate change bills in the U.S. Senate were:S. 2191: America’s Climate Security Act of 2007 (Lieberman-Warner)S. 1766: Low Carbon Economy Act of 2007 (Bingaman-Specter)
• Initial analysis was published in the Environmental Law Reporter
• On May 20, Senator Barbara Boxer introduced a Manager’s Amendment to the Lieberman-Warner Bill (S. 3036)
• Manager’s Amendment scheduled to be discussed on the Senate floor this week
• Summary of draft analysis of Manager’s Amendment presented today
The Evolution and Anatomy of
Recent Climate Change Bills in the U.S. Senate:
Critique and Recommendations
• Emission Reduction Targets
• Cost-Containment Mechanisms
• Point and Scope of Regulation
• Incentives for Activities Outside the Covered Facilities
• Distribution and Auction of Allowances
• Earmarking and Use of Auction Revenues
• Strategic Approach
Major Features of the Manager’s Amendment (S. 3036)
• Emission reduction targets similar to Lieberman-Warner bill
• Allocation of allowances closely resembles Lieberman-Warner bill
• Point and scope of regulation is primarily upstream, similar to Bingaman-Specter bill
• Cost containment mechanisms include a safety valve, as does the Bingaman-Specter bill
Major Features of the Manager’s Amendment (S. 3036)
• Enhanced environmental integrity, including minimum reserve price for allowances
• Movement towards behavior changes with more balanced technology approach
• Reduced technological lock-in, particularly with CCS, elimination of 4 billion CCS bonus allowances
• Deficit reduction fund, which directs some auction revenues to General Fund
• Reduced interference with price signal
•Requirement of “reproducibility” in offset estimation methods
Historical EmissionsS. 1766
S. 2191
S. 1766 Cond
IPCC 50
IPCC 85
2000 Emissions Levels
S. 3036
Business As Usual
Emission Reduction Targets
Cost-Containment Mechanisms
Lieberman-Warner
(S. 2191)
Bingaman-Specter(S. 1766)
• Trading
• Borrowing up to 15 percent of emissions up to 5 years from use year at 1.1 times “the number of years beginning after the use year and before the source year
• Unlimited Banking
• Trading
• No borrowing provision
• Unlimited banking
• “Technology Accelerator Payment” of $12/metric ton CO2 equivalent in 2012 (5 percent increase each year)
Cost-Containment Mechanisms
Manager’s Amendment
(S. 3036)
• Trading
• Borrowing up to 15 percent of emissions up to 5 years from use year at 10 percent compound interest
• Unlimited Banking
• Emergency “off ramps”Increase allowances borrowed
Adjust repayment periodRelaxed constraints on international
allowances/off-sets
•Minimum reserve price for Regular Auctions of $10 in 2012 (increases by 5 percent/year)
• Cost containment auctionsMinimum price of $22 per allowance | Maximum price of $30 per allowanceIncreases by 5 percent/year after 2012
Point and Scope of Regulation
Energy Source
Direction of Regulation
Lieberman-Warner
S. 2191
Bingaman-Specter
S. 1766Manager’s Amend
S. 3036
Coal Downstream Downstream Downstream
Natural Gas Downstream Upstream Upstream
Oil Upstream –transportation fuel; Downstream –industrial
Upstream Upstream
Nonfuel chemicals
Upstream Upstream Upstream
% Emissions Regulated
80 percent 85 percent 84 percent
% Emissions Excluded
15 percent 15 percent 16 percent
Activities Outside the Cap
Activity
Accounting Method
Lieberman-Warner
S. 2191
Bingaman-Specter
S. 1766Manager’s Amend
S. 3036
Domestic Offsets Off Budget(15 percent)
Off Budget(Unlimited)
Off Budget(15 percent)
Int’l Offsets NA Off Budget (10%)
Off Budget(5%; Carry Over)
Int’l Market Allowances
Off Budget (15%)
Off Budget(Unlimited)
Off Budget(Unlimited; CO)
Early Action On Budget(1-5%; 2012-2016)
On Budget(1%; 2012-2020)
On Budget
(1-5%; 2012-2025)
CCS Bonuses On and Off Budget(4% plus 4 B bonus)
On Budget(8%)
On Budget(1-4%; Kick Start)
Ag and Forestry On Budget (5%)
On Budget(5%)
On Budget(4.25 – 4.5%)
Int’l Forest Projects
On Budget
(3%)
NA On Budget
(1%; Carry over)
0
1,000
2,000
3,000
4,000
5,000
6,000
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Year
Distribution of Allowances under Lieberman-Warner Bill (S. 2191)
Auction
Forest Carbon
States
CCS
Agriculture and Forestry
Industry
Early Action
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Year
Distribution of Allowances under Bingaman-Specter Bill (S. 1766)
Auction
States
CCS
Early Action
Agriculture and ForestryIndustry
0
1,000
2,000
3,000
4,000
5,000
6,000
2012 2015 2018 2021 2024 2027 2030 2033 2036 2039 2042 2045 2048
Other
Auction
Forest Carbon
States
CCS
Early Reduction
Agriculture
Industry
Distribution of Allowances under Manager’s Amendment (S. 3036)
Auction
States
CCS
Early Action
Agriculture and Forestry
Industry
Forest Carbon
Other
Distribution of Auction Revenues
Program Area
Percentage
Lieberman-Warner
S. 2191
Bingaman-Specter
S. 1766Manager’s Amend
S. 3036
Energy Assistance Fund
20% 17% Decreasing
4%Increasing
Climate ChangeWorker Training
5% NA 14%Increasing
Adaptation Fund 20% 33%Increasing
29%Increasing
Energy Technology Development
55% 50% 18%Decreasing
Energy EfficiencyConservation Block
Grants
NA NA 8%Decreasing
Deficit Reduction NA NA 23%Increasing
Climate Security Act
5% NA 3%
Decreasing
Strategic Approach “Report Card”
Sector
Grade
Lieberman-Warner
S. 2191
Bingaman-Specter
S. 1766Manager’s Amend
S. 3036
Buildings A F A
Industry B B B+
Forestry A- C A
Waste C B B+
Energy B B B+
Transport C D A-
Agriculture C D B-
Water C F B
Infrastructure B- B+ B+
Human Health C F B-
Tourism C F B-
Manager’s Amendment (S. 3036) and Coal/Electric Power
•Important changes from previous bills
• Reduced level of bonus payments for CCS capture, but introduction of “Kick-Start program” to fund development
• Reduced emphasis on price subsidies• Reduced earmarking for technology development • Increased funding for support of worker
• Remaining issues:• Lack of distinction between utilities subject to state ratemaking
and those that are not• Design of “cost-containment auction”• Development of offset estimation methods and extension to
international offsets