Senator Boxer Releases Full Draft of US Climate Bill
Senator Barbara Boxer released a 923-page draft of the Clean Energy
Jobs and American Power Act over the weekend, the Senate version of
climate and energy legislation, for the first time specifying emissions
allocations and costs proposed in the bill.
"We've reached another milestone as we move to a clean energy future,
creating millions of jobs and protecting our children from dangerous
pollution," Boxer, chairperson of the Environmental and Public Works
Committee, who wrote the bill with Senator John Kerry, said on Friday.
In terms of emissions allocation, the Senate bill in many respect
mirrors provisions in the House version passed last summer (H.R. 2454,
the Waxman-Markey American
Clean Energy and Security Act of 2009.)
Electric utilities & coal
Boxer's bill uses identical language
to the Waxman-Markey bill, allocating 30 percent of the free emissions
allowances available to state-regulated local electric distribution
companies (LDC's) and requiring the LDC's to use revenue generated from
those free emissions credits to protect consumers from price increases
in electricity.
Merchant (investor-owned) coal operators will receive 3.5 percent of
the free credits, and companies holding long-term purchase agreements
1.5 percent. Both would see their free allocations drop to zero between
2026 and 2030.
Manufacturing belt
The Boxer-Kerry bill diverges
slightly from the House version for energy intensive industry, including
steel, cement, chemical, paper, and glass. The Senate plan calls for a
quick 4 percent infusion of free credits starting in 2012, and rising
to 15 percent in 2014 and 2015. Many of these trade-senstive industries,
located in Rust Belt states with swing-vote senators, will see a slow
phase-out of free allowances beginning in 2015. This differs from the
House bill by providing a larger infusion of free credits in the
beginning, followed by a slower phase-out.
Natural gas
Natural gas is considered by many as an important "bridge fuel" and
touted by the colorful oil baron T. Boone Pickens in his "Pickens
Plan" to energy independence.
Similar to the House bill,
the Boxer-Kerry bill allocates 9 percent of the emissions allowances to
natural gas distribution companies, with the express mandate to use the
funds raised to cushion consumers from energy price shocks. The free
credits will be phased out by 2030.
Auto industry
Automakers receive 3 percent of the free free allocation through 2017,
with the credits used to invest in electric cars and other new
technology R&D. Like the House, the bill will reduce the free allowance
to 1 percent from 2018 to 2025.
EPA cost analysis
Coinciding with the release of the
draft bill, Boxer also released an
analysis by the Environmental Protection Agency (pdf) saying the
Senate bill will cost the average American household roughly the same as
the House version, about $100 per year.
Auction will ease consumer
costs and help curb deficit
Through 2029, 15 percent of the
allowances will be auctioned, rising to 18.5 percent after 2029.
Some of the key areas revenue from
the sold credits include:
- Consumer energy cost rebates:
6.6 percent starting in 2025, topping off at 50.8 percent of the
revenue by 2035.
- Deficit reduction: From 2012
through 2029, revenue from 10 percent of the auctioned credits will
be sent to the Treasury to reduce the yawning deficit, expanding to
22 percent by 2039, and from there capping at 25 percent by 2050.
The House bill only uses 13 percent of auctioned credits revenue for
deficit reduction in 2012 and 2013, reduces that to 1 percent in
2014-15, and zeros out with no deficit reduction after 2023.
Hearings and markup
Boxer's committee will hold three
days of hearings this on the legislation, starting on Tuesday, with
markup of the bill tentatively scheduled to begin next week.
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