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Government &
Public Affairs Team
Reginald M. Turner
John
Van Fossen, Practice Group Leader
Lucius A. Vassar
Chris Wagner
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Senate Climate
Bill is Rolled Out
Today Senators
John Kerry (D. Mass.) and Joe Lieberman (I. Conn.) released the
long-awaited discussion draft of the climate and energy legislation
that is the culmination of eight months of closed-door negotiations
with Senator Lindsey Graham (R. S.C.) and industry and consumer
advocates. The climate bill, entitled the "American Power
Act," includes 12 titles aimed at addressing the country's
environmental and energy issues. (Click here to
see the complete 987 page discussion draft).
In a press release
issued today, Kerry said "We can finally tell the world that
America is ready to take back our role as the world's clean energy
leader. 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 to protect the air our
children breathe and the water they drink."
The bill includes greenhouse gas reduction goals
of 4.75% below 2005 levels by 2013, 17% by 2020, 42% by 2030 and 83%
by 2050, accomplished through a cap-and-trade type program.
Power plants will face the first restrictions, with energy-intensive
manufacturers being regulated six years later. Governance of
the greenhouse gas markets will be given to the Commodity Futures
Trading Commission, with an amendment to the Commodity Exchange Act
to regulate carbon instruments in the same manner as agricultural
commodities. Oversight of agricultural offsets will be vested with
the U.S. Department of Agriculture. Emissions from transportation
will also be regulated under the cap, but will be included in a
separate trading program.
A four-page short summary
of the American Power Act and a 21-page section-by-section
summary were distributed at today's press conference. According
to the summaries, key provisions of the bill include:
- Protecting Consumers - provides rebates
to consumers to protect against price increases and assistance
to low-income consumers;
- Ensuring Regulatory
Predictability - preempts potentially-conflicting state
regulations and programs;
- Ensuring Price
Predictability - establishes a hard price collar for carbon
prices, rising at a fixed rate over inflation, with some allowances
kept in reserve;
- Decreasing Dependence
on Foreign Oil - provides $7 billion annually to improve
transportation infrastructure and efficiency, tax incentives for
conversion to clean natural-gas fleet vehicles, investments into
manufacturing advanced vehicles and batteries, and veto-power to
states to opt-out of coastal drilling or increased revenue to
protect coastlines and coastal ecosystems if they do pursue
drilling;
- Expanding America's
Manufacturing Base -provides for phased-in regulation (with industrial
sources not entering program until 2016), energy-intensive and
trade-exposed industries initially receiving allocation of
allowances, and a border adjustment mechanism that is consistent
with the World Trade Organization;
- Creating New
Opportunities for American Farmers- exempts farmers
from carbon-pollution compliance obligations but incentivizes
them to reduce emissions through domestic offset programs in the
agricultural and forestry sector;
- Investing in Clean
Energy Research, Development, and Deployment - provides funding
for investments in clean energy research and development for
renewable energy technology, advanced vehicle technologies, and
carbon capture and sequestration;
- Ensuring Coal's
Future - provides $2 billion annually for research and
development of clean coal technologies and carbon capture and
sequestration and methods;
- Encouraging the Use
of America's Natural Gas - removes disincentives for natural
gas generation and requires public disclosure of chemicals used
in production of natural gas;
- Increasing Nuclear
Power Generation- provides broad package of financial
incentives to increase nuclear power generation including
regulatory risk insurance, accelerated depreciation for nuclear
plants, investment tax credit for new facilities, $54 billion in
loan guarantees, manufacturing tax credits, improved efficiency
in licensing process, and designation of existing national
laboratory as nuclear waste reprocessing center;
- Reducing
Transportation Emissions - includes transportation emissions
in the emissions cap and requires producers and importers of
refined products to purchase allowances, but establishes a
separate trading program for mobile emissions;
- Blocking Market
Manipulation - regulates only producers of more than
25,000 annual tons of carbon (7,500 factories and power plants);
limits auction and cash market participants to regulated
entities and a limited number of "market makers," but
allows broader participation in secondary market which will be
regulated, exchange traded, and transparent.
The
timing of the bill making its way to the Senate floor has been under
strict scrutiny and speculation in recent months, with co-author
Graham recently withdrawing his support for the bill over frustration
with it potentially being placed on the calendar behind sweeping
immigration reform. In talking with MSNBC this morning Kerry
indicated that he expected Graham to issue a statement that he
stands by the work product of the bill and supports the effort. Graham's statement
today, however, was that "The problems created by the
historic oil spill in the Gulf, along with the uncertainty of
immigration politics, have made it extremely difficult for
transformational legislation in the area of energy and climate to
garner bipartisan support at this time."
With
the uncertainty of Graham's involvement and support as well as the
timing of it being brought to the Senate floor, the bill is viewed
among many as a "long-shot" for this Congress, but will
likely be thoroughly dissected for clues about possible bipartisan
paths for the topic going forward.
Despite
this thinking, Kerry and Lieberman are pushing to maintain and gain
further support to pass the bill this year. "The American
Power Act is fundamentally different from previous energy and climate
bills - and not just because it will be the one that actually passes.
... 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," Lieberman said.
Stay
tuned to iGreen law for a more in-depth analysis of the American
Power Act and the comparisons and contrasts to the American Clean
Energy and Security Act passed by the U.S. House of Representatives.
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If you have any questions concerning these issues,
please contact Chris Wagner at 202.772.0924 or cwagner@clarkhill.com.
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To find out
more about Clark Hill and our Government & Public Affairs
Practice Group, visit clarkhill.com
or call 800.949.3124
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