Waxman-Markey's Senate Sibling Mirrors House Climate Bill

Originally posted at the Breakthrough Institute

As the Senate's climate and energy bill takes shape, it looks broadly similar to the House-passed Waxman-Markey American Clean Energy and Security Act, with a couple key exceptions, according to E&E News' ClimateWire service.

ClimateWire has obtained an early version of the bill (pdf) being written by Senators Barbara Boxer (D-CA) and John Kerry (D-MA). Key sections are still under development as Senate staffers put the finishing touches on the discussion draft version of the bill scheduled for public release tomorrow, but the early draft appears to mirror closely the structure and content of its House sibling.

Emissions targets in 2020 are stronger than the House-passed version (20% below 2005 levels instead of 17%) and the EPA's authority to separately regulate greenhouse gas emissions from major sources is reportedly preserved. A modest new nuclear title has been added as well. Other major provisions, including the extensive permitted use off offsets and a strategic reserve pool to control allowance prices, appear consistent with the House climate bill.

[Update, 9/29/09, 5:33 PST: additional details are emerging as successive drafts of the legislation are leaked to reporters and bloggers. An 801-page draft bill was leaked this afternoon, which is reportedly more current than the 684-page draft reported by ClimateWire earlier today. This version is still not the final, which we'll have to wait until tomorrow for.

The current draft apparently contains a cost collar on emissions allowance prices backed up by the same kind of strategic allowance reserve in the House bill. The floor price begins at $11 per ton in 2012 and the ceiling at $28 per ton, both rising steadily each year. The House version had a $10 floor price in 2012 and a ceiling that floated at 60% above a rolling average of market prices for allowances, providing little certainty of an upper price on carbon under the bill. E&E News also reports that the new bill contains greater support for research and commercialization of advanced biofuels and greater incentives to replace coal-fired power plants with new natural gas plants.]

Key sections on how the climate bill will divvy up hundreds of billions of dollars in allowance allocation revenue will remain blank, to be filled in later when Senator Boxer releases a "chairmans mark" before formal markup of the bill in the Environment and Public Works Committer, likely sometime in October. However, if theHill.com's observations are accurate, as in the House bill, these billions in new revenue will likely be considered "chits to use to negotiate support for their bill as they attempt to form a winning coalition," rather than a funding source for critical, proactive investments to spur clean energy technologies, industries and jobs.

Key excerpts from the ClimateWire story follow...

An early version of Senate climate legislation obtained today by E&E confirms that Sens. Barbara Boxer (D-Calif.) and John Kerry (D-Mass.) largely plan to follow the path their Democratic colleagues pursued in the House-passed climate bill.

But the 684-page Senate draft bill (pdf) diverges from the House measure in its push for a 2020 emissions target of 20 percent, compared with the House's bill's 17 percent limit.
Both the House-passed bill, H.R. 2454 (pdf), and the preliminary Boxer-Kerry proposal contain the same longer-term emissions limits of 42 percent below 2005 levels by 2030 and an 83 percent cut for 2050.

A senior Boxer aide cautioned that the draft bill does not reflect proposed changes that have recently been incorporated from senators both on and off the Senate Environment and Public Works Committee. The latest version, which the aide says stretches for more than 800 pages, is scheduled to be released tomorrow during a Capitol Hill press conference with about a dozen senators, veterans, environmentalists and industry officials.

...

Overall, the early draft of the Boxer-Kerry legislation includes four titles that take aim at greenhouse gas emissions across multiple economic sectors, as well as a "transition and adaptation" section aimed at helping the nation cope with the costs of a climate bill and the expected repercussions of global warming.

Both the early draft and the Boxer-Kerry bill due for release tomorrow will leave blank key information about how the senators intend to distribute hundreds of billions of dollars in emission allowances. Following the path of Democratic leaders of the House Energy and Commerce Committee, those figures will come next month when Boxer releases a chairman's mark of the bill before an EPW Committee markup.

To deal with economic uncertainties, the draft Boxer-Kerry plan would establish a strategic allowance reserve that allows U.S. EPA to sell credits into the carbon market via an auction in the event credit prices rise faster than expected.

The draft also mirrors the House on offset projects that allow industry an alternative compliance option to pay farmers and other landowners for environmentally friendly projects. Both the House-passed bill and this early Senate draft allow capped sources to collectively use emissions offsets to meet 2 billion tons of their obligations annually -- divided evenly between domestic and international credits with the amount of international credits allowed to increase if insufficient domestic offsets are available.

The early draft of the Boxer-Kerry bill heeds environmentalists' requests by removing a section of the House bill that would have restricted EPA's ability to enact climate change regulations.

Like the House bill, the Boxer-Kerry draft would provide emissions allowances to fund commercial deployment of carbon capture and sequestration, although it does not provide specifics. It also establishes performance standards for emissions of greenhouse gases from new coal-fired power plants.

...

Divergence from House

There are also significant differences between the Senate draft and the House bill.

For example, Boxer and Kerry propose a different approach for oversight of the carbon market, which in the House bill is shared between FERC and the Commodity Futures Trading Commission, with FERC regulating the cash market for allowances and offsets and CFTC handling the derivatives market.

The draft Senate plan, in contrast, would place the carbon markets under a single regulator -- the brief carbon market section would have CFTC regulate both markets. It also broadly empowers the regulator to prevent manipulation of these markets and eliminate "excessive speculation" that adds to price volatility.

...

The Senate draft also has a modest nuclear title, although pro-nuclear senators are likely to push for significant incentives in the final measure. The bill's nuclear title would steer money to the Energy Department for implementing programs to expand expertise in the nuclear field. Advocates of expanding U.S. nuclear power say there are not enough nuclear engineers and other experts to work on the hoped-for build out of new reactors.

The nuclear title also has a section titled "Nuclear Waste Research and Development," but it is left blank, stating "to be supplied."

Boxer plans to release another version of the legislation in mid-October as a chairman's mark. Hearings are also expected next month, with an EPW Committee markup before November. Several other Senate committees are also planning to weigh in, with Majority Leader Harry Reid (D-Nev.) the ultimate judge on what the bill looks like before the floor debate.