Bingaman-Specter Low Carbon Economy Act
On Wednesday, Senators Jeff Bingaman (D-NM) and Arlen Specter (R-PA) introduced the text of the “Low Carbon Economy Act” (S 1766), an industry-friendly cap-and-trade bill.
The targets are 2006 levels of emissions by 2020, 1990 levels by 2030. No targets are set before 2020.
Price of CO2 is not set by market, but by the legislation at $12 a ton, rising each year at 5% above inflation. This decouples the price of CO2 from the target reductions, a central component of most cap-and-trade systems.
Allowances are intially given away to the private sector, the bonanza being reduced after five years. Allowances will also be given away for fuel converted to feedstock and for fuel or other GHG precursors (e.g. HFCs) exported from the United States (Section 301).
Sectors covered are limited to petroleum and natural gas plants and importers, and large coal-consuming (>5000 Ton/yr) facilities.
The bill was written by the National Commission on Energy Policy (a project of the The Bipartisan Policy Center, supported primarily by the Hewlett Foundation) and supported by coal-intensive and nuclear industry players including American Electric Power, Duke Energy Corp., Edison International, Exelon Corp., PNM Resources, PPL Corp. and NRG Energy Inc.