House Leadership Prepares Cap-and-Trade Legislation for April
E&E News’s Darren Samuelson reports in a pair of stories that the House of Representatives is moving forward to introduce companion legislation to the Lieberman-Warner Climate Security Act (S. 2191), the cap-and-trade legislation wending its way through the Senate. Rep. John Dingell (D-Mich.), whose Energy and Commerce Committee has jurisdiction, told steel industry officials last week that he plans “to release one or more draft global warming bills for comment by mid-April.”
Samuelson also reported that Rep. Markey, chair of the Select Committee on Energy Independence and Global Warming and a strong ally of Speaker Pelosi, has been meeting with “alternative energy producers, labor groups, financial market officials and industry representatives” to craft legislation.Rep. Markey is preparing to send a report directly to Pelosi with proposals to address climate change or offer amendments when the House Energy and Commerce Committee holds a markup on a major piece of climate legislation, sources on and off Capitol Hill said today.
Markey said: “I think you should do the best you can each year. I do. And we have a real chance this year. If there’s an epiphany that occurred at the White House, then there we are with a chance to make history.”
Boucher, Dingell in House Energy Committee Call for Cap-and-Trade
As he previously announced he would, Energy and Commerce’s Energy and Air Quality Subcommittee chair Rep. Rick Boucher (D-Va.) released the first of a series of white papers on climate legislation today, Scope of a Cap-and-Trade Program.
Based on the hearings earlier this year, the Committee and Subcommittee Chairmen have reached the following conclusions: The United States should reduce its greenhouse gas emissions by between 60 and 80 percent by 2050 to contribute to global efforts to address climate change. To do so, the United States should adopt an economy-wide, mandatory greenhouse gas reduction program. The central component of this program should be a cap-and-trade program. Given the breadth of the economy that will be affected by a national climate change program and the significant environmental consequences at stake, it is important to design a fair program that obtains the maximum emission reductions at the lowest cost and with the least economic disruption. The Subcommittee and full Committee will draft legislation to establish such a program.
Oddly, the white paper fails to mention a baseline for emissions reductions; the scientific consensus for the 80 percent reduction is from 1990 emissions levels.
The white paper makes no recommendations on how credits should be allocated, though Boucher has stated his resistance to auctions in the past. Nor does it discuss interaction with foreign carbon markets or how to deal with imports from unregulated entities.
The white paper argues that complementary measures are necessary:“Even with a broad-based cap-and-trade program, complementary measures (such as a carbon tax or other tax-based incentives, efficiency or other performance standards, or research and development programs) will also be needed. For example, funding for research, development, and deployment of new technologies would assist industries that will need to adopt new technologies. In addition, efficiency or other performance standards might be appropriate for some economic actors that would be inappropriate to include directly in a cap-and-trade program, but that should contribute to an economy-wide reduction program in some other way.
Proposed measures range from Dingell’s carbon tax, increased CAFE standards, appliance and lighting efficiency standards, a federal renewable energy standard, to carbon sequestration funding.
Further notes are below.
Interestingly, the report draws extensively from the Nicholas Institute for Environmental Policy Solutions September report, Size Thresholds for Greenhouse Gas Regulation: Who Would be Affected by a 10,000-ton CO2 Emissions Rule? The Nicholas Institute is run by Sen. Lieberman’s former environmental counsel, Nick Profeta.
A later white paper will discuss carbon offsets in the agricultural and industrial sector.
Greenhouse gas emissions from other sources in [the industrial] sector (such as landfills) generally may not lend themselves to regulation under a cap-and-trade program if there is difficulty in measuring the emissions accurately. For example, EPA currently operates methane programs that encourages landfills and other soruces to capture gas and use it for electricity generation. . . . The agricultural sector, however, does have significant opportunities to reduce emissions that may lend themselves to measurement, which could make them appropriate as a source of credits or offsets in a cap-and-trade program…. [manure methane capture, cropland biological sinks]... A later White Paper will discuss the potential for using such reductions as offsets or credits as part of the cap-and-trade program.
Dingell Unveils Carbon Tax Proposal 1
As he announced he would last month, Rep. John Dingell (D-Detroit), chair of the House Energy and Commerce Committee, unveiled draft legislation for a carbon emission fee and related elements.
Dingell is soliciting comment online.
The elements:- A $50 tax per ton of carbon (approximately equivalent to a $14 price on CO2, not the $100/ton CO2 reported by CNSNews) to be phased in over five years and then indexed to inflation
- A $0.50/gallon gasoline tax to be phased in over five years and then indexed to inflation
- Diesel would be excluded from this tax because “the fuel economy benefits of diesel surpass even its emissions benefits; it provides about a thirty percent increase in fuel economy and a twenty percent emissions reduction,” figures basically in line with the Union of Concerned Scientists report, The Diesel Dilemma “on an energy-equivalent basis, each gallon of diesel fuel results in about three percent more heat-trapping gas emissions than gasoline.”)
- Biofuel blends would only be taxed on their petroleum content
- Revenues go to the highway trust fund, with 40% going to the mass transit and 60% going to roads
- A $0.50/gallon jet fuel tax, with revenues going into the airport and airway trust fund
- McMansion provision: Phases out the mortgage interest deduction on primary mortgages on houses over 3000 square feet, going to zero for homes 4200 square feet and up
- Exemptions for historical homes (prior to 1900) and farm houses
- Exemptions for home owners who purchase carbon offsets to make home carbon neutral or own LEED certified homes
- Budget savings will go to pay for an increase in the Earned Income Tax Credit