Point of Regulation, Permit Allocation, Uses of Revenue, and Offsets in S. 2191 (Lieberman-Warner)

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Point of Regulation, Permit Allocation, Uses of
Revenue, and Offsets in S. 2191
(Lieberman-Warner)
Presentation to the Kansas Energy Council
Greenhouse Gas Policy Committee May 13, 2008
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Stated Purposes

• (1) to establish the core of a federal program
  that will reduce United States greenhouse gas
  emissions substantially enough between 2007 and
  2050 to avert the catastrophic impacts of global
  climate change.
• (2) to accomplish that purpose while preserving
  the robust growth of the United States economy
  and avoiding the imposition of hardship on United
  States citizens.

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Some Definitions

• Trigger 10,000 Carbon Dioxide Equivalents
• Carbon dioxide equivalent quantity of GHG
  that EPA determines makes the same contribution
  to global warming as one metric ton of CO2.
• Point of Control (covers 75 of U.S. Emissions)
• Three sectors defined
• 1) Electric power sector (emitters)
• 2) Industrial sector (emitters)
• 3) Transportation sector (producers/importers)
• 4) Non-fuel chemical sector (producers/importers
  )
• Assumes no carbon capture and storage, based
  on end-use emissions from product.

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Administration

• 1. EPA will catalog the allowances
• Create Emission Allowance Accounts for each year,
  2012-2050, reducing each year
• 2012 5.2 billion allowances
• 2020 4.43 billion allowances
• 2050 1.56 billion allowances (70 below 2005
  emissions)
• Each emission allowance will have serial number
• 2. Carbon Market Efficiency Board
• Created to monitor the market and report to the
  President and Congress

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Administration (continued)

• 3. Climate Change Credit Corporation
• Auctions the initial allowances
• Redirects proceeds to US Treasury new
  programs/funds
• Energy Technology Deployment Program
• Energy Assistance Fund
• Climate Change Worker Training Fund
• The Adaptation Fund
• The Climate Change and National Security Fund

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The Market

• Anyone can trade (not just covered facilities)
• Banking allowed
• Borrowing allowed up to 15 of given years
  obligation (at 10 interest rate, five year
  limit)
• Offsets allowed up to 15 of given years
  obligation
• International credits allowed up to 15 of
  given years obligation (EPA must certify)

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Allowance Allocations

• Annual Auction
• 18 in 2012, increasing annually to 73 by 2036
  to 2050
• Reward for Early Action
• 5 will be given away in 2012 (4 in 2013, 3 in
  2014, 2 in 2015, 1 in 2016) to owners and
  operators who have adopted clean energy/emission
  reduction strategies since 1994

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Allowance Allocations, continued

• States
• 5 to all state governments, 90 of which must be
  used to mitigate impacts on low-income consumers,
  promote EE, etc.
• 1 to reward states with EE building codes for
  90 of new buildings
• 1 to reward states that have enacted policies to
  decouple utility rates
• 2 to reward states that have enacted more
  stringent carbon protocols

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Use of Auction Revenue New Programs

• Energy Technology Deployment (55)
• incentives for renewable electricity
  technologies, low-carbon technologies, advanced
  biofuels, CCS, PHEV, high-efficiency consumer
  products
• Energy Assistance Funds (20)
• 50 to LIHEAP
• 25 to WAP Low Income
• 25 to new Rural Energy Assistance Program

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Use of Auction Revenue New Programs (continued)

• Climate Change and Worker Training Program (5)
• Workforce training, education, and placement
• Adaptation Program for Natural Resources in U.S.
  and Territories (20)
• 65 to the Interior Department (wildlife
  conservation)
• 5 to Agriculture Department (U.S. Forest
  Service)
• 25 to EPA and Corp of Engineers (ecosystems)
• 5 to U.S. Commerce Department (land conservation
  and coastal management)

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Use of Auction Revenue New Programs (continued)

• The Climate Change and National Security Fund
• 5 to fund if deemed warranted
• Taken pro rata from above funds

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• Corey Mohn
• Kansas Energy Council Staff
• Kansas Department of Commerce
• [phone]
• www.kansascommerce.com