On September 29, 2009, Senators Barbara Boxer (D-CA) and John Kerry (D-MA) released their 821-page draft climate bill, the “Clean Energy Jobs and American Power Act”. The Boxer Bill’s climate change cap-and-trade provisions parallel the legislation by House Energy and Commerce Committee Chairman Henry Waxman (D-CA) and Rep. Edward Markey (D-MA) which the House of Representatives passed in June. There are, however, significant differences.
Most prominently among these, the Senate draft sets more aggressive near-term emissions goals, requiring emissions reductions of 20 percent below 2005 levels by 2020 rather than the 17 percent reduction target contained in the House bill. Both bills aim to reduce emissions 42 percent by 2030 and 83 percent by 2050. Importantly, the allocation or auction of the hundreds of billions of carbon allowances remains to be decided.
Like the House bill, the Senate bill allows sources to meet targets via the use of emissions offsets. Unlike the House measure, however, the Senate plan offers increased offset levels and provides for greater use of domestic offsets, and reduced use of international offsets. Under the Senate bill, regulated entities could use up to 500 million tons of international offsets and up to 1.5 billion tons of domestic offsets annually to meet emissions limits. The Boxer Bill provides for an increase in international offsets to 750 million tons if supplies of domestic offsets prove insufficient. The House bill, conversely, allows only 1 billion tons of domestic offsets and up to 1.5 billion tons of international offsets annually.
The Boxer Bill is silent about how revenues generated by sale of emissions allowances may be spent. It requires only that 25 percent of the revenue generated annually go to deficit reduction. The Senate draft also sets prices for emissions allowances, limiting the price of carbon allowances to $28 per ton in 2012 with subsequent annual increases. The bill sets a minimum price of $11 per ton for auctioned allowances/credits, which also would increase annually. The House bill, conversely, sets a $10 minimum credit price and sets a maximum price that floats at 60 percent above a rolling average of carbon market prices.
The Boxer Bill would give oversight and regulatory authority over both the emissions trading and futures markets to the Commodity Futures Trading Commission (“CFTC”), whereas Waxman-Markey divided those responsibilities between the Federal Energy Regulatory Commission and the CFTC, respectively. Like Waxman-Markey, the Boxer bill provides for allowance allocations to trade-exposed and energy-intensive industries. Unlike Waxman-Markey, the Boxer bill would not authorize imposition of allowance obligations on importers of goods from countries without greenhouse gas reduction policies comparable to the United States’.
The Senate draft also includes a number of provisions supporting alternative fuel sources, including greater support for nuclear energy, advanced biofuels, and natural gas than provided by the House bill. The Boxer Bill includes a Nuclear Energy title that provides for training to expand the nuclear energy workforce and research and development into nuclear safety and waste disposal. It also establishes a new grant program for advanced biofuels development. Among the alternative fuels provisions, the bill also provides incentives to encourage utilities to switch from coal to natural powered electric plants.