Senator Barbara Boxer released a 923-page draft of the Clean Energy Jobs and American Power Act over the weekend, the Senate version of climate and energy legislation, for the first time specifying emissions allocations and costs proposed in the bill.
“We’ve reached another milestone as we move to a clean energy future, creating millions of jobs and protecting our children from dangerous pollution,” Boxer, chairperson of the Environmental and Public Works Committee, who wrote the bill with Senator John Kerry, said on Friday.
In terms of emissions allocation, the Senate bill in many respect mirrors provisions in the House version passed last summer (H.R. 2454, the Waxman-Markey American Clean Energy and Security Act of 2009.)
Electric utilities & coal
Boxer’s bill uses identical language to the Waxman-Markey bill, allocating 30 percent of the free emissions allowances available to state-regulated local electric distribution companies (LDC’s) and requiring the LDC’s to use revenue generated from those free emissions credits to protect consumers from price increases in electricity.
Merchant (investor-owned) coal operators will receive 3.5 percent of the free credits, and companies holding long-term purchase agreements 1.5 percent. Both would see their free allocations drop to zero between 2026 and 2030.
The Boxer-Kerry bill diverges slightly from the House version for energy intensive industry, including steel, cement, chemical, paper, and glass. The Senate plan calls for a quick 4 percent infusion of free credits starting in 2012, and rising to 15 percent in 2014 and 2015. Many of these trade-senstive industries, located in Rust Belt states with swing-vote senators, will see a slow phase-out of free allowances beginning in 2015. This differs from the House bill by providing a larger infusion of free credits in the beginning, followed by a slower phase-out.
Natural gas is considered by many as an important “bridge fuel” and touted by the colorful oil baron T. Boone Pickens in his “Pickens Plan” to energy independence.
Similar to the House bill, the Boxer-Kerry bill allocates 9 percent of the emissions allowances to natural gas distribution companies, with the express mandate to use the funds raised to cushion consumers from energy price shocks. The free credits will be phased out by 2030.
Automakers receive 3 percent of the free free allocation through 2017, with the credits used to invest in electric cars and other new technology R&D. Like the House, the bill will reduce the free allowance to 1 percent from 2018 to 2025.
EPA cost analysis
Coinciding with the release of the draft bill, Boxer also released an analysis by the Environmental Protection Agency (pdf) saying the Senate bill will cost the average American household roughly the same as the House version, about $100 per year.
Auction will ease consumer costs and help curb deficit
Through 2029, 15 percent of the allowances will be auctioned, rising to 18.5 percent after 2029.
Some of the key areas revenue from the sold credits include:
- Consumer energy cost rebates: 6.6 percent starting in 2025, topping off at 50.8 percent of the revenue by 2035.
- Deficit reduction: From 2012 through 2029, revenue from 10 percent of the auctioned credits will be sent to the Treasury to reduce the yawning deficit, expanding to 22 percent by 2039, and from there capping at 25 percent by 2050. The House bill only uses 13 percent of auctioned credits revenue for deficit reduction in 2012 and 2013, reduces that to 1 percent in 2014-15, and zeros out with no deficit reduction after 2023.
Hearings and markup
Boxer’s committee will hold three days of hearings this on the legislation, starting on Tuesday, with markup of the bill tentatively scheduled to begin next week.
Sources and further reading:
Grist: What to do with the utility handouts in the climate bill?
Grist: Senate digs into climate bill at hearings this week
New York Times/ClimateWire (subscription)