Wednesday, September 9, 2009

Waxman!

On Friday, June 26, the House of Representatives approved the American Clean Energy and Security Act (ACES) with 212 to 219 votes. The Bill, also known as Waxman-Markey Bill, would impose the first federal restrictions on CO2 emissions, establish an emission trading system and promote investment in, and transition to, cleaner-energy technologies. The House vote was an important step forward for comprehensive climate change legislation, now the Bill must be approved also by the Senate, in which 60 votes are needed.
Below the key characteristics of the Emission Trading System proposed by the American Clean Energy and Security Act are summarized.
1. Start: 2011
2. Coverage
a. 85% of total GHG emission, including electric utilities, oil companies, large industrial sources and other entities emitting more than 25,000 tCO2e per year;
b. A wide range of GHGs (CO2, N2O, CH4 etc.) emitted from a chemical manufacturing process at an industrial stationary source, any perfluorocarbon, nitrogen trifluoride
3. Point of regulation: mixed upstream/downstream
a. upstream coverage of fossil-based liquid fuel and GHGs producers and importers;
b. downstream coverage of electricity generators ands and large industrial sources.
4. Emissions targets: Emission reductions, below 2005 levels
a. 3 % by 2012;
b. 17 % by 2020 (4% below 1990 levels);
c. 42 % by 2030 (32% below 1990 levels);
d. 83 % by 2050 (80% below 1990 levels).
5. Allowance allocation
a. 85% of allowances would be given away free at the start of the program, with the percentage decreasing over time;
b. 15% allowances would be auctioned at the start of the program, with the percentage increasing over time. Price collar at $10.
6. Banking and borrowing
a. Unlimited banking of allowances;
b. Rolling two-year compliance period, effectively allowing covered entities to borrow from one year ahead without penalty;
c. Allowances from two to five years in the future can be borrowed under limited circumstances.
7. Penalty: Twice the auction clearly price for the earliest vintage year emission allowances in the last auction carried out per excess tCO2e.
8. Use of offsets: regulated companies would be allowed to purchase carbon offsets for up to 2 GtCO2 of total emission reductions each year, including:
a. up to 1 GtCO2 of international projects;
b. up to 1 GtCO2 of national projects