Tomorrow will be the unveiling of the long-awaited, Kerry-Lieberman clean energy/climate change bill (the “American Power Act”). Based on what I’m hearing, my understanding is that the Act will…
*…refund 2/3 of revenues raised not dedicated to reducing the deficit right back to consumers. Eventually, that will rise to 100% of revenues not dedicated to reducing the deficit going back to consumers.
*…invest in all domestic energy sources – renewables, coal, oil, natural gas, and nuclear – while rebuilding our nation’s energy infrastructure.
*…aim to kick our foreign oil addiction.
*…use different approaches for different sectors (e.g., power plants, heavy industry, transportation).
*…set up a carbon market that is simple and secure, with no chance of being manipulated.
*…invest $2 billion per year for development of carbon capture and sequestration methods.
*…encourage the use of American natural gas.
*…exempt farmers from carbon pollution compliance provisions of the bill.
*…invest in clean energy R&D.
*…have industrial sources enter the program in 2016, at which point industries that are energy-intensive and trade-exposed will receive allowances to offset compliance costs.
*…improve transportation infrastructure and efficiency.
*…set a hard price collar to ensure price predictability.
*…lay out one set of national rules, as opposed to a patchwork of conflicting state and federal regulations.
*…forbid states from operating their own cap-and-trade programs.
*…allow states to opt out of drilling up to 75 miles from their coasts.
*…give states that pursue offshore oil drilling 37.5% of revenues, in part to help them protect their coastlines from environmental harm.
*…reduce CO2 emissions by 17% in 2020 and 80% in 2050.
At first glance, this looks promising to me, but as the saying goes, “the devil’s in the details” (and there are a LOT of details in this bill)! Still, we badly need to get clean energy and climate change legislation, including a meaningful price (one way or the other) on CO2, for powerful economic, environmental, and national security (e.g., stop funding countries and non-state actors that want to hurt us) reasons. The main reason why, despite its flaws, I supported the Waxman-Markey bill in the House of Representatives, is because it enshrined the principle that there has to be a price signal for CO2. Currently, this is a huge “externality” and also a huge market failure.
By putting a price on CO2, we can harness the power of the marketplace to jumpstart a clean energy, low-carbon revolution in this country, one that will pay huge dividends for years to come. That’s why I strongly urge the Congress to move forward on strong, serious clean energy and climate change legislation this year. We have no more time to waste.
UPDATE: The Washington Post now has a copy of the bill posted on its website.