It now appears that Senators Kerry and Lieberman will release their long-awaited climate change and energy bill tomorrow. The bill, named the “American Power Act” is reported to have been altered in response to the BP/Deepwater Horizon accident in the Gulf of Mexico by permitting neighboring states that would be “directly impacted” to veto off-shore drilling by passing a law. Apparently the Department of the Interior would determine which neighboring states would be environmentally or economically impacted. In addition states that pursue off-shore drilling would be allowed to retain 37% of the Federal royalties resulting from that drilling
A cynic might note that the state new-found royalty payments could be shared with neighboring states to discourage any veto legislation.
As I have previously written, the American Power Act is primarily an energy bill, providing something for every special interest. The bill increases funding for nuclear power plants, natural gas, off-shore oil and gas production and provides $2 billion per year for the development of clean coal technologies. The act places a “hard” minimum and maximum price, indexed for inflation, on carbon emissions. However, carbon emission controls are only applied to the transportation, utility and heavy manufacturing sectors, exempting such sectors as agriculture, chemical/refining industries, buildings and other major carbon sources. Only the largest polluters, those who produce more that 25,000 tons of carbon emissions, will be regulated under the act. In other words, the emissions of only 7,500 factories and power plants will be covered by the Act.
The Act does provide for 2/3rds of all allowance auction proceeds “not dedicated to reducing our nation’s deficit” to be returned to the consumer. The funds will be returned to local electricity and natural gas distributing companies to be used “exclusively for the benefit of ratepayers”. For heating oil and propane consumers, the funds would be returned to state governments who would be responsible for ensuring that they are used to for the exclusive benefit on heating oil and propane consumers. The funds would be used to either reduce rates, or provide a direct rebate.
The cap and trade carbon emission targets of the American Power Act are somewhat less than other proposed legislation in the early years, but does approach the 17% of 2005 by 2050 standard.
In addition to the American Power Act, Senators Cantwell and Collins have introduced their Carbon Limits and Energy America’s Renewal (CLEAR) Act. In contrast to the massive American Power Act, the 39-page CLEAR act is a straight-forward cap and dividend proposal. CLEAR prohibits financial speculation in “carbon derivatives” and restricts resale of allowances. In sharp contrast to the American Power Act, the boondoggle of emission offsets do not exist under CLEAR.
As a cap and dividend bill, CLEAR would rebate 75% of the emission auction funds directly to every legal resident of the United states, in the form of a direct monthly payment. All residents would receive an equal amount, and the payments would be exempt from Federal income tax. Thus most of any increase in energy cost would be directly returned to the citizens, not to special interest groups.
CLEAR has strong provisions to ensure the competiveness of American business in the international market, and provides a fair, uniform approach to emission control. It establishes a target carbon emission levels of 70% in 2025 and 17% in 2050, again using 2005 as the reference year.
CLEAR does not attempt to resolve all problems, rather it directly, clearly and fairly provides for the regulation of carbon emissions. And it does so in far more effective manner than the American Power Act, and at a much lower cost to Americans. Contact you senators and request their support for CLEAR.
