Greenhouse Gas Legislation: Summary and Analysis of H.R. 2454 as Passed by the House of Representatives
Congressional research reportJul 27, 2009
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Greenhouse Gas Legislation: Summary and
Analysis of H.R. 2454 as Passed by the House
of Representatives
Updated July 27, 2009
Congressional Research Service
https://crsreports.congress.gov
R40643
Greenhouse Gas Legislation: Summary and Analysis of H.R. 2454 as Passed by the
House
Summary
H.R. 2454, the American Clean Energy and Security Act of 2009, was introduced May 15, 2009,
by Representatives Waxman and Markey, and was subsequently modified (both technical and
substantive changes) and ordered reported by the House Committee on Energy and Commerce on
May 21, 2009. The bill was reported (amended) June 5 (H.Rept. 111-137, Part I). It was passed in
the House on June 26, 2009, by a recorded vote of 219-212.
H.R. 2454 contains provisions that would amend the Clean Air Act to establish a cap-and-trade
system designed to reduce greenhouse gas emissions from covered sources 17% below 2005
levels by 2020 and 83% below 2005 levels by 2050. The market-based approach would establish
an absolute cap on the emissions and would allow trading of emissions permits (“allowances”).
The bill achieves its broad coverage through an upstream compliance mandate on petroleum and
most fluorinated gas producers and importers, and a downstream mandate on electric generators
and industrial sources, and a midstream mandate on natural gas local distribution companies
(LDCs). The bill allocates a substantial percentage of the allowances for the benefit of energy
consumers and low-income households. As the program proceeds through the mid-2020s it shifts
to more government auctioning with most of the proceeds returned to households. The bill’s
allocation scheme includes free allowance allocations to energy-intensive, trade-exposed
industries, merchant coal-fired electric generators, and petroleum refiners. An important cost
control mechanism in the cap-and-trade program is the availability of domestic and international
offsets.
The bill contains energy efficiency provisions that cover grants, standards, rebates and other
programs for buildings, lighting and commercial equipment, water-using equipment, wood
stoves, industrial equipment, and healthcare facilities.
H.R. 2454 contains several provisions related to vehicles and fuels, including incentives to
produce plug-in vehicles and other advanced technology vehicles. Three percent of allowances
from the greenhouse gas cap-and-trade program would be allocated to the automotive sector to
provide grants to refit or establish plants to build plug-ins and other advanced vehicles. The bill
directs the Environmental Protection Agency (EPA) to establish greenhouse gas emissions
standards for various transportation sectors. The bill would also significantly modify the
definition of “renewable biomass” under the renewable fuel standard (RFS), expanding the
allowable pool of agricultural and forestry feedstocks that could be used.
The bill requires EPA to develop a unified national strategy for addressing the key legal and
regulatory barriers to deployment of commercial scale carbon capture and sequestration.
The legislation would amend the Public Utility Regulatory Policies Act of 1978 (PURPA) to
create an integrated energy efficiency and renewable electricity standard starting in 2011,
requiring retail electricity suppliers to meet 20% of their electricity demand through renewable
energy sources and energy efficiency by 2020.
The bill provides for smart grid technologies, including products that can be equipped with smart
grid capability, requirements for electric power retailers to reduce their peak loads using smart
grid and other energy efficient technologies, and requirements that power suppliers ensure that
utility smart grid systems will be compatible with plug-in electric drive vehicles.
Congressional Research Service
Greenhouse Gas Legislation: Summary and Analysis of H.R. 2454 as Passed by the
House
Contents
Introduction and Overview of Legislation....................................................................................... 1
Combined Efficiency and Renewable Electricity Standard ...................................................... 1
Geologic Sequestration of Carbon Dioxide .............................................................................. 2
Vehicles and Fuels ..................................................................................................................... 3
Smart Grid ................................................................................................................................. 3
Energy Efficiency ...................................................................................................................... 4
Major Cap-and-Trade Provisions .............................................................................................. 6
Provisions in Title V Added by the “Manager’s Amendment” ............................................... 10
Title I—Clean Energy ................................................................................................................... 13
Subtitle A—Combined Efficiency and Renewable Energy Standard ..................................... 13
Sec. 101. Combined Efficiency and Renewable Energy Standard ................................... 13
Sec. 102. Clarifying State Authority to Adopt Renewable Energy Incentives .................. 15
Sec. 103. Federal Renewable Energy Purchases ............................................................... 16
Subtitle B—Carbon Capture and Sequestration ...................................................................... 16
Sec. 111. National Strategy ............................................................................................... 16
Sec. 112. Regulations for Geologic Sequestration Sites ................................................... 17
Sec. 113. Studies and Reports ........................................................................................... 17
Sec. 114. Carbon Capture and Sequestration Demonstration and Early
Deployment Program ..................................................................................................... 18
Sec. 115. Commercial Deployment of Carbon Capture and Sequestration
Technologies .................................................................................................................. 20
Sec. 116. Performance Standards for Coal-Fueled Power Plants ..................................... 22
Subtitle C—Clean Transportation ........................................................................................... 24
Sec. 121. Electric Vehicle Infrastructure ........................................................................... 24
Sec. 122. Large-Scale Vehicle Electrification Program .................................................... 24
Sec. 123. Plug-in Electric Drive Vehicle Manufacturing .................................................. 25
Sec. 124. Investment in Clean Vehicles ............................................................................ 26
Sec. 125. Advanced Technology Vehicle Manufacturing Incentive Loans ....................... 26
Sec. 126. Definition of Renewable Biomass..................................................................... 26
Sec. 127. Open Fuel Standard ........................................................................................... 27
Deleted Old Sec. 128. Temporary Vehicle Trade-in Program (New Sec. 128
Below)............................................................................................................................ 27
Sec. 128. Diesel Emissions Reduction .............................................................................. 28
Sec. 129. Loan Guarantees for Projects to Construct Renewable Fuel Pipelines ............. 28
Sec. 130. Fleet Vehicles .................................................................................................... 28
Sec. 130A. Report on Natural Gas Vehicle Emissions Reductions ................................... 28
Subtitle D—State Energy and Environment Development Accounts ..................................... 29
Sec. 131. Establishment of SEED Funds .......................................................................... 29
Sec. 132. Support of State Renewable Energy and Energy Efficiency Programs ............. 29
Sec. 133. Support of Indian Renewable Energy and Energy Efficiency Programs .......... 30
Subtitle E—Smart Grid Advancement .................................................................................... 31
Sec. 141. Definitions (no summary or comments) ............................................................ 31
Sec. 142. Assessment of Smart Grid Cost-Effectiveness in Products ............................... 31
Sec. 143. Inclusions of Smart Grid Capability on Appliance ENERGY GUIDE
Labels ............................................................................................................................. 31
Sec. 144. Smart Grid Peak Demand Reduction Goals ...................................................... 32
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Greenhouse Gas Legislation: Summary and Analysis of H.R. 2454 as Passed by the
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Sec. 145. Reauthorization of Energy Efficiency Public Information Program to
Include Smart Grid Information .................................................................................... 33
Sec. 146. Inclusion of Smart-Grid Features in Appliance Rebate Program ...................... 33
Subtitle F—Transmission Planning......................................................................................... 34
Sec. 151. Transmission Planning and Siting ..................................................................... 34
Sec. 152. Net Metering for Federal Agencies ................................................................... 36
Sec. 153. Support for Qualified Advanced Electric Transmission Manufacturing
Plants, Qualified High Efficiency Transmission Property, and Qualified
Advanced Electric Transmission Property ..................................................................... 36
Subtitle G—Technical Corrections to Energy Laws ............................................................... 37
Sec. 161. Technical Corrections to Energy Independence and Security Act of
2007 ............................................................................................................................... 37
Sec. 162. Technical Corrections to Energy Policy Act of 2005 ........................................ 38
Subtitle H—Energy and Efficiency Centers and Research ..................................................... 38
Sec. 171. Energy Innovation Hubs.................................................................................... 38
Sec. 172. Advanced Energy Research ............................................................................... 38
Sec. 173. Building Assessment Centers ............................................................................ 39
Sec. 174. Centers for Energy and Environmental Knowledge and Outreach ................... 39
Sec. 175. High Efficiency Gas Turbine Research, Development, and
Demonstration................................................................................................................ 40
Subtitle I—Nuclear and Advanced Technologies.................................................................... 40
Sec. 181. Revisions to Loan Guarantee Program Authority ............................................. 40
Sec. 182. Purpose .............................................................................................................. 41
Sec. 183. Definitions ......................................................................................................... 41
Sec. 184. Clean Energy Investment Fund ......................................................................... 41
Sec. 185. Energy Technology Deployment Goals............................................................. 41
Sec. 186. Clean Energy Deployment Administration ....................................................... 42
Sec. 187. Direct Support ................................................................................................... 42
Sec. 188. Indirect Support ................................................................................................. 42
Sec. 189. Federal Credit Authority ................................................................................... 43
Sec. 190. General Provisions ............................................................................................ 43
Sec. 191. Conforming Amendments ................................................................................. 43
Subtitle J—Miscellaneous ....................................................................................................... 43
Sec. 195. Increased Hydroelectric Generation at Existing Federal Facilities ................... 43
Sec. 196. Clean Technology Business Competition Grant Program ................................. 43
Sec. 197. National Bioenergy Partnership ........................................................................ 44
Sec. 198. Office of Consumer Advocacy .......................................................................... 44
Sec. 199. Development Corporation for Renewable Power Borrowing Authority ........... 45
Sec. 199A. Study ............................................................................................................. 45
Title II—Energy Efficiency ........................................................................................................... 45
Subtitle A—Building Energy Efficiency Programs ................................................................ 45
Sec. 201. Greater Energy Efficiency in Building Codes ................................................... 45
Sec. 202. Building Retrofit Program ................................................................................. 46
Sec. 203. Energy Efficient Manufactured Homes ............................................................. 46
Sec. 204. Building Energy Performance Labeling Program ............................................. 47
Sec. 205. Tree Planting Programs ..................................................................................... 47
Sec. 206. Energy Efficiency for Data Center Buildings ................................................... 48
Sec. 207. Community Building Code Administration Grants ........................................... 48
Sec. 208. Solar Energy Systems Building Permit Requirements for Receipt of
Community Development Block Grant Funds .............................................................. 48
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Greenhouse Gas Legislation: Summary and Analysis of H.R. 2454 as Passed by the
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Sec. 209. Prohibition of Restrictions on Residential Installation of Solar Energy
System............................................................................................................................ 49
Subtitle B—Lighting and Appliance Energy Efficiency Programs ......................................... 49
Sec. 211. Lighting Efficiency Standards ........................................................................... 49
Sec. 212. Other Appliance Efficiency Standards .............................................................. 50
Sec. 213. Appliance Efficiency Determinations and Procedures ...................................... 50
Sec. 214. Best-in-Class Appliances Deployment Program ............................................... 51
Sec. 215. WaterSense ........................................................................................................ 52
Sec. 216. Federal Procurement of Water Efficient Products ............................................. 53
Sec. 217. Early Adopter Water Efficient Product Incentive Programs.............................. 53
Sec. 218. Certified Stoves Program .................................................................................. 54
Sec. 219. Energy Star Standards ....................................................................................... 54
Subtitle C—Transportation Efficiency .................................................................................... 55
Sec. 221. Emission Standards ........................................................................................... 55
Sec. 222. Greenhouse Gas Emissions Reductions Through Transportation
Efficiency ....................................................................................................................... 55
Sec. 223. SmartWay Transportation Efficiency Program ................................................. 56
Sec. 224. State Vehicle Fleets ........................................................................................... 57
Subtitle D—Industrial Energy Efficiency Programs ............................................................... 57
Sec. 241. Industrial Plant Energy Efficiency Standards.................................................... 57
Sec. 242. Electric and Thermal Waste Energy Recovery Award Programs ...................... 57
Sec. 243. Clarifying Election of Waste Heat Recovery Financial Incentives ................... 58
Sec. 244. Motor Market Assessment and Commercial Awareness Program..................... 58
Sec. 245. Motor Efficiency Rebate Program .................................................................... 58
Sec. 246. Clean Energy Manufacturing Revolving Loan Fund Program.......................... 59
Sec. 247. Clean Energy and Efficiency Manufacturing Partnerships ............................... 59
Sec. 248. Technical Amendments ..................................................................................... 60
Subtitle E—Improvements in Energy Savings Performance Contracts .................................. 60
Sec. 251. Energy Savings Performance Contracts ............................................................ 60
Subtitle F—Public Institutions ................................................................................................ 60
Sec. 261. Public Institutions.............................................................................................. 60
Sec. 262. Community Energy Efficiency Flexibility ........................................................ 61
Sec. 263. Small Community Joint Participation ............................................................... 61
Sec. 264. Low Income Community Energy Efficiency Program ...................................... 61
Sec. 265. Consumer Behavior Research ........................................................................... 61
Subtitle G—Miscellaneous ..................................................................................................... 62
Sec. 271. Energy Efficient Information and Communications Technologies ................... 62
Sec. 272. National Energy Efficiency Goals ..................................................................... 62
Sec. 273. Affiliated Island Energy Independence Team ................................................... 63
Sec. 274. Product Carbon Disclosure Program ................................................................. 63
Sec. 275. Industrial Energy Efficiency Education and Training Initiative ........................ 64
Sec. 276. Sense of Congress (on Aircraft Emissions) ....................................................... 64
Subtitle H—Green Resources for Energy Efficient Neighborhoods ....................................... 65
Sec. 281. Short Title .......................................................................................................... 65
Sec. 282. Definitions ......................................................................................................... 65
Sec. 283. Implementation of Energy Efficiency Participation Incentives for HUD
Programs ........................................................................................................................ 65
Sec. 284. Basic HUD Energy Efficiency Standards and Standards for Additional
Credit ............................................................................................................................. 66
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Sec. 285. Energy Efficiency and Conservation Demonstration Program for
Multifamily Housing Projects Assisted with Project-Based Rental Assistance ............. 67
Sec. 286. Additional Credit for Fannie Mae and Freddie Mac Housing Goals for
Energy Efficient and Location-Efficient Mortgages ...................................................... 68
Sec. 287. Duty to Serve Underserved Markets for Energy-Efficient and LocationEfficient Mortgages ....................................................................................................... 68
Sec. 288. Consideration of Energy Efficiency Under FHA Mortgage Insurance
Programs and Native American and Native Hawaiian Loan Guarantee Programs ........ 69
Sec. 289. Energy Efficient Mortgages and Location-Efficient Mortgages
Education and Outreach Campaign ............................................................................... 70
Sec. 290. Collection of Information on Energy-Efficient and Location Efficient
Mortgages through Home Mortgage Disclosure Act ..................................................... 70
Sec. 291. Ensuring Availability of Homeowners Insurance for Homes Not
Connected to Electricity Grid ........................................................................................ 70
Sec. 292. Mortgage Incentives for Energy Efficient Multifamily Housing ...................... 71
Sec. 293. Energy Efficient Certifications for Manufactured Housing with
Mortgages ...................................................................................................................... 71
Sec. 294. Assisted Housing Energy Loan Pilot Program .................................................. 71
Sec. 295. Making it Green ................................................................................................ 72
Sec. 296. Residential Energy Efficiency Block Grant Program ....................................... 72
Sec. 297. Including Sustainable Development and Transportation Strategies in
Comprehensive Housing Affordability Strategies ......................................................... 73
Sec. 298. Grant Program to Increase Sustainable Low-Income Community
Development Capacity ................................................................................................... 73
Sec. 299. HOPE VI Green Developments Requirement ................................................... 73
Sec. 299A. Consideration of Energy-Efficiency Improvements in Appraisals ................. 74
Sec. 299B. Housing Assistance Council ........................................................................... 74
Sec. 299C. Rural Housing and Economic Development Assistance ................................ 74
Sec. 299D. Loans to States and Indian Tribes to Carry Out Renewable Energy
Sources Activities .......................................................................................................... 75
Sec. 299E. Green Banking Centers ................................................................................... 75
Sec. 299F. GAO Reports on Availability of Affordable Mortgages .................................. 76
Sec. 299G. Public Housing Energy Cost Report............................................................... 76
Sec. 299H. Secondary Market for Residential Renewable Energy Lease
Instruments .................................................................................................................... 76
Sec. 299I. Green Guarantees ............................................................................................. 77
Title III─Reducing Global Warming Pollution ............................................................................. 77
Sec. 301. Short Title .......................................................................................................... 77
Subtitle A─Reducing Global Warming Pollution ................................................................... 78
Sec. 311. Reducing Global Warming Pollution ................................................................ 78
“Title VII─Global Warming Pollution Reduction Program” ...................................... 78
“Part A─Global Warming Pollution Reduction Goals and Targets”........................... 78
“Sec. 701. Finding and Purpose” ................................................................................ 78
“Sec. 702. Economy-Wide Reduction Goals” ............................................................ 78
“Sec. 703. Reduction Targets for Specified Sources” ................................................. 79
“Sec. 704. Supplemental Pollution Reductions” ........................................................ 79
“Sec. 705. Review and Program Recommendations”................................................. 80
“Sec. 706. National Academy Review” ...................................................................... 80
“Sec. 707. Presidential Response and Recommendations” ........................................ 81
“Part B ─ Designation and Registration of Greenhouse Gases” ................................ 81
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“Sec. 711. Designation of Greenhouse Gases” ........................................................... 81
“Sec. 712. Carbon Dioxide Equivalent Value of Greenhouse Gases” ........................ 82
“Sec. 713. Greenhouse Gas Registry” ........................................................................ 82
“Part C ─ Program Rules” .......................................................................................... 83
“Sec. 721. Emission Allowances” .............................................................................. 83
“Sec. 722. Prohibition of Excess Emissions” ............................................................. 83
“Sec. 723. Penalty for Noncompliance” ..................................................................... 85
“Sec. 724. Trading” .................................................................................................... 86
“Sec. 725. Banking and Borrowing” .......................................................................... 86
“Sec. 726. Strategic Reserve” ..................................................................................... 86
“Sec. 727. Permits” ..................................................................................................... 87
“Sec. 728. International Emission Allowances” ......................................................... 87
“Part D ─ Offsets” ...................................................................................................... 88
“Sec. 731. Offsets Integrity Advisory Board” ............................................................ 88
“Sec. 732. Establishment of Offsets Program” ........................................................... 88
“Sec. 733. Eligible Project Types”.............................................................................. 89
“Sec. 734. Requirements for Offset Projects” ............................................................ 89
“Sec. 735. Approval of Offset Projects” ..................................................................... 90
“Sec. 736. Verification of Offset Projects” ................................................................. 90
“Sec. 737. Issuance of Offset Credits” ....................................................................... 91
“Sec. 738. Audits” ...................................................................................................... 91
“Sec. 739. Program Review and Revision” ................................................................ 91
“Sec. 740. Early Offset Supply” ................................................................................. 91
“Sec. 741. Environmental Considerations” ................................................................ 92
“Sec. 742. Trading” .................................................................................................... 93
“Sec. 743. International Offset Credits” ..................................................................... 93
“Part E ─ Supplemental Emissions Reductions from Reduced Deforestation” ......... 94
“Sec. 751. Definitions” ............................................................................................... 94
“Sec. 752. Findings” ................................................................................................... 95
“Sec. 753. Supplemental Emissions Reductions Through Reduced
Deforestation”.......................................................................................................... 95
“Sec. 754. Requirements for International Deforestation Reduction Program” ......... 95
“Sec. 755. Reports and Reviews” ............................................................................... 96
“Sec. 756. Legal Effect of Part E” .............................................................................. 97
Sec. 312. Definitions ......................................................................................................... 97
“Sec. 700. Definitions” ............................................................................................... 97
Subtitle B—Disposition of Allowances .................................................................................. 98
Sec. 321. Disposition of Allowances for Global Warming Pollution Reduction
Program.......................................................................................................................... 98
“PART H—DISPOSITION OF ALLOWANCES” ..................................................... 99
“Sec. 781. Allocation of Allowances for Supplemental Reductions” ......................... 99
“Sec. 782. Allocation of Emission Allowances”......................................................... 99
“Sec. 783. Electricity Consumers” ........................................................................... 101
“Sec. 784. Natural Gas Consumers” ......................................................................... 103
“Sec. 785. Home Heating Oil, Propane, and Kerosene Consumers” ........................ 103
[Sec. 786 added in Title I (Clean Energy), Section 115] .......................................... 104
“Sec. 787. Allocations to Refineries” ....................................................................... 104
“Sec. 788. Supplemental Agriculture and Renewable Energy Incentives
Programs” .............................................................................................................. 104
“Sec. 789. Climate Change Consumer Refunds” ..................................................... 105
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“Sec. 790. Exchange for State-Issued Allowances” ................................................. 105
“Sec. 791. Auction Procedures”................................................................................ 106
“Sec. 792. Auctioning Allowances for Other Entities” ............................................. 107
“Sec. 793. Establishment of Funds” ......................................................................... 108
“Sec. 794. Oversight of Allocations” ........................................................................ 108
“Sec. 795. Exchange for Early Action Offset Credits” ............................................. 108
Subtitle C—Additional Greenhouse Gas Standards .............................................................. 109
Sec. 331. Greenhouse Gas Standards .............................................................................. 109
“Title VIII—Additional Greenhouse Gas Standards ................................................ 109
“Sec. 801. Definitions” ............................................................................................. 109
“Part A ─ Stationary Source Standards” ................................................................... 109
“Sec. 811. Standards of Performance” ...................................................................... 109
“Part C ─ Exemptions from Other Programs”........................................................... 110
“Sec. 831. Criteria Pollutants” ................................................................................... 110
“Sec. 832. International Air Pollution” ...................................................................... 110
“Sec. 833. Hazardous Air Pollutants” ........................................................................ 110
“Sec. 834. New Source Review” ............................................................................... 111
“Sec. 835. Title V Permits” ........................................................................................ 111
Sec. 332. HFC Regulation ............................................................................................... 111
“Sec. 619. Hydrofluorocarbons (HFCs)”................................................................... 111
Sec. 333. Black Carbon .................................................................................................... 113
“Part E ─ Black Carbon” ........................................................................................... 113
“Sec. 851. Black Carbon” .......................................................................................... 113
Sec. 334. States ................................................................................................................ 113
Sec. 335. State Programs ................................................................................................. 114
“Part F ─ Miscellaneous” .......................................................................................... 114
“Sec. 861. State Programs” ........................................................................................ 114
“Sec. 862. Grants for Support of Air Pollution Control Programs” .......................... 114
Sec. 336. Enforcement ..................................................................................................... 114
Sec. 337. Conforming Amendments ................................................................................ 115
Sec. 338. Davis-Bacon Compliance................................................................................. 115
Summary of section ................................................................................................... 115
Comments .................................................................................................................. 115
Sec. 339. National Strategy for Domestic Biological Carbon Sequestration ................... 115
Sec. 340. Reducing Acid Rain and Mercury Pollution .................................................... 115
Subtitle D—Carbon Market Assurance .................................................................................. 116
Sec. 341. Carbon Market Assurance ................................................................................ 116
“Part IV—Carbon Market Assurance” ...................................................................... 116
“Sec. 401. Oversight and Assurance of Carbon Markets” ......................................... 116
Sec. 342. Carbon Derivative Markets .............................................................................. 117
Subtitle E—Additional Market Assurance ............................................................................. 118
Sec. 351. Regulation of Certain Transactions in Derivatives Involving Energy
Commodities ................................................................................................................. 118
Sec. 352. No Effect on Authority of the Federal Energy Regulatory Commission ......... 119
Sec. 353. Inspector General of the Commodity Futures Trading Commission ............... 119
Sec. 354. Settlement and Clearing Through Registered Derivatives Clearing
Organizations ................................................................................................................ 119
Sec. 355. Limitation on Eligibility to Purchase a Credit Default Swap ........................... 119
Sec. 356. Transaction Fees .............................................................................................. 120
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Sec. 357. No Effect on Antitrust Law or Authority of the Federal Trade
Commission ................................................................................................................. 120
Sec. 358. Effect of Derivatives Regulatory Reform Legislation..................................... 120
Sec. 359. Cease-and-Desist Authority ............................................................................ 121
Sec. 360. Presidential Review of Regulations ................................................................ 121
Title IV ─ Transitioning to a Clean Energy Economy ................................................................ 121
Subtitle A— Ensuring Real Reductions In Industrial Emissions .......................................... 121
Sec. 401. Ensuring Real Reductions in Industrial Emissions ......................................... 121
“Part F—Ensuring Real Reductions in Industrial Emissions”.................................. 121
“Sec. 761. Purposes” ................................................................................................ 121
“Sec. 762. Definitions” ............................................................................................. 122
“Subpart 1—Emission Allowance Rebate Program”................................................ 122
“Sec. 763. Eligible Industrial Sectors” ..................................................................... 122
“Sec. 764. Distribution of Emission Allowance Rebates” ........................................ 123
“Subpart 2 ─ Promoting International Reductions in Industrial Emissions” ........... 124
“Sec. 765. International Negotiations” ..................................................................... 124
“Sec. 766. United States Negotiating Objectives with respect to Multilateral
Environmental Negotiations” ................................................................................ 125
“Sec. 767. Presidential Reports and Determinations” .............................................. 125
“Sec. 768. International Reserve Allowance Program” ............................................ 126
“Sec. 769. Iron and Steel Sector” ............................................................................. 127
Subtitle B—Green Jobs and Worker Transition .................................................................... 127
Part 1—Green Jobs ......................................................................................................... 127
Sec. 421. Clean Energy Curriculum Development Grants ............................................. 127
Sec. 422. Increased Funding for Energy Worker Training Program ............................... 128
Sec. 423. Development of Information and Resources Clearinghouse for
Vocational Education and Job Training in Renewable Energy Sectors ....................... 128
Sec. 424. Monitoring Program Effectiveness ................................................................. 128
Sec. 424A. Green Construction Careers Demonstration Project .................................... 129
Part 2—Climate Change Worker Adjustment Assistance ............................................... 129
Sec. 425. Petitions, Eligibility Requirements, and Determinations ................................ 129
Sec. 426. Program Benefits ............................................................................................. 130
Sec. 427. General Provisions .......................................................................................... 130
Subtitle C—Consumer Assistance ........................................................................................ 130
Sec. 431. Energy Refund Program .................................................................................. 130
“Title XXII—Energy Refund Program ..................................................................... 131
“Sec. 2201. Energy Refund Program” ...................................................................... 131
Sec. 432. Modification of Earned Income Credit Amount for Individuals ..................... 131
Sec. 433. Protection of Social Security and Medicare Trust Funds ................................ 132
Subtitle D—Exporting Clean Technology ............................................................................ 132
Sec. 441. Findings and Purposes..................................................................................... 132
Sec. 442. Definitions ....................................................................................................... 133
Sec. 443. Governance ..................................................................................................... 134
Sec. 444. Determination of Eligible Countries ............................................................... 134
Sec. 445. Qualifying Activities ....................................................................................... 134
Sec. 446. Assistance ........................................................................................................ 135
Subtitle E. Adapting to Climate Change ............................................................................... 135
Part 1. Domestic Adaptation ........................................................................................... 135
Subpart A. National Climate Change Adaptation Program ............................................. 135
Sec. 451. Global Change Research and Data Management ............................................ 136
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Sec. 452. National Climate Service ................................................................................ 139
Sec. 453. State Programs to Build Resilience to Climate Change Impacts .................... 141
Subpart B. Public Health and Climate Change ............................................................... 141
Sec. 461. Sense of Congress on Public Health and Climate Change ............................. 141
Sec. 462. Relationship to Other Laws ............................................................................ 142
Sec. 463. National Strategic Action Plan ....................................................................... 142
Sec. 464. Advisory Board .............................................................................................. 142
Sec. 465. Reports ........................................................................................................... 143
Sec. 466. Definitions ...................................................................................................... 143
Sec. 467. Climate Change Health Protection and Promotion Fund ............................... 143
Subpart C. Natural Resource Adaptation ........................................................................ 143
Sec. 471. Purposes ......................................................................................................... 143
Sec. 472. Natural Resources Climate Change Adaptation Policy .................................. 143
Sec. 473. Definitions ...................................................................................................... 144
Sec. 474. Council on Environmental Quality ................................................................ 144
Sec. 475. Natural Resources Climate Change Adaptation Panel ................................... 144
Sec. 476. Natural Resources Climate Change Adaptation Strategy ............................... 145
Sec. 477. Natural Resources Adaptation Science and Information ................................ 145
Sec. 478. Federal Natural Resource Agency Adaptation Plans ...................................... 146
Sec. 479. State Natural Resources Adaptation Plans ..................................................... 146
Sec. 480. Natural Resources Climate Change Adaptation Fund .................................... 146
Sec. 481. National Wildlife Habitat and Corridors Information Program. .................... 146
Sec. 482. Additional Provisions Regarding Indian Tribes ............................................. 147
Part 2. International Climate Change Adaptation Program ............................................. 147
Sec. 491. Findings and Purposes.................................................................................... 147
Sec. 492. Definitions ...................................................................................................... 147
Sec. 493. International Climate Change Adaptation Program ....................................... 148
Sec. 494. Distribution of Allowances............................................................................. 148
Sec. 495. Bilateral Assistance ........................................................................................ 148
Subtitle F—Deficit Neutral Budgetary Treatment ................................................................ 149
Sec. 496. Deficit Neutrality ........................................................................................... 149
Title V—Agriculture and Forestry Related Offsets ..................................................................... 149
Subtitle A—Offset Credit Program from Domestic Agricultural and Forestry Sources ....... 149
Sec. 501. Definitions ....................................................................................................... 149
Sec. 502. Establishment of Offset Credit Program from Domestic Agricultural
and Forestry Sources.................................................................................................... 150
Sec. 503. List of Eligible Domestic Agricultural and Forestry Offset Practice
Types ............................................................................................................................ 150
Sec. 504. Requirements for Domestic Agricultural and Forestry Practices .................... 150
Sec. 505. Project Plan Submission and Approval ........................................................... 151
Sec. 506. Verification of Offset Practices ....................................................................... 152
Sec. 507. Certification of Offset Credits ......................................................................... 152
Sec. 508. Ownership and Transfer of Offset Credits ...................................................... 152
Sec. 509. Program Review and Revision ........................................................................ 152
Sec. 510. Environmental Considerations ........................................................................ 153
Sec. 511. Audits .............................................................................................................. 153
Subtitle B—USDA Greenhouse Gas Emission Reduction and Sequestration Advisory
Committee .......................................................................................................................... 153
Sec. 531. Establishment of USDA Greenhouse Gas Emission Reduction and
Sequestration Advisory Committee ............................................................................. 153
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Subtitle C—Miscellaneous.................................................................................................... 154
Sec. 551. International Indirect Land Use Changes ........................................................ 154
Sec. 552. Biomass-Based Diesel ..................................................................................... 155
Sec. 553. Modification of Definition of Renewable Biomass ........................................ 155
Figures
Figure 1. Simplified Emission Allowance Distribution—2016....................................................... 7
Figure 2. Simplified Emission Allowance Distribution—2030....................................................... 8
Contacts
Author Information...................................................................................................................... 156
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House
Introduction and Overview of Legislation
H.R. 2454, the American Clean Energy and Security Act of 2009, was introduced May 15, 2009,
by Representatives Waxman and Markey, and was subsequently modified (both technical and
substantive changes) and ordered reported by the House Committee on Energy and Commerce on
May 21, 2009. The bill was reported (amended) June 5 (H.Rept. 111-137, Part I). It was passed
by the House on June 26, 2009. The five titles of the legislation cover clean energy, energy
efficiency, reducing global warming pollution, transitioning to a clean energy economy, and
agriculture and forestry related offsets. Among the many provisions contained in the bill, several
of the major provisions are summarized in this overview.
Following the overview, this report contains a section-by-section summary of H.R. 2454 as
passed by the House, and interpretive or informative commentary for some sections, when
appropriate.
Combined Efficiency and Renewable Electricity Standard
The legislation would amend the Public Utility Regulatory Policies Act of 1978 (PURPA) to
create an integrated energy efficiency and renewable electricity standard starting in 2012,
requiring retail electricity suppliers to meet 20% of their electricity demand through renewable
energy sources and energy efficiency by 2020. Under the standard, each retail electricity supplier
with annual sales of 4 million megawatt-hours (mwh) or more would be required to submit
Renewable Electricity Credits (RECs) equal to at least three-quarters of its annual combined
target. One REC would be awarded for each mwh of renewable energy generated from renewable
energy resources such as wind, solar, geothermal, marine or hydrokinetic, biomass, landfill gas,
or qualified hydropower (as defined in Sec. 101). The credits can be awarded to generators or to
“central procurement states.”1
RECs could be traded or banked, but would be retired after being submitted in proof of
compliance. “Distributed renewable generation”—small-scale, renewable power production
located at consumer sites—would qualify for three RECs for each mwh of eligible renewable
electricity. Funds collected from alternative compliance payments and civil penalties for noncompliance would be redistributed annually to help deploy renewable energy technologies and
fund cost-effective energy efficiency programs. In establishing regulations for this program, the
Secretary of Energy would be required, to the extent practicable, to incorporate and preserve best
practices of existing state renewable electricity standards and cooperate with states on minimizing
administrative costs and burdens.
Retail electric suppliers would be required to submit an amount of federal renewable electricity
credits and demonstrated total annual electricity savings equal to the annual combined targets, as
shown in the following schedule for each year:
2012 and 2013: 6%
2014 and 2015: 9.5%
2016 and 2017: 13%
2018 to 2019: 16.5%
2020 through 2039: 20%
1 A central procurement state is state that as of January 1, 2009, has adopted and implemented a program under which
the state, rather than individual utilities, procures renewable electricity.
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The definition of renewable electricity is augmented by adding other qualifying energy resources
(i.e., landfill gas, wastewater treatment gas, coal mine methane, and qualified waste-to-energy) to
the list of renewable energy resources.
Geologic Sequestration of Carbon Dioxide
H.R. 2454 would require the Administrator of the Environmental Protection Agency (EPA) to
submit a report to Congress, within one year of enactment, detailing a unified national strategy
for addressing the key legal and regulatory barriers to deployment of commercial scale carbon
capture and sequestration. The bill requires two other reports from studies examining: (1) how,
and under what circumstances, the environmental statutes for which EPA has responsibility would
apply to CO2 injection and geologic sequestration activities, due within 12 months of enactment;
and (2) the legal framework for geologic sequestration sites, including existing federal
environmental statutes, state environmental statutes, and state common law, due within 18 months
of enactment.
The legislation would amend the Safe Drinking Water Act (SDWA) by inserting a provision
directing the EPA Administrator to promulgate, within one year of enactment, regulations for the
development, operation, and closure of carbon dioxide geologic sequestration wells, and to take
into consideration the ongoing SDWA rulemaking regarding these wells. It would also amend
Title VIII of the Clean Air Act and establish a coordinated certification and permitting process for
geologic sequestration sites. Within two years of enactment, the Administrator would be required
to promulgate regulations to protect human health and the environment by minimizing the risk of
atmospheric release of carbon dioxide injected for geologic sequestration, including enhanced
hydrocarbon recovery combined with geologic sequestration. This provision broadens the scope
of regulatory authority beyond protecting underground sources of drinking water under SDWA to
protecting against atmospheric releases of CO2 under the Clean Air Act.
H.R. 2454 would authorize a Carbon Storage Research Corporation to establish and administer a
program to accelerate the commercial availability of carbon dioxide capture and storage
technologies and methods by awarding grants, contracts, and financial assistance to electric
utilities, academic institutions, and other eligible entities. The corporation would be established
by a referendum if providers of at least two-thirds of the total quantity of fuel-based electricity
delivered to retail consumers vote for approval. If 40% or more of state regulatory authorities
were to submit written notices of opposition to the creation of the corporation, the corporation
would not be established. If established, the corporation would levy an assessment on distribution
utilities for all fossil fuel-based electricity delivered to retail customers, and would adjust the
assessment rates to generate between $1.0 billion and $1.1 billion per year.
The bill would amend Title VII of the Clean Air Act to require that the EPA Administrator
promulgate regulations to distribute emission allowances to support the commercial deployment
of carbon capture and sequestration technologies in both electric power generation and industrial
operations. Among other eligibility requirements, it would require that the owner or operator
geologically sequester captured carbon dioxide or convert it to a stable form that can be safely
and permanently sequestered.
The legislation would also amend Title VIII of the Clean Air Act (CAA) by adding performance
standards for new coal-fired power plants and, in some instances, for existing plants retrofitted
with carbon capture and sequestration technology. Covered electric generating units (EGUs) that
are initially permitted on or after January 1, 2020, would be required to reduce their annual
emissions of carbon dioxide produced by the unit by 65%. EGUs initially permitted before
January 1, 2020, would need to achieve a 50% reduction.
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Vehicles and Fuels
H.R. 2454 contains several provisions related to vehicles and fuels. Most notably, the bill would
provide significant incentives for automakers and parts suppliers to produce plug-in vehicles and
other advanced technology vehicles. For example, in early years, 3% of allowances from the
greenhouse gas cap-and-trade program would be allocated to the automotive sector to provide
grants to refit or establish plants to build plug-ins and other advanced vehicles. Depending on the
allowance price in the cap-and-trade system, this allocation could easily be worth billions of
dollars each year.
H.R. 2454 also directs the Environmental Protection Agency to establish greenhouse gas
emissions standards for various transportation sectors. The bill would require EPA to establish
standards for heavy-duty vehicles and non-road vehicles (including marine vessels and
locomotives). A provision from the version reported by the Energy and Commerce Committee
requiring emissions standards for aircraft and aircraft engines was not included in the Housepassed version.
The bill would expand the definition of “renewable biomass” for the renewable fuel standard
(RFS) established in the Energy Policy Act of 2005 and expanded in the Energy Independence
and Security Act of 2007 (EISA). The RFS requires an increasing amount of biofuels to be
blended into gasoline and diesel fuel. By 2022, the mandate reaches 36 billion gallons of biofuels.
However, the amendments to the RFS in EISA restricted the feedstocks that would qualify as
renewable biomass under the RFS, effectively excluding a large potential pool of woody biomass,
as well as biomass from federal lands and from lands not previously cultivated. H.R. 2454 would
amend the biomass definition to allow fuel produced from some of these feedstocks to qualify
under the RFS.
Not included in the bill is a low carbon fuel standard (LCFS) similar to that established in
California. An LCFS would require that fuel suppliers reduce the lifecycle greenhouse gas
emissions from motor fuels relative to a baseline year. Such an LCFS would not be an explicit
mandate for biofuel use, but would likely promote some biofuels, as well as other low-carbon
transportation fuels such as natural gas and electricity produced from renewable resources. An
LCFS was part of an earlier draft of the bill but was not included in the bill as introduced. Further,
a “cash for clunkers” provision was removed from the bill because a nearly identical program was
enacted as part of P.L. 111-32.
Smart Grid
H.R. 2454 includes several provisions aimed at supporting development and installation of smart
grid2 technologies. The bill would direct the Department of Energy and Environmental Protection
Agency to identify products that could be cost-effectively equipped with smart grid capability. An
example would be a dishwasher that could wirelessly communicate with a “smart meter” installed
by a utility in a home. This linkage would allow the utility to temporarily stop operation of the
dishwasher when electricity was scarce or expensive (assuming the homeowner had agreed to the
procedure). The legislation would also direct the Federal Trade Commission to initiate a
2 The “smart grid” is intended to give the power grid some of the characteristics of a computer network, in which
information concerning, and control of, power supply and demand will flow between and be shared by individual
customers and utility control centers. The smart grid primarily involves the development of software and small-scale
technology (e.g., smart meters for homes and businesses that would interface with grid controls) rather than
construction of new transmission lines.
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rulemaking to determine whether smart grid information, such as potential dollar savings to the
consumer, should be added to ENERGY GUIDE product labels. (ENERGY GUIDE is an existing
federal program for labeling energy efficient products.)
The legislation would establish requirements for electric power retailers to reduce their peak
loads using smart grid and other energy efficient technologies; it would modify an energy
efficiency public information program authorized by the Energy Policy Act of 2005 (EPACT05)
to make it into a smart grid and energy efficiency information program authorized through 2020.
H.R. 2454 would also modify an EPACT05 energy efficiency appliance rebate program to add
appliances with smart grid capabilities. Authorized funding would be increased from $50 million
annually to $100 million, and the authorization would be extended to run through FY 2015.
Additionally, H.R. 2454 would require state regulatory authorities and self-regulating power
suppliers (such as municipal utilities) to consider implementing standards intended to ensure that
utility smart grid systems would be compatible with plug-in electric drive vehicles.
Energy Efficiency
The bill includes a variety of energy efficiency provisions that cover grants, standards, rebates
and other programs for buildings, lighting and commercial equipment, water-using equipment,
wood stoves, industrial equipment, and healthcare facilities.
Two new programs would be established that aim to facilitate the use of energy efficiency and
renewable energy programs to more directly support the goals of curbing greenhouse gas
emissions to mitigate climate change. First, the Department of Energy (DOE) would be required
to create a State Energy and Environment Development (SEED) program, which allows each
state to collect major federal energy grant appropriations (Weatherization, State Energy,
Efficiency Block Grants, and LIHEAP) into a common fund designed to support clean energy,
energy efficiency, and climate change mitigation. Second, EPA would be directed to implement a
legislated carbon allowance distribution program that would be used to help support several
energy efficiency and renewable energy programs.
Building energy efficiency improvements would be addressed by expanded responsibilities at
DOE and EPA. DOE would be required to regularly update its model building energy codes,
which are available for states to adopt and adapt to local circumstances. Further, DOE would be
directed to establish a rebate program designed to encourage replacement of manufactured homes
owned by low-income families. Also, DOE would be required to develop a program that supports
efficiency retrofits of existing commercial buildings. EPA, in parallel, would be required to
develop a program to support efficiency retrofits of existing residential buildings. Also, EPA
would be directed to establish a building energy efficiency labeling program that would be similar
to its existing energy labeling program for cars and appliances.
For lighting and commercial equipment, new efficiency standards would be set by law and some
new procedures and programs would be put in place. Lighting efficiency standards would be set
for the niche categories of outdoor luminaires, outdoor high output lamps, portable light fixtures,
and incandescent reflector lamps. Commercial equipment standards would be legislated for the
niche categories of water dispensers, commercial hot food holding cabinets, portable electric
spas, and commercial furnaces. Also, in general, existing criteria for setting appliance efficiency
standards would be expanded to include criteria related to greenhouse gas emissions and other
factors. Further, DOE would be directed to create an incentive program that aims to encourage
consumer purchases of the most energy-efficient appliances, while also providing an incentive to
remove the least efficient appliances from commercial use. An explicit cost-effectiveness purpose
would be set by law for EPA’s Energy Star program.
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Water use efficiency improvements would be addressed by three provisions. First, EPA’s
WaterSense program, a voluntary labeling program to reduce water use, would be given statutory
authority. Second, federal agencies would be directed to use WaterSense-labeled and DOE
Federal Energy Management Program (FEMP)-designated water-using products and services.
Third, EPA would be required to provide funds to support state rebate or voucher programs for
consumer purchases of residential water-efficient products and services.
New residential wood stoves and pellet stoves would have to meet an environmental performance
standard set by EPA. Further, EPA would be authorized to provide funds to state and local
governments, American Indian tribes, Alaskan Native villages, and certain nonprofit
organizations to replace stoves that do not meet the standards. To address a concern that
technological improvements gradually erode the true energy efficiency of products identified with
the EPA Energy Star label, EPA would be required to establish a grading system that ranges from
“A” (most efficient) to “F” (least efficient) and periodically test products to verify compliance.
Industrial energy efficiency would be addressed by four provisions. First, DOE would be directed
to expand an existing industrial standards program to include industrial plant energy efficiency
certification standards. Second, DOE would be required to establish a monetary award program to
spur innovation in the recovery of thermal energy in power plants and industrial facilities. Third,
DOE would be directed to assess the electric motor market, identify energy efficiency
improvement opportunities, and develop methods to estimate energy and cost savings and certain
program impacts. Fourth, DOE would be required to establish a rebate program for purchasers
and distributors of energy efficient motors.
Regulation of energy savings performance contracts (ESPCs) for federal agencies would be
revised to require that agencies establish competitions for task and delivery orders. Further, the
allowable types of energy transactions under ESPCs would be expanded to include thermal forms
of renewable energy. Also, onsite renewable energy production would become eligible for helping
to meet agency requirements for use of renewable energy.
Energy efficiency in public institutions is addressed by three provisions. First, under the Energy
Conservation Program for Schools and Hospitals, the list of eligible facilities would be expanded
to specifically include not-for-profit hospitals and not-for-profit inpatient health facilities. Further,
the authorization for grants would be increased from $1 billion to $2.5 billion annually. Second,
the definition of community eligibility for DOE’s Energy Efficiency and Conservation Block
Grant program would be expanded to include regional groups of small local governments. Third,
DOE would be authorized to create a new grant program for nonprofit community development
organizations that provide energy efficiency and renewable energy financing for businesses and
projects in low-income communities.
A national carbon labeling and disclosure program would be established at EPA, which would
likely have some parallels to EPA’s existing energy labeling program. DOE would be required to
provide affiliated islands (U.S. trust territories) with energy planning and implementation
assistance. Each federal agency, in collaboration with OMB, would be required to create an
implementation strategy for the purchase and use of energy efficient information and
communications technologies, infrastructure, and practices. A national goal would be established
to improve energy productivity by at least 2.5% per year from 2012 through 2030.
A new subtitle was added in the Manager’s Amendment that provides a number of provisions for
energy efficient neighborhoods. The bill requires The Secretary of Housing and Urban
Development (HUD) to promulgate regulations to encourage energy efficiency in HUD housing
programs. The language defines standards for energy efficiency to be applied, as appropriate, in
the implementation of a number of housing programs. Different programs apply to single-family
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residences, multi-family residences, rural residences, and some non-residential buildings.
Programs provide incentives to improve energy efficiency through mortgage and loan
instruments, loans to upgrade existing residential properties, and grants to increase sustainable
low-income community development capacity.
Major Cap-and-Trade Provisions
As passed, Title III of H.R. 2454 would amend the Clean Air Act to set up a cap-and-trade system
that is designed to reduce greenhouse gas (GHG) emissions from covered entities 17% below
2005 levels by 2020 and 83% below 2005 levels by 2050. Covered entities are phased into the
program over a four-year period from 2012 to 2016. When the phase-in schedule is complete, the
cap will apply to entities that account for 84.5% of U.S. total GHG emissions. By including other
provisions contained in the legislation (e.g., a separate cap-and-trade program for
hydrofluorocarbons (HFCs)), the World Resources Institute (WRI) estimates that the overall
potential net reductions in GHG emissions from H.R. 2454 could range from 28%-33% below
2005 levels in 2020 and 75%-81% in 2050.3
The market-based approach adopted by H.R. 2454 would establish an absolute cap on the
emissions from covered sectors and would allow trading of emissions permits (“allowances”)
among covered and non-covered entities.4 The bill achieves its broad coverage through an
upstream compliance mandate on petroleum, most fluorinated gas producers and importers, and a
downstream mandate on electric generators and industrial sources, and a midstream mandate on
natural gas local distribution companies (LDCs).5 Generally, the emissions cap would limit
greenhouse gas emissions from entities that produce or import more than 25,000 metric tons
annually (carbon dioxide equivalent) of greenhouse gases (or produce or import products that
when used will emit greenhouse gases).
If left unmitigated, any greenhouse gas cap-and-trade program (as well as a carbon tax
alternative) would be regressive. In an attempt to mitigate this distributional problem, H.R. 2454
allocates a substantial percentage of the allowances available for the benefit of energy consumers
and low-income households. In some cases, these allowances are allocated at no cost to entities
such as LDCs, with the express purpose of mitigating energy cost increases; in other cases, such
as low-income assistance, the allowances are auctioned by EPA and the proceeds distributed to
eligible recipients. As the program proceeds through the mid-2020s, the energy cost relief, along
with other free allocations are phased out in favor of more government auctioning with most of
the proceeds returned to households on a per-capita basis. See Figure 1 and Figure 2 for a
summary of how emission allowances are distributed in 2016 and 2030, respectively.
3 John Larsen and Robert Hellmayr, Emission Reductions Under the American Clean Energy and Security Act of 2009
(World Resources Institute, May 19, 2009).
4 See “Common Terms” box for definitions of terms in boldface.
5 Title III sets up a separate cap-and-trade program for hydrofluorocarbons (HFCs).
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Figure 1. Simplified Emission Allowance Distribution—2016
CCS, 1.75%
Energy Eff.
(States), 7.1%
Small Refiners,
0.25%
Oil Refiners, 2%
R&D, 1.5% Ag.& Renewables
Incentives, 0.28%
Autos, 3%
Int'l Deforest., 5%
Domestic Adapt.,
0.9%
Dom. Wildlife & Res.,
0.39%
Int'l Clean Tech., 1%
Int'l Adapt., 1%
Trade-Exposed
Industries, 13.4%
Heating oil
Consumers,
1.5%
Natural Gas
LDCs, 9%
Low-Income
Consumers, 15%
Deficit Reduction,
0.2%
Auction,
16.5%
Worker Assistance,
0.5%
Domestic Adapt.,
0.1%
Dom. Wildlife & Res.,
0.62%
Small Electric
LDCs, 0.5%
Long-Term Contracts,
1.5%
Electric LDCs, 30%
Merchant Coal, 3.5%
Source: Prepared by CRS
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Figure 2. Simplified Emission Allowance Distribution—2030
Int'l Clean Tech., 4%
Int'l Adapt., 4%
Low-Income
Consumers, 15%
Dom. Wildlife
& Res., 1.54%
Worker Assistance,
1.0%
Domestic
Adaptation, 3.9%
Domestic Adapt., 0.1%
Int'l Deforestation,
3%
Auction,
65.3%
R&D, 1.5%
Energy Eff. (States),
5.0%
Dom. Wildlife & Res.,
2.46%
Consumer Rebate, 30%
CCS, 5.00%
Trade-Exposed
Industries, 6.7%
Auctioned in Prior
Years, 17%
Source: Prepared by CRS
H.R. 2454’s allocation scheme also attempts to smooth the economy’s transition to a less carbonintensive future through free allowance allocations to energy-intensive, trade-exposed industries,
merchant coal-fired electric generators, and petroleum refiners. Bonus allotments of allowances
are allocated for emission reductions achieved by carbon capture and storage technology. Except
for carbon capture and storage, these free allocations of allowances are phased out by the early to
mid-2030s.
Finally, H.R. 2454’s allocation scheme attempts to address greenhouse gas emissions by
providing allowances to help prevent further tropical deforestation and to fund climate adaptation
activities.
Because allowance prices can be volatile, cap-and-trade bills generally provide some mechanisms
to address either the potential gyrations, or allowance prices more generally. H.R. 2454 does not
have a “safety valve”—an alternative compliance option that permits covered entities to pay an
excess emissions fee instead of reducing emissions. Instead, the legislation addresses cost control
through five main mechanisms: (1) unlimited banking and limited borrowing, (2) a two-year
compliance period, (3) a strategic reserve auction with a pool of allowances available at a
minimum reserve price, (4) periodic auctions with a reserve price, and (5) broad limits on the use
of offsets.
With respect to allowance price volatility, the bill includes two design elements that may dampen
volatility to some degree. First, the bill allows entities to borrow (without interest) allowances
from the year immediately following the current year, effectively creating a rolling two-year
compliance period. Second, EPA is directed to hold strategic reserve auctions. A strategic reserve
of allowances borrowed from future years is auctioned off in the early years of the program. This
increases the availability of allowances early, but maintains the overall emissions cap. The
strategic reserve auction would include a reserve price: $28/allowance in 2012 that would
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increase annually in 2013 and 2014. Starting in 2015, the reserve price would be 60% above the
36-month rolling average allowance price.
Regular auctions mandated by the bill also have a reserve price: $10 (in 2009 dollars) in 2012,
increasing at 5% real annually. An auction reserve price would help create an allowance price
floor, and help dampen allowance price spikes. The auctions, along with the other mechanisms
listed above, attempt to bracket volatility. Whether they would work is subject to debate,
particularly with respect to short-term price volatility.
With respect to overall cost control, analysis indicates that an important cost control mechanism
in the cap-and-trade program is the availability of domestic and international offsets. The bill
limits the availability of domestic and international offsets to two billion tons of emissions
annually—divided equally between domestic and international pools. According to analysis done
by EPA, the Congressional Budget Office, and CRA International, the availability of these offsets
reduces projected allowance prices under the program by half.6
Another concern with respect to a cap-and-trade program is potential allowance market abuse and
manipulation. The size of a U.S. carbon market could be in the hundreds of billions of dollars,
and involve all of the financial instruments, particularly derivatives, that any other commodity
market includes. To provide oversight of the newly created carbon allowance market, the bill has
detailed provisions for Federal Energy Regulatory Commission (FERC) oversight of the cash
allowance market, and enhanced Commodity Futures Trading Commission (CFTC) oversight of
allowance derivatives. With respect to the latter, the bill would remove energy commodities
(including carbon allowances) from the category of “exempt commodity” and require that overthe-counter transactions be cleared through a clearing house (a standard feature of a futures
exchange). In addition the CFTC is required to establish position limits, thus setting ceilings on
the number of energy contracts that any person could hold.
Besides the two emission caps created under Title III, the bill contains other provisions in Titles
III and IV to reduce greenhouse gas emissions and potential carbon leakage. Among the most
important of these provisions are (1) preventing tropical deforestation, (2) performance standards
for uncovered entities that emit over 10,000 metric tons annually, (3) a 1.25 offset requirement for
international offsets after 2017; and (4) programs designed to reduce potential carbon leakage.
First, H.R. 2454 has a supplemental greenhouse gas reduction program that requires EPA to use
some of the allowances available under the cap-and-trade program to fund international projects
to reduce deforestation. The goal of the program is to achieve 720 million metric tons of
additional emission reductions in 2020 (about 10% of U.S. 2005 emissions), and a total of 6
billion metric tons by 2025 (about equal the U.S. emissions in 1990). If achieved, this would have
significant effect on the net emission reductions achieved in the early years of the program, as
suggested by the WRI study cited earlier.
Second, as noted above, not all greenhouse gas emitting sources are covered by the Title III capand-trade programs. Under other provisions of Title III, stationary sources not covered by the
Title III caps are potentially subject to greenhouse gas performance standards. WRI estimates that
6 U.S. Environmental Protection Agency, EPA Preliminary Analysis of the Waxman-Markey Discussion Draft: The
American Clean Energy and Security Act of 2009 in the 111th Congress (April 20, 2009); Congressional Budget Office,
Congressional Budget Office Cost Estimate: H.R. 2454, American Clean Energy and Security Act of 2009 (as Ordered
Reported by the House Committee on Energy and Commerce) (June 5, 2009); and, CRA International, Impact on the
Economy of the American Clean Energy and Security Act of 2009 (H.R. 2454), prepared for the National Black
Chamber of Commerce (May 2009).
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standards for uncapped sources could reduce emissions from such sources by about 115 million
metric tons annually.
Third, as passed, the cap-and-trade program requires that international offsets submitted for
compliance beginning in 2018 be discounted (i.e., it takes 1.25 offset credits to equal 1.00
allowance). Depending on the number of international offsets used for compliance after 2017, the
discount factor could add up to 375 million metric tons of reductions annually.
H.R. 2454 takes two primary approaches to mitigating the potential impact of carbon leakage on
the net greenhouse gas reductions to be achieved under the bill.7 The first is the allocation of
allowances at no cost to energy-intensive, trade-exposed industries, as identified above. The
second is an international reserve allowance scheme that essentially imposes a shadow allowance
requirement on importers of energy-intensive, trade-exposed products, creating a de facto tariff.
Basically, the scheme would require importers of energy-intensive products from countries with
insufficient carbon policies to submit a prescribed amount of “international reserve allowances,”
or IRAs, for their products to gain entry into the United States. Based on the greenhouse gas
emissions generated in the production process, IRAs would be submitted on a per-unit basis for
each category of covered goods from a covered country.
Whether the international reserve allowance scheme would actually work is unclear. The daunting
administrative, informational, and analytical resources necessary to implement such a program
would create significant issues in any attempt to implement it. Likewise, it is not clear that the
potentially severe World Trade Organization (WTO) implications of the provision have been fully
exposed and accommodated.
Provisions in Title V Added by the “Manager’s Amendment”
The June 26, 2009, “Manager’s Amendment” included a new Title V to H.R. 2454—“Agriculture
and Forestry Related Offsets.” Most of this title concerns the establishment of a separate offsets
program for agriculture and forestry practices that is to be implemented by the U.S. Department
of Agriculture (USDA), rather than EPA under Title III. However, the title also includes
provisions that are not part of the new offsets program. Some of these provisions have been the
subject of intense debate.
Subtitle A of Title V would create within USDA an offsets program that covers domestic
agriculture and forestry-related practices. For the most part, the provisions in Title V are similar
to those found in Title III, the most striking exception being the difference in implementing
agencies. The separate offset jurisdictions between EPA and USDA are made by the revised
definitions of “domestic offset credit” and “offset credit.” These terms now have different
meanings between Parts C and D of Title III. In effect, these changes allow (domestic) offset
credits generated under Title V (agriculture and forestry offsets) to be used for compliance per
Title III, Part C, but would separate the implementation of offsets generated under Title III (Part
D) and Title V.
In the reported version of the bill, many stakeholders were concerned that the Title III offset
program did not include an explicit list of offset practices. Such a list is now part of the proposal
in Title V. However, as written, USDA is not required to include the practices specifically
identified in the regulatory program that would carry out the statutory provisions.
7 For a full discussion of carbon leakage, see CRS Report R40100, “Carbon Leakage” and Trade: Issues and
Approaches, by Larry Parker and John Blodgett.
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Title V would set up a domestic offset development process almost identical to the one in Title
III: Offset project developers would submit a petition to USDA; USDA would approve or reject
the petition; and third-party verification would be required before USDA would issue offset
credits. But there are several differences identified in the section-by-section analysis below.
One key difference is that Title V would allow USDA to issue (in lieu of offset credits) a “term
offset credit.” The inclusion of “term offset credits” is a new concept in U.S. cap-and-trade
proposals. This mechanism is similar to the temporary certified emission reductions (tCER) that
are allowed under the Kyoto Protocol for forestry and agriculture projects. Term offset credits are
temporary offsets that may be submitted for compliance per the conditions of Section 722(d)(2).
These credits expire at their term’s conclusion and must be replaced with emission allowances,
other offsets, or unexpired term offset credits. Term offset credits address concerns regarding the
permanence of particular offset practices, such as agriculture sequestration efforts. In contrast to
offset credits, reversals from term offset credits are only relevant during their crediting period.
In addition to the offsets program, Title V includes several other provisions. Within Section 501
(definitions), the bill specifically excludes “agriculture and forestry sectors” from the definition
of “capped sector” in Title III (i.e., the cap-and-trade program). However, neither the phrase
“agriculture and forestry sectors” nor “capped sector” appear elsewhere in the bill.
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Common Terms
Allowance. A limited authorization by the government to emit 1 metric ton of carbon dioxide equivalent. Although
used generically, an allowance is technically different from a credit. A credit represents a ton of pollutant that an
entity has reduced in excess of its legal requirement. However, the terms tend to be used interchangeably, along
with others, such as permits.
Auctions. Auctions can be used in market-based pollution control schemes to allocate some or all of the allowances.
Auctions may be used to: (1) ensure the liquidity of the credit trading program; and/or (2) raise (potentially
considerable) revenues for various related or unrelated purposes.
Banking. The limited ability to save allowances for the future and shift the reduction requirement across time.
Cap-and-trade program. An emissions reduction program with two key elements: (1) an absolute limit (“cap”) on
the emissions allowed by covered entities; and (2) the ability to buy and sell (“trade”) those allowances among
covered and non-covered entities.
Coverage. Coverage is the breadth of economic sectors covered by a particular greenhouse gas reduction program,
as well as the breadth of entities within sectors.
Emissions cap. A mandated limit on how much pollutant (or greenhouse gases) affected entities can release to the
atmosphere. Caps can be either an absolute cap, where the amount is specified in terms of tons of emissions on an
annual basis, or a rate-based cap, where the amount of emissions produced per unit of output (such as electricity) is
specified but not the absolute amount released. Caps may be imposed on an entity, sector, or economy-wide basis.
Greenhouse gases. The six gases recognized under the United Nations Framework Convention on Climate Change
are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulfur hexafluoride (SF6), hydrofluorocarbons
(HFC), and perfluorocarbons (PFC). H.R. 2454 adds nitrogen trifluoride (NF3).
Leakage. The shift in greenhouse gas (GHG) emissions from an area subject to regulation (e.g., cap-and-trade
program) to an unregulated area, so reduction benefits are not obtained. This would happen, for example, if a GHG
emitting industry moved from a country with an emissions cap to a country without a cap.
Offsets. Emission credits achieved by activities not directly related to the emissions of an affected source. Examples
of offsets would include forestry and agricultural activities that absorb carbon dioxide, and reductions achieved by
entities that are not regulated by a greenhouse gas control program.
Revenue recycling. How a program disposes of revenues from auctions, penalties, and/or taxes. Revenue recycling
can have a significant effect on the overall cost of the program to the economy, as well as its effect on income
classes.
Sequestration. Sequestration is the process of capturing carbon dioxide from emission streams or from the
atmosphere and then storing it in such a way as to prevent its release to the atmosphere.
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Title I—Clean Energy
Subtitle A—Combined Efficiency and Renewable Energy Standard
Sec. 101. Combined Efficiency and Renewable Energy Standard
Summary of section
Comments
Amends the Public Utility Regulatory Policies
Act of 1978 (PURPA) to create an integrated
energy efficiency and renewable electricity
standard.
The definition of renewable electricity is
augmented by adding other qualifying
energy resources (i.e., landfill gas,
wastewater treatment gas, coal mine
methane, and qualified waste-to-energy) to
the list of renewable energy resources.
Establishes a federal Renewable Electricity
Standard to promote renewable energy
production. Under the standard, each retail
electricity supplier with annual sales of 4
million megawatt-hours (mwh) or more must
earn or acquire Renewable Electricity Credits
(RECs) for a portion of its retail electricity
sales. Credits can also be acquired by “central
procurement states.”8
In establishing regulations for this program,
FERC must, to the extent practicable,
incorporate and preserve best practices of
existing state-level renewable electricity
programs and cooperate with states on
minimizing administrative costs and burdens.
RECs can be traded or banked, and can be
earned by producing electricity from specified
renewable energy sources, including wind,
solar, geothermal, marine or hydrokinetic,
biomass, landfill gas, or qualified hydropower.
“Distributed renewable generation”—smallscale, renewable power production located at
consumer sites—qualifies for three RECs for
each mwh of eligible renewable electricity. The
object of this provision (which is explicitly
stated in the bill) is to improve the costcompetitiveness of distributed renewable power
versus more conventional electricity sources.
The required renewable energy and efficiency
percentage for each year is:
Renewable biomass definition is revised to
allow thinning materials and removed
invasive species from the National Forest
system and public lands.
The bill’s requirement that qualified
hydropower installations must result in no
water surface elevation changes at existing
dams has been criticized as impractical.
Alternatives include establishing a range of
water elevation change per kilowatt-hour of
generation and providing for no “net”
degradation of downstream resources,
habitats, or existing uses.
The program includes limited
interchangeability between energy
efficiency and renewable electricity to meet
the savings targets established by the
amendment. This interchangeability
responds to concerns that some regions of
the country do not have sufficient
renewable energy resources (such as the
lack of wind power potential in the
Southeast) to meet a pure renewable
electricity standard.
Combined heat and power or CHP (also
referred to as cogeneration) is an integrated
process to produce electricity and process
heat for industrial or commercial use, such
as space heating. Because the CHP plant
makes use of the waste heat lost in a stand-
8 A central procurement state is state that as of January 1, 2009, has adopted and implemented a program under which
the state, rather than individual utilities, procures renewable electricity.
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Summary of section
Comments
2012 and 2013: 6%
alone power plant or steam plant, it is much
more energy efficient than those types of
facilities. Many types of CHP plants are in
commercial operation.
2014 and 2015: 9.5%
2016 and 2017: 13%
2018 to 2019: 16.5%
2020 through 2039: 20%
Generally a maximum of 25% of a retailer’s (or
a Central Procurement State’s) combined
efficiency and renewable energy target can be
met with energy efficiency. This can include
energy saved by the use of high efficiency
combined heat and power plants, high
efficiency fuel cells, solar water heating, and
solar light pipe technology. However, a state
governor can petition the Commission to
increase the efficiency percentage for the
retailers in his or her state up to 40%.
FERC is required to promulgate detailed
regulations on the standards and protocols that
must be used to verify the amount of energy
efficiency savings achieved by an electricity
retailer. The verification must be performed by
an independent third-party. Retailers must
submit annual reports to FERC on verified
savings, which FERC is to review. If FERC
concludes that some of a retailer’s savings are
overstated it can exclude those savings.
The fuel cell is a generating technology that
relies on chemical reactions, without
combustion, to produce electricity. Fuel
cells are a developmental technology. The
type of fuel used in a fuel cell determines
emissions. For example, fuel cells powered
by natural gas will produce more GHGs and
other emissions than those using pure
hydrogen as a fuel. Nonetheless, natural gas
fuel cells are expected to result in cleaner
electricity generation than natural gas fired
in combustion turbines.
A solar light pipe is a tubular structure that
uses, for example, prisms to funnel daylight
into a structure to supplement or replace
electric lighting.
A state can petition FERC to delegate the
Commission’s review authority to the state,
including the adoption of alternative
verification procedures. FERC must review the
implementation of review authority delegated to
the state at least once every four years, and can
revoke the delegation if it concludes the
implementation is faulty.
The bill allows bilateral contracts for the sale of
verified electricity savings, which can be used
by the buyer to meet its annual target. An
electric retailer can only buy savings that were
achieved within the retailer’s own state. (The
bill does not provide for a system for wide-scale
trading of energy efficiency credits, as it does
for renewable electricity credits.)
A retailer can choose to meet its annual target in
whole or part with an alternative compliance
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Summary of section
Comments
payment to the state equal to $25 per megawatthour (inflation-adjusted from a base of 2009),
for each megawatt-hour of the target it does not
intend to meet with either renewable electricity
credits or energy efficiency. The state would be
required to use the payments to promote the
deployment of renewable electricity and energy
efficiency. A retailer that fails to comply with its
target must pay to FERC a civil penalty equal to
the shortfall amount (in megawatt-hours) times
double the alternative compliance payment (i.e.,
$50 per megawatt-hour, inflation-adjusted).
Sec. 102. Clarifying State Authority to Adopt Renewable Energy Incentives
Summary of section
Comments
Section 210 of the Public Utility Regulatory
Policies Act of 1978 (PURPA) is amended by
confirming state regulatory or legislative
authority to set the rates for sales of electric
energy from a renewable energy facility under a
state-approved production incentive program.
The provision affirms state authority to set
rates for sales of renewable electricity
produced under a state-approved incentive
program. The clarification may be intended
to preclude conflict with other PURPA
requirements for small power generation
“Qualifying Facilities” which place rate
authority for electricity sales under the
Federal Energy Regulatory Commission.
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Sec. 103. Federal Renewable Energy Purchases
Summary of section
Comments
Requires that, for each of calendar years 2012
through 2039, the President shall ensure that, of
the total amount of electricity federal agencies
consume in the United States during each
calendar year, the following percentage shall be
renewable electricity:
Calendar year Required
annual percentage
2012 ......................................6.0
2013 ......................................6.0
2014 ......................................9.5
2015 ......................................9.5
2016 ....................................13.0
2017 ....................................13.0
2018 ....................................16.5
2019 ....................................16.5
2020 ....................................20.0
2021 through 2039 ..............
20.0
The requirements will be managed by the
Federal Energy Management Program in DOE.
Standardized contracts for the federal
government to acquire renewable energy may
be entered into for up to 20 years.
Subtitle B—Carbon Capture and Sequestration
Sec. 111. National Strategy
Summary of section
Comments
Within one year of enactment, the Administrator
of the U.S. Environmental Protection Agency
(EPA), in consultation with the Secretary of
Energy and the heads of other relevant federal
agencies as the President may designate, must
submit to Congress a report setting forth a
unified and comprehensive strategy to address
the key legal and regulatory barriers to the
commercial-scale deployment of carbon capture
and sequestration.
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Sec. 112. Regulations for Geologic Sequestration Sites
Summary of section
Comments
Requires a coordinated certification and
permitting process for geologic sequestration
sites, considering all relevant statutory
authorities. In establishing such an approach,
the Administrator shall take into account, and
reduce redundancy with, the requirements of the
Safe Drinking Water Act and, to the extent
practicable, reduce the burden on certified
entities and implementing authorities.
Sec. 112 amends Title VIII of the Clean Air
Act, and establishes the certification and
permitting process under the authority of
the Act. This provision broadens the scope
of regulatory authority for CCS beyond the
Safe Drinking Water Act (SDWA) by
requiring the EPA Administrator to
promulgate regulations to protect
atmospheric releases of CO2. EPA proposed
a new rule on July 25, 2008, to protect
underground sources of drinking water
under authority of the SDWA Underground
Injection Program. Sec. 112 requires EPA to
take into consideration the ongoing SDWA
rulemaking, but also requires the
Administrator to promulgate regulations
under SDWA for CO2 geologic
sequestration wells within one year after
enactment.
Not later than two years after enactment, the
Administrator is to promulgate regulations to
protect human health and the environment by
minimizing the risk of atmospheric release of
carbon dioxide injected for the purposes of
geologic sequestration.
Not later than two years after enactment, and at
three-year intervals thereafter, the Administrator
is to deliver to the relevant congressional
committees a report on geologic sequestration
in the United States, and to the extent relevant,
other countries in North America.
Amends the Safe Drinking Water Act by
inserting a provision directing the EPA
Administrator to promulgate regulations for the
development, operation, and closure of carbon
dioxide geologic sequestration wells. The
regulations are to include requirements for
maintaining evidence of financial responsibility
for emergency and remedial response, wellplugging, site closure, post-injection site care,
and related activities.
Sec. 113. Studies and Reports
Summary of section
Comments
Requires a study of the legal framework for
geologic sequestration sites by a task force
composed of an equal number of subject matter
experts, nongovernmental organizations with
expertise in environmental policy, academic
experts with expertise in environmental law,
state officials with environmental expertise,
representatives of state attorneys general, and
The first study would examine several of
the legal framework issues that some
observers contend may impede the
deployment of commercial scale CCS,
including liability and financial
responsibilities post-closure, and property
rights associated with the underground
storage of CO2, such as mineral rights,
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Summary of section
Comments
members of the private sector. The task force is
to conduct a study of existing federal
environmental statutes, state environmental
statutes, and state common law that apply to
geologic sequestration sites for carbon dioxide.
A report based on the study is due 18 months
after enactment.
water rights, rights to the pore space, and
others.
Requires a study examining how, and under
what circumstances, the environmental statutes
for which EPA has responsibility would apply to
CO2 injection and geologic sequestration
activities. A report based on the study is due one
year after enactment.
Sec. 114. Carbon Capture and Sequestration Demonstration and Early
Deployment Program
Summary of section
Comments
Allows for the establishment of a Carbon
Storage Research Corporation, by referendum,
that would establish and administer a program
to accelerate the commercial availability of
carbon dioxide capture and storage technologies
and methods by awarding grants, contracts, and
financial assistance to electric utilities,
academic institutions, and other eligible entities.
Sec. 114 is nearly identical to H.R. 1689,
the Carbon Capture and Storage Early
Deployment Act introduced by Rep.
Boucher on March 24, 2009.
Establishes the corporation by a referendum
among “qualified industry organizations” which
would include the Edison Electric Institute, the
American Public Power Association, the
National Rural Electric Cooperative
Association, their successors, or a group of
owners or operators of distribution utilities
delivering fossil fuel-based electricity who
collectively represent at least 20% of the
volume of all fossil fuel-based electricity
delivered by distribution utilities to U.S.
consumers. Voting rights would be based on the
quantity of fossil fuel-based electricity
delivered to the consumer in the previous year
or other representative period. The corporation
would be established if persons representing
two-thirds of the total quantity of fuel-based
electricity delivered to retail consumers vote for
approval. If 40% or more of state regulatory
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If established, the corporation would award
grants, contracts, and assistance to support
commercial-scale demonstration of carbon
capture or storage technology projects that
encompass coal and other fossil fuels, and
are suitable for either new or retrofitted
plants. The corporation would seek to
support at least five commercial-scale
demonstration projects over the lifetime of
the corporation. Pilot-scale and other smallscale projects would not be eligible under
the program.
The authority to collect assessments expires
10.5 years after enactment, and the
corporation would dissolve 15 years after
enactment unless extended by Congress. If
assessments are collected as specified, the
corporation would accumulate
approximately $10 billion to be awarded
over 15 years.
The program gives priority to “early
movers,” electric utilities that committed
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Summary of section
Comments
authorities submit written notices of opposition
to the creation of the corporation, the
corporation would not be established.
resources to deploy large scale electricity
generation units integrated with carbon
capture and sequestration prior to the award
of any grant authorized under this section.
The section does not quantify the amount of
resources deployed, but does state that they
should be “applied to a substantial portion
of the unit’s carbon dioxide emissions.”
Establishes requirements for board members,
compensation, and terms of service. Provides
descriptions of the status of corporations,
functions and administration of the corporation,
and details of corporation administration,
including the use of grants and contracts,
intellectual property issues, budgeting, record
keeping, audits, and reports.
The corporation would raise funding for its
program by collecting an assessment on
distribution utilities for all fossil fuel-based
electricity delivered to retail customers. The
assessments would reflect the relative CO2
emission rates of different fossil fuel-based
electricity as follows:
Fuel type
Coal ........................................
Natural Gas .............................
Oil ...........................................
Rate of
assessment
per
kilowatt
hour
$0.00043
$0.00022
$0.00032.
The corporation is authorized to adjust the
assessments so that they generate not less than
$1.0 billion and not more than $1.1 billion per
year.
Provides specific provisions for the Electric
Reliability Council of Texas (ERCOT),
including the corporation factors listed above.
Methods are specified for determining fossilfuel-based electricity deliveries.
Within five years, the Comptroller General of
the United States must prepare an analysis and
report to Congress assessing the Corporation’s
activities, including project selection and
methods of disbursement of assessed fees,
impacts on the prospects for commercialization
of carbon capture and storage technologies, and
adequacy of funding.
Allows that a distribution utility whose
transmission, delivery, or sale of electric energy
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Summary of section
Comments
are subject to any form of rate regulation shall
not be denied the opportunity to recover the full
amount of the prudently incurred costs
associated with complying with this section.
Establishes a technical advisory committee to
provide independent assessments and technical
evaluations, as well as make non-binding
recommendations to the Board, concerning
Corporation activities and describes its role and
management.
Sec. 115. Commercial Deployment of Carbon Capture and Sequestration
Technologies
Summary of section
Comments
Amends Title VII of the Clean Air Act to
require that not later than two years after the
date of enactment, the EPA Administrator is to
promulgate regulations providing for the
distribution of emission allowances to support
the commercial deployment of carbon capture
and sequestration technologies in both electric
power generation and industrial operations.
Eligibility for emission allowances requires an
owner or operator to implement carbon capture
and sequestration technology at: (1) an electric
generating unit that has a nameplate capacity of
200 megawatts or more, and derives at least
50% of its annual fuel input from coal,
petroleum coke, or any combination of these
two fuels, and which will achieve at least a 50%
reduction in carbon dioxide emissions annually
produced by the unit; and (2) at an industrial
source that, absent carbon capture and
sequestration, would emit more than 50,000
tons per year of carbon dioxide, and upon
implementation will achieve at least a 50%
reduction in annual carbon dioxide emissions
from an emission point. Eligibility for emission
allowances requires that the owner or operator
geologically sequester captured carbon dioxide
or convert it to a stable form that can be safely
and permanently sequestered.
Sec. 115 excludes industrial facilities from
eligibility if they produce a liquid
transportation fuel from a solid fossil-based
feedstock.
Distributes emission allowances to electric
generating units in two phases. Phase I applies
An amendment was successfully offered
during markup that makes retrofitted
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For projects that capture and sequester
carbon dioxide for the purposes of
enhanced hydrocarbon recovery, the
Administer is required to reduce the
applicable bonus allowance value compared
to projects that capture carbon dioxide
solely for purposes of sequestration.
This section provides an incentive for
“early movers.” Under Phase I distribution
to electric generating units, the bonus
allowance value is increased by $10—of the
otherwise applicable bonus value—if the
generating unit achieves a 50% capture rate
before January 1, 2017.
An amendment was successfully offered
during markup to replace the word “source”
with the words “emission point” regarding
eligibility for emission allowances at an
industrial source. The change in wording
could affect the eligibility for industrial
sources that might employ carbon capture
and sequestration at some but not all
emission points in the facility.
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Summary of section
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to the first 6 gigawatts of electric generating
units, measured in cumulative generating
capacity of such units. Under Phase I, eligible
projects receive allowances equal to the number
of tons of carbon dioxide captured and
sequestered, multiplied by a bonus allowance
value, divided by the average fair market value
of an emission allowance in the prior year. The
Administrator shall establish a bonus allowance
value for each rate of carbon capture and
sequestration—compared to how much would
otherwise be emitted—from a minimum of $50
per ton for a 50% rate to a maximum of $90 per
ton for an 85% rate.
electric generating units eligible for
emission allowances if the carbon capture
and sequestration technology is applied to
the flue gas from at least 200 megawatts of
the total nameplate capacity of the unit. The
amendment similarly makes retrofitted units
eligible if the carbon capture and
sequestration technology achieves at least a
50% reduction capacity in emissions from
the treated portion of the flue gas from the
retrofitted unit.
After the 6 gigawatt threshold is achieved,
Phase II distributes emission allowances by
reverse auction (described in this section of the
bill). If the Administrator determines that
reverse auctions are not efficient or costeffective for deploying commercial-scale
capture and sequestration technologies, the
Administrator may prescribe an alternative
distribution method. In an alternative
distribution method, the Administrator would
divide emission allowances into multiple
tranches, each supporting the deployment of a
specified quantity of cumulative electric
generating capacity utilizing carbon capture and
sequestration technology. Each tranche would
support no more than 6 gigawatts of electric
generating capacity, and would be distributed
on a first-come, first-serve basis. For each
tranche, the Administrator would establish a
sliding scale that provides higher bonus
allowance values for projects achieving higher
rates of capture and sequestration. For each
successive tranche, the Administrator would
establish a bonus allowance value that is lower
than the rate established for the previous
tranche.
An amendment was successfully offered
during markup to include retrofitted units in
the calculation of bonus allowances with
respect to the treated portion of flue gas
from the retrofitted units.
The Administrator would not distribute more
than 15% of the allocated allowances under Sec.
782(f) to eligible industrial sources. The
allowances may be distributed to eligible
industrial sources using a reverse auction
method or an incentive schedule, similar to the
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Summary of section
Comments
Phase II methods described for electric
generating units.
Total allowances under Sec. 115 are limited to
72 gigawatts of total cumulative generating
capacity, including for industrial sources
according to an equivalent metric designated by
the Administrator.
Sec. 116. Performance Standards for Coal-Fueled Power Plants
Summary of section
Comments
Amends Title VIII of the Clean Air Act (CAA)
by adding performance standards for carbon
dioxide removal for new coal-fired power
plants. Plants covered by this section include
plants that have a permit issued under CAA
Title V to derive at least 30% of their annual
heat input from coal, petroleum coke, or any
combination of these fuels. The performance
standards are as follows:
The 65% reduction mandated for coal
plants entering service after January 1,
2020, would result in a level of emissions
roughly equivalent to the carbon dioxide
released by a natural gas-fired plant of
modern design (a “combined cycle” plant)
using no carbon controls.
A covered unit that is “initially
permitted” on or after January
1, 2020, shall reduce carbon
dioxide emissions by 65%.
A covered unit that is initially
permitted after January 1, 2009,
and before January 1, 2020,
must achieve a 50% reduction
in carbon dioxide emissions by
a compliance date that will be
determined by future
developments. Specifically, the
compliance date will be the
earliest of (1) four years after
the date in which the equivalent
of 4 gigawatts (Gw) of
generating capacity with
commercial carbon capture and
sequestration technology are
operating in the United States
and sequestering at least 12
million tons of carbon dioxide
annually (equivalent to roughly
eight medium-sized coal
plants). This 4 Gw of capacity
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The use of the term “initially permitted” is
important in the implementation of this
section. A new power plant that has
received a permit that is still subject to
administrative or legal review is considered
to be “initially permitted.” If a proposed
new coal plant has been “initially
permitted” prior to January 1, 2009, it will
not fall under the requirements of this
section to eventually install carbon controls.
In an earlier version of this bill, only new
units that had been “finally permitted” prior
to January 1, 2009—that is, the permit was
no longer subject to any challenges or
reviews—would have escaped this
requirement.
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Summary of section
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must include at least 3 Gw of
electric generating units, may
include up to 1 Gw of industrial
applications that are capturing
and sequestering at least 3
million tons of carbon dioxide
annually, and must include at
least two operating 250
megawatt (Mw) or larger
generating units that sequester
captured carbon dioxide in
geologic formations other than
oil and gas fields; or (2)
January 1, 2025 (which can be
extended by the EPA
Administrator by up to 18
months on a case-by-case
basis).
Not later than 2025 and at fiveyear intervals thereafter, the
Administrator is to review the
standards for new covered units
under this section and shall
reduce the maximum carbon
dioxide emission rate for new
covered units to a rate which
reflects the degree of emission
limitation achievable through
the application of the best
system of emission reduction
which the Administrator
determines has been adequately
demonstrated. The
Administrator is also to publish
biennial reports on the amount
of capacity with commercial
carbon capture and
sequestration technology in the
United States.
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Subtitle C—Clean Transportation
Sec. 121. Electric Vehicle Infrastructure
Summary of section
Comments
Establishes a new standard that state regulatory
authorities and non-regulated electric utilities
may adopt. The standard would require electric
utilities to develop plans to support the use of
plug-in hybrid vehicles (PHEVs) and pure plugin electric vehicles (EVs), including heavy-duty
hybrids. Plans may include deployment of
charging stations, battery exchanges, fastcharging infrastructure, and triggers for
development based on vehicle market
penetration. Infrastructure should be
interoperable with products from all
manufacturers, to the extent practicable. State
regulatory authorities and utilities must
establish protocols and standards for integrating
plug-in vehicles into the electrical distribution
system, and include the ability for each vehicle
to be identified individually and associated with
its owner’s electric utility account, for the
purposes of billing of electricity use and the
crediting of any power returned to the grid by
the vehicle’s batteries.
A key issue with the development and
expansion of electric vehicles is the
availability of infrastructure to support
those vehicles. Currently, various protocols
and technologies are being tested and have
been considered. In some cases, standards
have been determined for vehicle
recharging plug design and other elements,
but most standardization questions remain
undecided. Requiring utilities to develop
plans for infrastructure development will
likely provide an impetus for further
standardization, as well as expansion of that
infrastructure.
Under the standard, within three years of
enactment, state regulatory authorities would be
required to set a hearing date for considering the
plan, and must make a determination on new
standards within four years of enactment. State
regulatory authorities would consider whether
to allow cost recovery for the development and
implementation of such plans.
Sec. 122. Large-Scale Vehicle Electrification Program
Summary of section
Comments
Requires the Secretary of Energy to establish a
program to deploy and integrate plug-in
vehicles in multiple regions. Any state or local
government—either solely or jointly with
electric utilities, automakers, technology
providers, car sharing companies, or other
entities—may apply to the Secretary for
financial assistance. The Secretary is to
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Summary of section
Comments
determine the design elements and requirements
for the program, including the type of financial
assistance provided. Financial assistance may
be used for various purposes: assisting in the
purchase of new vehicles; deployment of
recharging or battery exchange infrastructure;
integration of plug-in vehicles into the grid; and
other projects the Secretary deems appropriate
to support large-scale deployment of plug-in
vehicles.
Sec. 123. Plug-in Electric Drive Vehicle Manufacturing
Summary of section
Comments
Requires the Secretary of Energy to establish a
program to provide financial assistance to
automobile manufacturers to facilitate the
manufacture of plug-in vehicles. The Secretary
may provide assistance for the reconstruction or
retooling of vehicles developed and produced in
the United States, and for the purchase of
domestically produced batteries for such
vehicles. The Secretary is to determine the
design elements and requirements for the
program, including the type of financial
assistance provided. The Secretary is to give
preference to facilities located in areas that have
the greatest need for the facility, and to
proposals that are most likely to be successful.
The details of this program, if enacted
would determine its likely scope and
effects. For example, manufacturers are
more likely to prefer grants to loans, and
direct loans to loan guarantees.
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Sec. 124. Investment in Clean Vehicles
Summary of section
Comments
Directs EPA to distribute one-quarter of the
allowances allocated to the automotive sector in
Sec. 782 through the cap-and-trade program
(see below) for plug-in electric vehicle
development. Half of those allowances (i.e.
one-eighth of auto sector allowances) shall be
used to implement Sec. 122 and half for
implementation of Sec. 123.
Sec. 136 of EISA established a loan
program to support the development of
facilities to produce advanced technology
vehicles. While DOE has received
applications for the Advanced Technology
Vehicle Manufacturing Loan Program
(ATVM) program, no loans have yet been
awarded, and many automakers may not
qualify for the loans due to the financial
stability requirements in EISA. Sec. 124
contains no similar requirements, and
would effectively be a grant program as
opposed to a loan program.
Directs EPA to distribute the remaining auto
sector allowances to automakers and parts
suppliers for the development of advanced
technology vehicles as defined in Sec. 136 of
the Energy Independence and Security Act of
2007 (EISA, P.L. 110-140). The allowance
value may cover up to 30% of the cost of
reequipping, expanding, or establishing
facilities to produce qualifying vehicles or
components.
Sec. 125. Advanced Technology Vehicle Manufacturing Incentive Loans
Summary of section
Comments
Increases the total amount of loans allowed
under the Advanced Technology Vehicle
Manufacturing Loan Program established in
Sec. 136 of EISA (see comment in Sec. 124).
EISA authorized up to $25 billion in loans. Sec.
125 authorizes up to $50 billion.
The total value of loan applications under
EISA Sec. 136 far exceeded the $25 billion
cap on loan authority.
Sec. 126. Definition of Renewable Biomass
Summary of section
Comments
Replaces the definition of “renewable biomass”
in the Renewable Fuel Standard (RFS) that was
enacted in EISA.
The EISA definition of “renewable
biomass” effectively restricted the types of
feedstocks that could be used to produce
eligible fuels under the RFS. The definition
precluded the use of woody biomass from
federal lands and significantly limited the
use of woody biomass from private lands.
This amendment would significantly
expand the amount of biomass from
forested lands that could be used to produce
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Summary of section
Comments
fuels under the RFS. Further, the Housepassed version would eliminate an EISA
requirement that feedstock crops come from
previously cultivated land.
Sec. 127. Open Fuel Standard
Summary of section
Comments
Authorizes the Secretary of Transportation to
establish an “open fuel standard” for new
automobiles in model year 2016 or later if he
determines that E85 (85% ethanol and 15%
gasoline) or M85 (85% methanol and 15%
gasoline) are available in sufficient quantities to
be used by flexible fuel vehicles (FFVs), that
sufficient infrastructure exists to fuel the
vehicles, and that such a requirement is a costeffective way to meet energy and environmental
goals. An open fuel standard would require
automakers to produce a share of their new
vehicles as FFVs (capable of operating on E85
or M85) or capable of operating on biodiesel.
Currently, automakers are granted credits
under the Corporate Average Fuel Economy
(CAFE) program for the production of
FFVs. FFVs can run on any mixture of
conventional gasoline and an alternative
fuel (in most cases, E85). Currently, there
are an estimated six to eight million FFVs
on the road, but the vast majority of these
vehicles are operated only on gasoline, due
to the higher per-mile cost of E85 and its
limited availability.
Deleted Old Sec. 128. Temporary Vehicle Trade-in Program
(New Sec. 128 Below)
Summary of section
Comments
Would have established a “Cash for Clunkers”
program within the National Highway Traffic
Safety Administration (NHTSA). The program
would have offered vouchers to customers who
purchased a new fuel-efficient vehicle to
replace an older, less efficient vehicle. The
vehicle to be replaced was to be crushed or
shredded. Vouchers would have been valued at
$3,500 or $4,500, depending on the class of
vehicle (e.g., passenger car, light-duty truck,
medium-duty truck), the fuel efficiency
improvement from the scrapped vehicle to the
new vehicle, and/or the age of the scrapped
vehicle. The vouchers would have covered only
vehicles purchased or leased between March 30,
2009, and March 31, 2010. A total of $4 billion
This section, which was added in
committee markup, was removed from the
House-passed bill because a similar
program was enacted as part of the defense
supplemental appropriations bill (H.R.
2346, P.L. 111-32). The key difference
between the proposed and enacted language
is that under the new law, $1 billion is
appropriated for the program to run
between July 1 and November 1, 2009. The
deleted section would have authorized, but
not appropriated, $4 billion.
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Summary of section
Comments
would have been authorized to implement the
program.
Sec. 128. Diesel Emissions Reduction
Summary of section
Comments
Amends the Diesel Emission Reduction Grant
Program established in the Energy Policy Act of
2005 (P.L. 109-58) to include American Samoa,
Guam, the Commonwealth of the Northern
Mariana Islands, Puerto Rico, and the Virgin
Islands to the states eligible to receive and
distribute grant funds.
Sec. 129. Loan Guarantees for Projects to Construct Renewable Fuel Pipelines
Summary of section
Comments
Amends the loan guarantee program in Title
XVII of the Energy Policy Act of 2005 to
include the construction of pipelines for
renewable fuels, including ethanol, biodiesel,
and any other qualified fuel under the
renewable fuel standard in EISA.
Sec. 130. Fleet Vehicles
Summary of section
Comments
Amends the Energy Policy Act of 1992 to allow
federal, state, and fuel provider fleets to earn
credits from the conversion of existing vehicles
to operate on alternative fuels. Those credits can
be used to partially offset a fleet’s requirement
to purchase new alternative fuel vehicles.
The Energy Policy Act of 1992 requires
federal, state, and alternative fuel providers
to purchase alternative fuel vehicles. Of a
given year’s vehicle purchases, a
percentage must be alternative fuel
vehicles—the percentage varies depending
on the type of fleet. Currently, vehicle
conversions do not generate credits.
Sec. 130A. Report on Natural Gas Vehicle Emissions Reductions
Summary of section
Comments
Within 360 days of enactment, the EPA
Administrator must report to Congress on the
contribution natural gas vehicles have made to
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Comments
reducing greenhouse gases and criteria
pollutants, the likely reductions from these
vehicles between 2010 and 2020, and additional
federal measures that would maximize the
potential of natural gas vehicles.
Subtitle D—State Energy and Environment Development Accounts
Sec. 131. Establishment of SEED Funds
Summary of section
Comments
Directs the Department of Energy (DOE) to
create a program that allows each state energy
office to establish a State Energy and
Environment Development (SEED) Fund. The
state-level SEED Fund is to serve as a common
repository that manages and accounts for
federal financial assistance that is designated
mainly for clean energy, energy efficiency, and
climate change purposes. DOE is required to
develop model regulations for SEED operations
and to assist states with set-up and operations.
The SEED Fund is designed to collect a
few major, but separate, grant programs
into a more unified effort.
Each state is allowed to deposit into its SEED
Fund the appropriations from DOE‘s
Weatherization Assistance Program (WAP),
State Energy Program (SEP), and Energy
Efficiency and Conservation Block Grant
(EECBG) Program. Also, appropriations from
the Department of Health and Human Services’
Low Income Home Energy Assistance Program
(LIHEAP) could be deposited in the SEED
Fund. To the extent that amounts deposited in a
SEED Funds are not tied to a specific use, such
amounts may be used to support grants, loans,
loan interest subsidies, and revolving loan
programs.
Sec. 132. Support of State Renewable Energy and Energy Efficiency Programs
Summary of section
Comments
Directs the Environmental Protection Agency,
during the period from 2012 through 2050, to
distribute carbon offset allowances among states
according to a legislated formula. The formula
The carbon allowance distribution program
established in this section would be used to
help support several energy efficiency
programs in Title II.
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Summary of section
Comments
would distribute one-third of the allowances
among the states equally, one-third to states
according to population, and one-third to states
according to energy use.
State use of allowances would also be
controlled by a legislated formula. That formula
directs that each state distribute a minimum of:
12.5% to local governments for efficiency and
renewables; 15% for building codes (§201),
manufactured homes (§203), building energy
labels (§204), smart grid, transportation
planning, low-income energy efficiency
programs (§264), and other “cost-effective”
efficiency programs for end-use consumers; and
5% for implementation of the Retrofit for
Energy and Environmental Performance
(REEP) program (§202). Also, 20% would
support a variety of incentives aimed to reequip, expand, or establish a manufacturing
facility that produces renewable energy
equipment or energy storage systems; deploy
renewable energy technologies; or deploy
facilities or equipment (e.g. solar panels) for
urban buildings. The remaining 47.5% would be
used to support any of the preceding categories,
with the stipulation that the low-income
efficiency programs would get at least 1%.
Each state receiving emission allowances would
be required to submit biennial reports to
Congress. Those reports are to include a list of
entities that received allowances; the amount
and nature of allowances; the purposes of
allowance use; the amount of energy savings
and emission reductions; and an assessment of
the cost-effectiveness of spending for the lowincome energy efficiency programs (§264).
Sec. 133. Support of Indian Renewable Energy and Energy Efficiency Programs
Summary of section
Comments
Directs DOE, in consultation with EPA and the
Department of the Interior (DOI), to issue
regulations that would establish a competitive
program to distribute allowances to Indian
tribes for cost-effective energy efficiency
From the allowances provided under
Section 132, this section carves out a slice
of allowances designated specifically for
American Indian tribes.
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Summary of section
Comments
programs that serve end-use consumers and for
deployment of renewable energy power
generation technologies. The regulations would
include design elements such as criteria for
assessing proposals and reporting requirements.
Subtitle E—Smart Grid Advancement
Sec. 141. Definitions (no summary or comments)
Sec. 142. Assessment of Smart Grid Cost-Effectiveness in Products
Summary of section
Comments
Directs the Energy Secretary and EPA
Administrator to assess the cost-effectiveness of
integrating smart grid capability into all
products that are reviewed for potential
designation as Energy Star (i.e., energy
efficient) products. The evaluation process is to
begin within a year of enactment. Within two
years of enactment the Administrator and
Secretary are to prepare an analysis of the
energy, greenhouse gas, and cost savings that
could result (under certain specified conditions)
from the inclusion of smart grid capability in
the products analyzed pursuant to this section.
Within three years of enactment the findings
from this work are to be summarized in a report
to Congress. Additionally, product
manufacturers are to be notified if the
incorporation of smart grid technology in their
products appears to be cost-effective.
Sec. 143. Inclusions of Smart Grid Capability on Appliance ENERGY GUIDE
Labels
Summary of section
Comments
Directs the Federal Trade Commission to
complete a rulemaking, within three years of
enactment, to consider adding to ENERGY
GUIDE labels information on the smart grid
features of products that incorporate smart grid
technology. The information would inform the
consumer that the product actually has smart
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Summary of section
Comments
grid technology, that the benefits of the
technology can only be realized if the
consumer’s local utility has implemented a
smart grid power system, and the potential cost
savings from using the smart grid features of the
product.
Sec. 144. Smart Grid Peak Demand Reduction Goals
Summary of section
Comments
Requires load serving entities (i.e., utilities that
sell electricity directly to customers) to establish
and meet goals reducing peak electricity
demand for the years 2012 and 2015. No targets
are set in the bill itself, except that the goals
should be “realistically achievable with an
aggressive effort to deploy Smart Grid and peak
demand reduction technologies and methods.”
This provision is mandatory for load serving
entities with an annual baseline peak demand of
at least 250 megawatts (equivalent to the output
of a single, relatively small power plant).
Although this section is under the smart
grid rubric, many of the listed measures for
achieving peak demand reductions do not
necessarily require deployment of smart
grid technology. These include, for
example, utility ability to cycle demand at
industrial facilities that have signed up for
demand response programs (in which they
receive lower rates in return for giving the
utility the option of interrupting service),
and power supply from distributed
generation.9 Other options, such as direct
control of residential appliances, do require
smart grid technology.
Goals can be set by individual load-serving
entities, by states, or by “regional entities.” The
goals can be designed to cover a single loadserving entity or a region.
FERC is ordered to implement this program in
coordination, to the extent possible, with state
demand response and peak reduction programs.
There is no penalty for a load-serving entity’s
failure to reach goals, except for being
identified in annual progress reports to
Congress. The bill authorizes financial
assistance to the states using emission
allowances from the SEED Accounts
established by Sec. 132 of this bill.
The term regional entity is not defined in
the bill. It could refer to the FERCsponsored Regional Transmission
Organizations that operate the transmission
grid and perform other functions in parts of
the United States. The term could also refer
to the regional reliability entities that assist
the North American Electric Reliability
Corp. in establishing and enforcing power
system reliability standards. It also not clear
how the states, load-serving entities, and
regional entities are supposed to coordinate
the process of setting peak reduction goals.
The Energy Independence and Security Act
of 2007 (EISA) articulated a national policy
to modernize the power system with smart
grid technology, and authorized research
and development programs, funding for
demonstration projects, and matching funds
9 This is generation owned by the customer and located at the customer’s site. Distributed generation ranges from
rooftop solar on a home to large generating facilities located at big manufacturing plants.
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Summary of section
Comments
for investments in smart grid technologies.
These and related programs received $4.5
billion in funding in the 2009 stimulus bill.
In addition, the Emergency Economic
Stabilization Act of 2008 shortens the
depreciation period for smart meters and
other smart grid equipment from 20 years to
10 years (which increases each year’s
depreciation tax deduction for the
equipment). The value of this tax change to
the power industry is reportedly $915
million over 10 years.
Sec. 145. Reauthorization of Energy Efficiency Public Information Program to
Include Smart Grid Information
Summary of section
Comments
Modifies an energy efficiency public
information program authorized by the Energy
Policy Act of 2005 to make it into a smart grid
and energy efficiency information program. In
addition to the change in emphasis, the end-date
for the program is extended from 2010 to 2020.
Sec. 146. Inclusion of Smart-Grid Features in Appliance Rebate Program
Summary of section
Comments
Modifies an energy efficiency appliance rebate
program authorized by the Energy Policy Act of
2005 to add appliances with smart grid
capabilities. The section also amends the
original language generally such that federal
money can be used to fund 100% of the rebate
amount instead of just administrative costs
(states must still supply at least 50% of
administrative costs). Authorized funding is
increased from $50 million annually to $100
million, and the authorization is extended to run
through FY 2015.
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Subtitle F—Transmission Planning
Sec. 151. Transmission Planning and Siting
Summary of section
Comments
Amends the Federal Power Act to create new
transmission planning and siting processes. The
primary purpose is to facilitate the development
of new renewable power sources. As discussed
below, the siting processes differ between the
eastern and western parts of the country.
Specifies that the transmission planning
processes should consider non-transmission
solutions to power system needs, such as
energy efficiency, distributed generation,
and electricity storage. These requirements
implicitly turn transmission planning into
wider-scope power system planning.
Planning: Establishes a national transmission
planning policy. Based on this policy, FERC is
to establish within a year of enactment planning
principles which can be adopted and used by a
variety of existing and new planning entities to
develop transmission plans. FERC is to receive
all plans (effectively combining regional plans
into multi-regional or national plans) no more
than 18 months after filing the planning
principles, and attempt to resolve conflicts
between plans. FERC is also to facilitate
coordination between the planning entities and
related DOE activities. Plans are to be updated
by the planning entities not less than every three
years.
The limitation of the new federal
transmission permitting authority to the
Western Interconnection apparently reflects
opposition by some eastern governors to the
notion that new long distance and expensive
transmission lines are needed to bring
renewable power across the country to the
east (such as wind power generated in the
central plains). The counter-argument is
that renewable power can be generated
locally in the east, such as from off-shore
wind plants or hydroelectric plants in
Quebec, which obviates the need for new
inter-regional transmission projects.
FERC is to report to Congress on the status of
the planning efforts three years after enactment
and every three years thereafter. As part of
these reports FERC can recommend legislative
changes to facilitate development of the
transmission system.
The planning processes are directed to focus
primarily on facilitating the “deployment of
renewable and other zero-carbon and lowcarbon” power sources. Other objectives are
noted, such as power system reliability and
cost-effective service, but these are to be met in
the context of the overarching goal of
facilitating renewable/zero-carbon power
deployment.
The bill authorizes funding as necessary for
FERC and DOE to assist the planning process
with, for example, technical expertise, computer
modeling support, and dispute resolution
services.
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Summary of section
Comments
Siting of New Transmission Lines:
transmission line siting and permitting is
currently almost entirely under the control of
the states. The bill grants FERC new federal
siting and permitting authority within the
Western Interconnection.10 This authority to
supersede state permitting decisions applies
only to proposed transmission projects that meet
certain criteria, including:
Interstate projects “identified as needed in
significant measure to meet demand for
renewable energy.”
The project is included in regional
transmission plans that meet FERC
planning criteria.
Any conflicts concerning the project
between regional transmission planning
authorities have been resolved.
The developer has filed a complete
application with a state permitting authority,
which authority has nonetheless either
rejected the project, approved it with
conditions that make the project
impractical, or failed to act on the
application within a year of filing.
In addition to having authority to permit
facilities that meet these criteria, FERC is to
coordinate all federal reviews and approvals for
the project (in coordination with the Department
of the Interior in respect to Federal lands).
The bill also amends existing provisions of the
Federal Power Act which require DOE to
conduct transmission congestion studies and,
under certain limited circumstances, allow
FERC to permit transmission lines in special
transmission corridors designated by DOE. The
10 The transmission grid for the contiguous 48 states consists of three, for the most part electrically independent,
“interconnections.” These are the ERCOT Interconnection, which covers most of Texas; the Eastern Interconnection,
which extends from the eastern seaboard to the eastern front of the Rockies; and the Western Interconnection, which
covers the balance of the country. Transmission operations and planning in ERCOT is the responsibility of a single
entity (the Electric Reliability Council of Texas, Inc.). While the Western Interconnection is not centralized to the
same degree, there is a single entity (the Western Electric Coordinating Council) with substantial responsibility for
interconnection-wide reliability and transmission planning. There is no comparable organization for the Eastern
Interconnection, which is covered by 11 different and sometimes overlapping transmission-related organization (six
reliability regions and five regional transmission operators). For more information and maps, see CRS Report R40511,
Electric Power Transmission: Background and Policy Issues, by Stan Mark Kaplan.
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Summary of section
Comments
bill would limit this provision to the Eastern
Interconnect, and then only for interstate
transmission lines or intrastate lines essential to
an interstate project.
Sec. 152. Net Metering for Federal Agencies
Summary of section
Comments
Amends the Public Utility Regulatory Policies
Act of 1978 (PURPA) to require state
regulatory authorities to consider ordering
utilities under their jurisdiction to implement
net metering for federal facilities. It is also
requires non-regulated utilities (such as many
municipal utilities) to make the same
evaluation. The standard would not apply to
small utilities that sell less than 4 million
megawatt-hours of electricity annually.
Net metering is a ratemaking concept
intended to encourage the development of
“distributed generation.” Distributed
generation is electricity generated at the
customer’s site, possibly (but not necessarily)
using renewable energy. In principal the wider
use of distributed generation could reduce the
need for new large utility power plants and
the need for new transmission lines to bring
electricity from power plants to customers.
Consideration of net metering for federal
facilities must take place within a year of
enactment. The net metering standard must be
adopted if it is consistent with state law and is
found by the controlling regulatory authority
to be “appropriate.”
Net metering is intended to make distributed
generation more economical by requiring the
utility that supplies electricity to a facility to
also take any electricity generated by that
facility, such as from rooftop solar panels or
an on-site diesel generator. The ultimate
utility bill to the facility is reduced by the
amount of electricity supplied to the power
company. This cuts the utility bill for the
customer, although in a complete economic
analysis the cost of building and operating the
consumer’s power generator would also have
to be taken into consideration.
Sec. 153. Support for Qualified Advanced Electric Transmission
Manufacturing Plants, Qualified High Efficiency Transmission Property, and
Qualified Advanced Electric Transmission Property
Summary of section
Comments
Amends the Energy Policy Act of 2005
(EPACT05) to provide for incentives for the
development and construction of transmission
lines and related facilities using currently noncommercial technology. The categories of
technology include “advanced electric
transmission property” (essentially high-
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efficiency underground transmission lines and
associated equipment), “advanced electric
transmission manufacturing plant” (plants that
manufacture the “advanced electric
transmission property”), and “high efficiency
transmission property” (essentially highefficiency overhead transmission lines and
associated equipment).
All three categories of technology would be
added to the list of technologies qualifying for
the new loan guarantee program added to
EPACT05 by the American Recovery and
Reinvestment Act of 2009. These loan
guarantees are available to specified
renewable energy and transmission projects
that begin construction no later than
September 30, 2011. In addition, the first
“advanced electric transmission property”
project to qualify pursuant to this amendment
will be eligible for a grant from the
Department of Energy to cover up to 50% of
project development and construction costs.
The amendment authorizes up to $100 million
for this grant program for FY2010.
Additionally, “advanced electric transmission
property” and “advanced electric transmission
manufacturing plant” only would be added to
the original loan guarantee program included
in EPACT05. This program was originally
created to support the development of low
carbon and other advanced energy
technologies.
Subtitle G—Technical Corrections to Energy Laws
Sec. 161. Technical Corrections to Energy Independence and Security Act of
2007
Summary of section
Comments
Clarifying, technical amendments.
No substantive changes.
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Sec. 162. Technical Corrections to Energy Policy Act of 2005
Summary of section
Comments
Clarifying, technical amendment.
No substantive change.
Subtitle H—Energy and Efficiency Centers and Research
Sec. 171. Energy Innovation Hubs
Summary of section
Comments
Directs DOE to establish regional Energy
Innovation Hubs to promote commercial
deployment of clean indigenous energy forms
that help reduce fossil energy use, curb
greenhouse gas emissions, and help maintain
national technological leadership.
The Hubs are to focus on cross-disciplinary
R&D in areas not served by the private sector.
Also, the Hubs are to promote regional
economic development by cultivating “clusters”
of clean energy technology firms and other
businesses and organizations.
DOE is required to conduct a competitive
process for the distribution of emission
allowances to consortia with the aim of
establishing eight Hubs, each with a unique
technology focus. Each consortium must
include at least two research universities and at
least one other qualifying entity, which can be
another university, a state energy institution, or
a nongovernmental energy organization.
Each Hub is required to use allowances to
provide awards to projects managed by
qualifying entities. Also, each Hub must submit
an annual report to DOE.
Sec. 172. Advanced Energy Research
Summary of section
Comments
Requires that, not later than September 30 of
2011, and each calendar year thereafter through
2049, the Director of the Advanced Research
Projects Agency-Energy shall distribute
allowances on a competitive basis to institutions
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Summary of section
Comments
of higher education, companies, research
foundations, trade and industry research
collaborations, or consortia of such entities, or
other appropriate research and development
entities to achieve the goals of:
(1) novel early-stage energy research with
possible technology applications;
(2) development of techniques, processes, and
technologies, and related testing and evaluation.
Sec. 173. Building Assessment Centers
Summary of section
Comments
Requires DOE to fund Building Assessment
Centers at institutions of higher education to
promote energy efficiency techniques for new
and existing buildings, promote applications of
new technologies, provide training, assist
community colleges and trade schools, promote
R&D, and coordinate with accredited technical
training centers. Starting with FY2010, the
program is authorized $50 million per year.
A Building Assessment Center may serve as
a Center for Energy and Environmental
Knowledge and Outreach, as identified in
Section 173.
Sec. 174. Centers for Energy and Environmental Knowledge and Outreach
Summary of section
Comments
Directs DOE to conduct a competitive process
to establish up to 10 regional Centers for
Energy and Environmental Knowledge and
Outreach at institutions of higher education.
Each Center shall consist of at least one
industrial research and assessment center, Clean
Energy Application Center, or Building
Assessment Center (§172). DOE is required to
ensure that the Centers cover all geographic
regions of the nation. Each Center is required to
develop regional goals, cultivate technical
resources, and perform outreach.
Each Center must establish a workforce training
internship program. A federal funding share of
50% would be provided. Starting with FY2010,
the training program is authorized $5 million
per year.
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Summary of section
Comments
The Small Business Administration is required
to consider loans to affiliated industrial research
and assessment centers, Clean Energy
Application Centers, and Building Assessment
Centers.
Starting with FY2010, DOE is authorized $10
million per year to support these Centers. Also,
for Clean Energy Application Centers, a
previous authorization of $10 million per year
would rise to $30 million per year, starting in
FY2010.
Sec. 175. High Efficiency Gas Turbine Research, Development, and
Demonstration
Summary of section
Comments
Directs the Secretary of Energy to carry out a
multiyear, multiphase program of research,
development, and technology demonstration to
improve the efficiency of gas turbines used in
combined cycle power generation systems and
to identify the technologies that ultimately will
lead to gas turbine combined cycle efficiency of
65%.
Subtitle I—Nuclear and Advanced Technologies
Sec. 181. Revisions to Loan Guarantee Program Authority
Summary of section
Comments
Amends DOE’s loan guarantee program for
low-carbon energy projects under Title XVII of
the Energy Policy Act of 2005. A procedure for
“conditional commitments” for federal loan
guarantees is established, potential government
losses from loan guarantees can be covered by a
combination of payments by project sponsors
and appropriations, a fund is established for
administrative expenses, and prevailing wages
are required for projects receiving loan
guarantees. In addition, the Secretary of Energy
is authorized to share the proceeds of any asset
sales with other creditors.
This section makes some administrative
changes in the existing DOE loan guarantee
program but otherwise leaves it intact.
Perhaps the most significant change is to
require projects receiving loan guarantees
to pay prevailing wages under the DavisBacon Act.
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Sec. 182. Purpose
Summary of section
Comments
States that the purpose of the remainder of this
subtitle is to promote domestic development
and deployment of clean energy technologies.
Sec. 183. Definitions
Summary of section
Comments
Defines key terms, including: “breakthrough
technology” as promising technology with high
commercial risk; and “clean energy
technology,” as technology that can help
stabilize greenhouse gas concentrations but for
which insufficient commercial lending is
available.
Sec. 184. Clean Energy Investment Fund
Summary of section
Comments
Establishes a revolving fund in the Treasury to
be used by the newly established Clean Energy
Deployment Administration to provide financial
assistance to clean energy projects. The
Secretary of the Treasury is to issue Green
Bonds totaling $7.5 billion to acquire capital
stock of the Clean Energy Deployment
Administration established by Sec. 186.
The revolving fund would be in addition to
DOE loan guarantee authority under
EPACT.
The Federal Credit Reform Act of 1990
(FCRA) requires the appropriation of
budget authority to pay for the estimated
subsidy costs, calculated on a net present
value basis, of direct loans and loan
guarantees (federal credit) in the fiscal year
that the credit is provided. The proposed
sale of $7.5 billion in “Green Bonds” is
inconsistent with the concepts of the FCRA,
because funds raised from the sale of these
bonds would not go through the
appropriations process.
Sec. 185. Energy Technology Deployment Goals
Summary of section
Comments
Requires the Secretary of Energy to establish
goals and performance targets for clean energy
technology deployment.
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Sec. 186. Clean Energy Deployment Administration
Summary of section
Comments
Establishes Clean Energy Deployment
Administration (CEDA) as an independent
corporation wholly owned by the federal
government. CEDA would be headed by a
presidentially appointed administrator for a
five-year term and would have a nine-member
board of directors, including the CEDA
Administrator, who would serve as chairman,
and the Secretary of Energy. A CEDA Energy
Technology Advisory Council would develop
methodologies for assessing clean energy
technologies for potential CEDA financial
support.
Sec. 187. Direct Support
Summary of section
Comments
Authorizes CEDA to issue direct loans, letters
of credit, and loan guarantees to support clean
energy projects. CEDA is to establish a loan
loss reserve to cover estimated losses from the
program; the initial target for the reserve is 10%
of the CEDA investment portfolio. No single
energy technology may receive more than 30%
of CEDA financial support. Projects supported
by CEDA must pay prevailing wages to their
workers. CEDA may not provide direct or
indirect support to projects receiving loan
guarantees under Title XVII of EPACT.
The financial support authorized by CEDA
would be in addition to the DOE loan
guarantee authority under EPACT. The new
program would be substantially broader in
the types of support that could be provided.
The 30% limit on support for any single
technology is most likely to affect nuclear
power projects. Primarily because of their
relatively large size, proposed nuclear
plants are currently seeking more total
financial assistance than other technologies.
Sec. 188. Indirect Support
Summary of section
Comments
Authorizes CEDA to provide credit support to
enhance the availability of private financing for
clean energy deployment. To carry out this
section, CEDA may support portfolios of
taxable debt obligations through direct loans,
letters of credit, loan guarantees, and insurance
products, and through the purchase or sale, or
commitments to purchase or sell, debt
instruments.
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Sec. 189. Federal Credit Authority
Summary of section
Comments
Supports CEDA obligations with the full faith
and credit of the United States.
Sec. 190. General Provisions
Summary of section
Comments
Establishes immunity requirements, as well as
various reporting and auditing requirements.
Sec. 191. Conforming Amendments
Summary of section
Comments
The Clean Energy Development Administration
is added to existing lists in the U.S. Code of taxexempt entities and wholly owned government
corporations.
Subtitle J—Miscellaneous
Sec. 195. Increased Hydroelectric Generation at Existing Federal Facilities
Summary of section
Comments
Directs DOE, the Department of the Army, and
the Department of the Interior to update an
earlier report on the potential for up-rating or
adding hydroelectric generating capacity to
federal water facilities. The report, which is to
be filed with several House and Senate
committees within a year of enactment, would
in effect be an update on progress made since
the original study.
The original report on “Potential
Hydroelectric Development at Existing
Federal Facilities” was required by Section
1834 of the Energy Policy Act of 2005.
The report is available at
http://www.usbr.gov/power/data/1834/
Sec1834_EPA.pdf. It found that the
potential existed to increase federal
hydroelectric generating capacity by up to
2,513 megawatts (equivalent to one or two
large power plants).
Sec. 196. Clean Technology Business Competition Grant Program
Summary of section
Comments
Authorizes $20,000,000 for the Secretary of
Energy to provide grants to non-profit
organizations to conduct business competitions
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Summary of section
Comments
that provide incentives, training, and
mentorship to entrepreneurs and early stage
start-up companies throughout the United States
to meet high priority economic, environmental,
and energy security goals in areas to include
energy efficiency, renewable energy, air quality,
water quality and conservation, transportation,
smart grid, green building, and waste
management.
Sec. 197. National Bioenergy Partnership
Summary of section
Comments
Authorizes $7,500,000 for the Secretary of
Energy to establish a National Bioenergy
Partnership to provide coordination among
programs of state governments, the federal
government, and the private sector that support
the institutional and physical infrastructure
necessary to promote the deployment of
sustainable biomass fuels and bioenergy
technologies for the United States.
Sec. 198. Office of Consumer Advocacy
Summary of section
Comments
Amends Sec. 319 of the Federal Power Act to
establish an Office o
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