Greenhouse Gas Reduction: Cap-and-Trade Bills in the 110th Congress
Congressional research reportJun 27, 2008
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Prepared for Members and Committees of Congress
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Multiple proposals to advance programs that reduce greenhouse gases have been introduced in
the 110th Congress. S. 2191 was reported May 20, 2008, from the Senate Committee on
Environment and Public Works. An amended version of S. 2191 S. 3036, was considered by the
Senate in June 2008, but a vote to invoke cloture failed. In general, these proposals would create
market-based greenhouse gas reduction programs along the lines of the trading provisions of the
current acid rain reduction program established by the 1990 Clean Air Act Amendments. This
report presents a side-by-side comparison of the major provisions of those bills and includes a
glossary of common terms (Appendix C).
Although the purpose of these bills is to reduce greenhouse gases (GHGs), the specifics of each
differ greatly. Five bills (S. 280, S. 309, S. 485, H.R. 620 and H.R. 1590) cap greenhouse gas
emissions from covered entities at 1990 levels in the year 2020. S. 317 places its first emissions
cap at 2001 levels in 2015; S. 1766 targets reductions at 2006 levels in 2020; S. 2191 as reported
would cap GHGs at about 19% below 2005 levels in 2020; H.R. 4226 would limit 2020
emissions to 85% of their 2006 levels; H.R. 6186 would reduce emissions to 20% below 2005
levels by 2020, and H.R. 6316 would reduce emission to 20% below 1990 levels by 2020. Ten
bills (S. 280, S. 317, S. 485, S. 2191, S. 3036, H.R. 620, H.R. 1590, H.R. 4226, H.R. 6186, and
H.R. 6316) would establish cap-and-trade systems to implement their emission caps. In contrast,
S. 1766 provides for two compliance systems—a cap-and-trade program and an alternative safety
valve payment—and allows the covered entities to choose one or employ a combination of both.
Finally, S. 309 provides discretionary authority to the Environmental Protection Agency (EPA) to
establish a cap-and-trade program to implement its emission cap.
The differences continue with respect to entities covered under the programs. Three bills (S. 309,
S. 485, H.R. 1590) provide discretionary authority to EPA to determine covered entities by
applying cost-effective criteria to reduction options. In contrast, S. 317‘s emission cap is imposed
solely on the electric generating sector. The other bills (S. 280, S. 1766, S. 2191, S. 3036, H.R.
620, H.R. 4226, H.R. 6186, and H.R. 6316) cover most economic sectors but not all (e.g., they
exclude the agricultural sector). Thus, the overall reductions achieved by the bills depend partly
on the breadth of entities covered.
Beyond the basics of these bills, each contains other important provisions. For example, S. 280
creates a new innovation infrastructure, while several—S. 1766, S. 2191, S. 3036, H.R. 4226,
H.R. 6186, and H.R. 6316—encourage foreign countries to undertake comparable control actions
and specify potential consequences for inaction. Other provisions include mandatory greenhouse
gas standards for vehicles (S. 309, S. 485, H.R. 1590), and a renewable portfolio standard for the
electric generating sector (S. 309, S. 485, H.R. 1590). This comparison should be considered a
guide to the basic provisions contained in each bill. It is not a substitute for careful examination
of each bill’s language and provisions.
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Introduction ..................................................................................................................................... 1
Proposed Legislation in 110th Congress .......................................................................................... 2
Legislative Action in the 110th Congress ......................................................................................... 5
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Appendix A. Comparison of Key Provisions of Senate Greenhouse Gas Reduction Bills ............. 6
Appendix B. Comparison of Key Provisions of House Greenhouse Gas Reduction Bills............ 15
Appendix C. Common Terms ........................................................................................................ 23
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Author Contact Information .......................................................................................................... 25
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Climate change is generally viewed as a global issue, but proposed responses generally require
action at the national level. In 1992, the United States ratified the United Nations Framework
Convention on Climate Change (UNFCCC), which called on industrialized countries to take the
lead in reducing the six primary greenhouse gases to 1990 levels by the year 2000.1 For more than
a decade, a variety of voluntary and regulatory actions have been proposed or undertaken in the
United States, including monitoring of power plant carbon dioxide emissions, improved appliance
efficiency, and incentives for developing renewable energy sources. However, carbon dioxide
emissions have continued to increase.
In 2001, President George W. Bush rejected the Kyoto Protocol, which called for legally binding
commitments by developed countries to reduce their greenhouse gas emissions.2 He also rejected
the concept of mandatory emissions reductions. Since then, the Administration has focused U.S.
climate change policy on voluntary initiatives to reduce the growth in greenhouse gas emissions.
In contrast, in 2005, the Senate passed a Sense of the Senate resolution on climate change
declaring that Congress should enact legislation establishing a mandatory, market-based program
to slow, stop, and reverse the growth of greenhouse gases at a rate and in a manner that “will not
significantly harm the United States economy” and “will encourage comparable action” by other
nations.3
A number of congressional proposals to advance programs designed to reduce greenhouse gases
have been introduced in the 110th Congress. These have generally followed one of three tracks.
The first is to improve the monitoring of greenhouse gas emissions to provide a basis for research
and development and for any potential future reduction scheme. The second is to enact a marketoriented greenhouse gas reduction program along the lines of the trading provisions of the current
acid rain reduction program established by the 1990 Clean Air Act Amendments. The third is to
enact energy and related programs that would have the added effect of reducing greenhouse
gases4; an example would be a requirement that electricity producers generate a portion of their
electricity from renewable resources (a renewable portfolio standard). This report focuses on the
second category of bills. (For a review of additional climate change related bills, see CRS Report
RL34067, Climate Change Legislation in the 110th Congress, by (name redacted) and (name
redacted).)
1
Under the United Nations Framework Convention on Climate Change (UNFCCC), those gases are carbon dioxide
(CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur
hexafluoride (SF6). Some greenhouse gases are controlled under the Montreal Protocol on Substances that Deplete the
Ozone Layer, and are not covered under UNFCCC.
2
For further information, see CRS Report RL30692, Global Climate Change: The Kyoto Protocol, by (name red
acted).
3
S.Amdt. 866, passed by voice vote after a motion to table failed 43-54, June 22, 2005.
4
For discussions of relevant energy legislation, see CRS Report RL34294, Energy Independence and Security Act of
2007: A Summary of Major Provisions, by (name redacted), and CRS Report RL33831,
Energy Efficiency and Renewable
Energy Legislation in the 110th Congress, by (name redacted), (name redacted), and (name redacted).
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In the 110th Congress, Members have introduced 12 bills that include provisions to impose or
permit some form of market-based controls on emissions of greenhouse gases. General
descriptions of those bills follow, beginning with S. 2191, which was reported, with amendments,
on May 20, 2008, by the Senate Committee on Environment and Public Works.5 The major
provisions of the seven Senate bills are compared in Appendix A. The major provisions of the
five House bills are compared in Appendix B.
S. 2191, as introduced October 18, 2007, by Senators Lieberman and Warner, would cap
greenhouse gas emissions from the electric generation, industrial, and transportation sectors (for
facilities that emit more than 10,000 metric tons of carbon dioxide equivalent—mtCO2e). As
introduced, the cap is estimated by the sponsors to reduce emissions to 15% below 2005 levels in
2020, declining steadily to 63% below 2005 levels in 2050. The program would be implemented
through an expansive allowance trading program to maximize opportunities for cost-effective
reductions. Credits obtained from increases in carbon sequestration and acquisition of allowances
from foreign sources could be used to comply with 30% of allowance requirements. The bill
would also establish a Carbon Market Efficiency Board to observe the allowance market and
implement cost-relief measures if necessary. (For recent action on S. 2191 and for modifications
to the provisions, see the next section.)
S. 3036, introduced by Senator Boxer on May 20, 2008, is identical to the reported version of S.
2191, except that S. 3036 contains a budget amendment aimed at making the bill revenue-neutral.
This would entail devoting a percentage of auction revenues—increasing from 6.1% in 2012 to
15.99% in 2031 and thereafter—to offset budget deficits that are projected to occur due to the
cap-and-trade program.6 This bill was considered by the Senate the week of June 2, 2008.
S. 280, introduced January 12, 2007, by Senator Lieberman, would cap emissions of the six
greenhouse gases specified in the United Nations Framework Convention on Climate Change at
reduced levels from the electric generation, transportation, industrial, and commercial sectors—
sectors that account for about 85% of U.S. greenhouse gas emissions. The reductions would be
implemented in four phases, with an emissions cap in 2012 based on the affected facilities’ 2004
emissions (for an entity that has a single unit that emits more than 10,000 metric tons of carbon
dioxide equivalent); the cap steadily declines until it is equal to one-third of the facilities’ 2004
levels. The program would be implemented through an expansive allowance trading program to
maximize opportunities for cost-effective reductions, and credits obtained from increases in
carbon sequestration, reductions from non-covered sources, and acquisition of allowances from
foreign sources could be used to comply with 30% of reduction requirements. The bill also
contains an extensive new infrastructure to encourage innovation and new technologies.
S. 309, introduced January 16, 2007, by Senator Sanders, would cap greenhouse gas emissions on
an economy-wide basis beginning in 2010. Beginning in 2020, the country’s emissions would be
capped at their 1990 levels, and then proceed to decline steadily until they were reduced to 20%
of their 1990 levels in the year 2050. EPA has the discretion to employ a market-based allowance
5
The bill was ordered reported December 5, 2007, by an 11-8 vote.
See CBO, S. 2191, America’s Climate Security Act, with an Amendment (April 10, 2008), at http://www.cbo.gov/
ftpdocs/91xx/doc9120/s2191.pdf.
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trading program or any combination of cost-effective emission reduction strategies. The bill also
includes new mandatory greenhouse gas emission standards for vehicles and new powerplants,
along with a new energy efficiency performance standard. The bill would establish a renewable
portfolio standard (RPS) and a new low-carbon generation requirement and trading program.
S. 317, introduced January 17, 2007, by Senator Feinstein, would cap greenhouse gas emissions
from electric generators over 25 megawatts. Beginning in 2011, affected generators would be
capped at their 2006 levels, declining to 2001 levels by 2015. After that, the emission cap would
decline 1% annually until 2020, when the rate of decline would increase to 1.5%. The allowance
trading program includes an allocation scheme that provides for an increasing percentage of all
allowances to be auctioned, with 100% auctioning in 2036 and thereafter. The cap-and-trade
program allows some of an entity’s reduction requirement to be meet with credits obtained from
foreign sources and a variety of other activities specified in the bill.
S. 485, introduced February 1, 2007, by Senator Kerry, would cap greenhouse gas emissions on
an economy-wide basis beginning in 2010. Beginning in 2020, the country’s emissions would be
capped at their 1990 levels. After 2020, emissions economy-wide would be reduced 2.5%
annually from their previous year’s level until 2031, when that percentage would increase to 3.5%
through 2050. The allowance trading system includes an allocation scheme that requires an
unspecified percentage of allowances to be auctioned. The bill also includes new mandatory
greenhouse gas emission standards for vehicles, along with a new energy efficiency performance
standard. The bill would establish a renewable portfolio standard (RPS), increase biofuel
mandates under the Renewable Fuels Standard, and mandate new infrastructure for biofuels.
Finally, the bill expands and extends existing tax incentives for alternative fuels and advanced
technology vehicles, and establishes a manufacturer tax credit for advanced technology vehicle
investment.
S. 1766, introduced July 11, 2007, by Senator Bingaman, would set emissions targets on most of
the country’s greenhouse gas emissions. Greenhouse gas emitting activities such as methane
emissions from landfills, coal mines, animal waste, and municipal wastewater projects, along
with nitrous oxide emissions from agricultural soil management, wastewater treatment, and
manure management, are not included under the targets, although credits for use by covered
entities are available or may be generated by verified GHG reductions in these areas. Beginning
in 2012, covered entities would have emissions targets set at their 2006 levels in 2020. The
emissions targets would decline steadily until 2030 when the emission target would be set at the
entities’ 1990 levels. Compliance can be secured either through an allowance trading program or
by paying a safety valve price (called a Technology Accelerator Payment or TAP). Under the
trading program, allowances are allocated according to various categories, including covered
entities; eligible facilities, such as coal mines and carbon-intensive industries; states; and
sequestration activities. Initially, 24% of all allowances are auctioned, a percentage that increases
over time. The TAP is set at $12 a metric ton of carbon dioxide equivalent; it increases 5%
annually above the rate of inflation. The bill also requires countries that do not take comparable
action to control emissions to submit special allowances (or their foreign equivalent) to
accompany exports to the United States of any covered greenhouse intensive goods and primary
products.
H.R. 620, introduced February 7, 2007, by Representative Olver, is a substantially modified
version of S. 280. Using the same basic structure as S. 280, the emission caps under H.R. 620 are
more stringent. Reductions from affected sectors (electric generation, transportation, industrial,
and commercial) would be set at 2004 levels in 2012 and then steadily decline until the cap is
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equal to about one-fourth of facilities’ 2004 levels. Although H.R. 620 permits affected entities to
comply with the reduction requirements with credits from foreign sources, sequestration, and
reductions from non-covered entities, these credits are limited to 15% of the source’s reduction
requirement.
H.R. 1590, introduced March 20, 2007, by Representative Waxman, is similar to S. 485. H.R.
1590 would cap greenhouse gas emissions on an economy-wide basis beginning in 2010.
Beginning in 2020, the country’s emissions would be capped at their 1990 levels. After 2020,
emissions economy-wide would be reduced by roughly 5% annually from their previous year’s
level through 2050, when emissions levels would be capped at 80% below 1990 levels. The
allowance trading system includes an allocation scheme that requires an unspecified percentage
of allowances to be auctioned. The bill also includes new mandatory greenhouse gas emission
standards for vehicles, along with a new energy efficiency performance standard. The bill would
also establish a renewable portfolio standard.
H.R. 4226, introduced November 15, 2007, by Representative Gilchrest, is a modified version of
H.R. 620. Using the same basic structure as H.R. 620, emission limitations are based on
percentages of 2006 emission levels. Reductions from affected sectors (electric generation,
transportation, industrial, and commercial) would be set at 2006 levels in 2012 and then steadily
decline until the cap is equal to about one-fourth of facilities’ 2006 levels in 2050. The bill
provides that the President may establish a program to require importers to pay the value of
GHGs emitted during the production of goods or services imported into the United States from
countries that have no comparable emission restrictions to those of the United States. The
program’s requirement may not be imposed on countries until negotiations to achieve agreement
on such restrictions have been attempted. In addition, the bill also establishes a Carbon Market
Efficiency Board to observe the allowance market and implement cost-relief measures if
necessary.
H.R. 6186, introduced June 4, 2008, by Representative Markey, would cap emissions from
covered sources at 930 million mtCO2e in 2050. Of the long-term reduction targets in the capand-trade bills, this is among the most stringent. H.R. 6186 would auction 94% of its emission
allowances in 2012, increasing to 100% by FY2020. Almost 60% of the auction revenues would
be distributed (via tax credits and rebates) to low- and middle-income households. The bill would
direct EPA to develop emission performance standards for non-covered entities, which may
include coal mines, landfills, wastewater treatment operations, and animal feeding operations. In
addition, new (as defined in the bill) coal-fired power plants would be required to capture and
geologically sequester not less than 85% of their CO2 emissions within a specified time frame.
H.R. 6316, introduced June 19, 2008, by Representative Doggett, would cap emissions from
covered sources at 348 million mtCO2e in 2050. Of the long-term reduction targets in the capand-trade bills, this is the most stringent. In addition, the bill would direct EPA to develop
regulations that prevent growth in emissions from non-covered entities. H.R. 6316 would auction
85% of its emission allowances in 2012, increasing to 100% by FY2020. Approximately 54% of
the auction revenues would be distributed for consumer assistance: of this allotment, 66% would
fund a healthcare coverage program (established by subsequent legislation); the remainder would
provide rebates and tax relief to low- and moderate-income households. Domestic offsets and
international allowances could combine to contribute up to 25% of covered source’s allowance
requirements. Similar to other bills, a Carbon Market Efficiency Board would observe the
allowance market and implement cost-relief measures if necessary. The bill would also require
countries that do not take comparable action to control emissions to submit special allowances (or
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their foreign equivalent) to accompany exports to the United States of any covered primary
product.
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On May 20, 2008, the Senate Committee on Environment and Public Works’ Subcommittee on
Private Sector and Consumer Solutions to Global Warming and Wildlife Protection reported out a
revised version of S. 2191. As reported from subcommittee, S. 2191 is estimated to reduce
greenhouse gas emissions 19% below 2005 levels by 2020 (up from 15% as introduced) and 63%
below 2005 levels by 2050. The increase in the estimated reductions in 2020 is the result of
amended text that includes greenhouse gases from all natural gas uses under the overall emissions
cap. Other amendments approved included modifications to eligibility requirements for the
advanced technology vehicles manufacturing incentive program and the advanced coal generation
technology demonstration program. Modifications were also made to the proposed allocation of
allowances to help tribal communities respond to climate change and to encourage international
forest carbon activities, along with 1% of allowances reserved for rural cooperatives and a
corresponding reduction in allowances allocated to the rest of the electric power industry. The
revised bill also added two new recipients of auction revenues: a Bureau of Land Management
Emergency Firefighting Fund ($300 million) and a Forest Service Emergency Firefighting Fund
($800 million).
On December 5, 2007, the full committee ordered reported out a revised version of S. 2191 by an
11 to 8 vote. The bill was reported by the committee on May 20, 2008 (S.Rept. 110-337). The
revised bill expands the greenhouse gas reduction program coverage by replacing the previous
definition of covered facility based on the electric power, transportation, and industrial sectors
with a comprehensive upstream definition for oil refineries, natural gas processing plants, and a
downstream definition for coal consumers. Among the amendments agreed to by the full
committee were a new low carbon fuel standard (LCFS) that would require the carbon intensity
of transportation fuel to be frozen in 2011 and then reduced by 5% in 2015 and 10% in 2020.
Other amendments agreed to would increase incentives for states to modify their utility regulatory
structures to encourage energy efficiency, and would broaden the ability of states to use their
allowance allocations to mitigate adverse economic impacts resulting from the bill’s
implementation. As ordered reported, S. 2191‘s emissions cap is estimated by its sponsors to
require a 71% reduction from 2005 levels by 2050 from covered entities (estimated by the
sponsors to account for 87% of total U.S. greenhouse gas emissions). Overall, the sponsors
estimate that S. 2191 would reduce total U.S. greenhouse gas emissions by up to 66% from 2005
levels by 2050.
In April 2008, a proposed amendment to S. 2191 was submitted by the committee to the
Congressional Budget Office (CBO) to be included in the scoring of the bill. The amendment
would provide for some of the auctioned revenues to be put aside for deficit reduction purposes.
Senator Boxer introduced S. 3036 on May 20, 2008. This proposal combined the reported version
of S. 2191 with the revenue-neutral amendment. The Senate considered S. 3036 the week of June
2, 2008. On June 6, 2008, a motion to invoke cloture failed on a roll call vote of 48 to 36, and bill
supporters withdrew the bill from consideration.
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Topic
Emission
reduction/
limitation
scheme
Responsible
agency
Greenhouse
gases defined
Specific
emissions
limits
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S. 280 (Lieberman)
Absolute cap on total
emissions from all
covered entities in the
electric power,
transportation, industry,
and commercial sectors.
Environmental Protection
Agency (EPA).
Carbon dioxide,
methane, nitrous oxide
(N2O),
hydrofluorocarbons
(HFCs), perfluorocarbons
(PFCs), and sulfur
hexafluoride (SF6).
Beginning in 2012,
emissions from covered
entities are capped at
6.13 billion metric tons,
minus 2012 emissions
from non-covered
entities.
Beginning in 2020,
emission cap declines to
5.239 billion metric tons,
minus 2020 emissions
from non-covered
entities.
Beginning in 2030,
emission cap declines to
4.1 billion metric tons,
minus 2030 emissions
from non-covered
S. 309
(Sanders)
S. 317 (Feinstein)
S. 485 (Kerry)
S. 1766 (Bingaman)
Absolute cap on
total emissions
economy-wide.
Absolute cap on total
emissions from
covered electric
generators.
Absolute cap on
total emissions
economy-wide.
EPA.
EPA.
EPA.
Same six gases as
S. 280.
Same six gases as S.
280.
Same six gases as S.
280.
Emissions targets for all
covered entities.
Affected entities
estimated to cover
about 85%-90% of all
U.S. GHG emissions.
To be determined by
the President.
Same six gases as S.
280.
Beginning in
2010, emissions
economy-wide
to be reduced
2% annually.
Beginning in
2020, emission
cap on economywide basis set at
1990 level, with
declining
emission caps of
26.7% below
1990 levels in
2030 and 53.3%
in 2040.
Beginning in
2050, emission
Beginning in 2011,
emissions from affected
electric generators
capped at 2006 levels.
Beginning in 2015,
emissions from affected
electric generators
capped at their 2001
levels, declining 1%
annually from previous
year’s level from 2016
to 2020.
Beginning in 2020,
emission cap declines
1.5% annually from
previous year’s level.
Beginning in 2010,
emissions
economy-wide to
be reduced by
appropriate
measures to cap
emissions at 1990
levels by 2020.
Beginning in 2021,
emissions
economy-wide to
be reduced 2.5%
annually from
previous year’s
level.
Beginning in 2031
through 2050,
emissions
In 2012, the emissions
target for covered
entities is set at 6.652
billion metric tons.
Target is reduced
annually thereafter until
2030.
Emission target for
covered sources in
2020 is 6.188 billion
metric tons.
Emission target for
covered sources in
2030 is 4.819 billion
metric tons.
If the President
determines that
scientific, technological,
S. 3036 (Boxer) / S. 2191 as
amended (Lieberman)
Absolute cap on total
emissions from all covered
entities. Affected entities
estimated to cover about 80%87% of all U.S. GHG emissions.
EPA.
Same six gases as S. 280.
In 2012, emissions from
covered entities are capped at
5.775 billion metric tons. Cap
is reduced annually thereafter
until 2050.
Emission cap for covered
sources in 2020 is 4.924 billion
metric tons.
Emission cap for covered
sources in 2030 is 3.860 billion
metric tons.
Emission cap for covered
sources in 2040 is 2.796 billion
metric tons.
Emission cap for covered
sources in 2050 is 1.732 billion
metric tons.
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Topic
Covered
entities
General
allocating and
implementing
strategy
Ȭŝȱ
S. 280 (Lieberman)
S. 309
(Sanders)
S. 317 (Feinstein)
S. 485 (Kerry)
entities.
Beginning in 2050,
emission cap further
declines to 2.096 billion
metric tons, minus annual
emissions from noncovered entities.
cap set at 80%
below 1990
levels.
In metric tons of carbon
dioxide equivalents
(CO2e): any electric
power, industrial, or
commercial entity that
emits over 10,000 CO2e
annually from any single
facility owned by the
entity; any refiner or
importer of petroleum
products for
transportation use that,
when combusted, will
emit over 10,000 metric
tons annually; and any
importer or producer of
HFCs, PFCs, or SF6 that,
when used, will emit over
10,000 CO2e.
EPA promulgates
rule within two
years of
enactment that
applies the most
cost-effective
reduction
options on
sources or
sectors to
achieve
reduction goals.
Any fossil fuel-fired
electric generating
facility that has a
capacity of greater than
25 megawatts and
generates electricity
for sale, including
cogeneration and
government-owned
facilities.
EPA promulgates
rule within two
years of enactment
that applies the
most cost-effective
reduction options
on the largest
emitting sources or
sectors to achieve
reduction goals.
A tradeable allowance
system is established:
EPA shall determine
allocations based on
several economic, equity,
and sector-specific
criteria, including
economic efficiency,
competitive effects, and
Tradeable
allowance system
permitted. In
implementing
reduction
program, EPA
shall select the
most costeffective
Tradeable allowance
system is established.
Allocations to existing
sources based on
historic electricity
output, and includes
allowance allocations
for incremental nuclear
capacity and renewable
A tradeable
allowance system is
established. The
President submits
to Congress an
allocation plan
within one year of
enactment that
includes a
economy-wide to
be reduced 3.5%
annually from
previous year’s
level.
S. 1766 (Bingaman)
and international
considerations suggest
further reductions are
warranted, his
recommendations are
to be considered by
Congress under
expedited procedures.
Regulated fuel
distributors include
petroleum refineries,
natural gas processing
plants, and imports of
petroleum products,
coke, or natural gas.
Regulated coal facilities
are entities that
consume more than
5,000 tons of coal a
year. Regulated nonfuel
entities are importers
of HFCs, PFC, SF6,
N2O, or products
containing such
compounds, and adipic
acid and nitric acid
plants, aluminum
smelters, and facilities
that emit HFCs as a
byproduct of HCFC
production.
Two compliance
systems are provided.
Covered entities may
choose which one to
use or employ a
combination of both.
First, a tradeable
allowance system is
established. In 2012,
S. 3036 (Boxer) / S. 2191 as
amended (Lieberman)
Assuming no capture of GHGs,
any producer or importer of
petroleum- or coal-based liquid
or gaseous fuel that emits
GHGs, or any facility that
produces or imports more
than 10,000 CO2e of GHG
chemicals annually; any facility
that uses more than 5,000 tons
of coal annually; any natural gas
processing plant or importer
(including LNG); or, any facility
that emits more than 10,000
CO2e of HFCs annually as a
byproduct of
hydrochlorofluorocarbon
production.
A tradeable allowance system
is established. Off the top, a
share of allowances are
auctioned for deficit reduction
increasing from 6.1% in 2012
to 15.99% in 2031 and
thereafter. Then the
“remainder allowances” are
distributed in 2012 (adjusted in
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Topic
Public
sale/auction of
allowances
ȬŞȱ
S. 280 (Lieberman)
S. 309
(Sanders)
S. 317 (Feinstein)
impact on consumers.
Allowances are to be
allocated upstream to
refiners and importers of
transportation fuel, along
with producers of HFCs,
PFCs, and SF6, and
downstream to electric
generation, industrial, and
commercial entities.
Allocations to covered
entities are provided at
no cost.
emission
reduction
strategies.
EPA shall allocate
to various
sectors and
interests any
allowances that
are not allocated
to affected
entities, including
households,
dislocated
workers, energy
efficiency and
renewable
energy activities,
sequestration
activities, and
ecosystem
protection
activities.
energy, along with
sequestration and early
action provisions.
From 2011 on, an
increasing percentage
of all allowances are to
be auctioned, with
100% of allowances
auctioned in 2036 and
thereafter.
EPA shall determine the
number of allowances
allocated to the Climate
Change Credit
Corporation (CCCC)
(established by the bill).
EPA shall allocate to the
CCCC allowances before
2012 to auction to raise
revenue for technology
deployment and
dissemination.
EPA may choose
to provide for
trustees to sell
allowances for
the benefit of
entities eligible
to receive
assistance under
the proposal (see
above).
From 2011 on, an
increasing percentage
of all allowances are to
be auctioned, with
100% of allowances
auctioned in 2036 and
thereafter.
Revenues from the
auction are to be
deposited in the
Climate Action Trust
Fund created by the
S. 485 (Kerry)
combination of
auctions and free
allocation of
allowances. To the
maximum extent
practicable, the
allocation and
revenues received
should maximize
public benefits,
promote economic
growth, assist
households and
dislocated workers,
encourage energy
efficiency,
renewable energy,
and sequestration
activities, and assist
states in addressing
the impact of
climate change.
Congress has one
year to enact an
alternative to the
plan; otherwise,
EPA shall
implement it.
The President shall
determine the
number of
allowances to be
auctioned. The
proceeds of the
auction to be
deposited with the
Climate
Reinvestment Fund
created by the
Department of the
Treasury. (See
S. 1766 (Bingaman)
S. 3036 (Boxer) / S. 2191 as
amended (Lieberman)
53% of allowances
allocated to covered
and eligible industrial
entities; 23% allocated
to States and for
sequestration and early
reduction activities;
24% are auctioned to
fund low income
assistance, carbon
capture and storage,
and adaptation
activities. The
percentage auctioned
increases steadily,
reaching 53% by 2030.
Second, a Technology
Accelerator Payment
(i.e., safety valve) may
be paid in lieu of
submitting one or more
allowances.
future years) as follows: 38% of
allowances to covered electric
utilities, industrial facilities, and
coops, declining steadily to 0 in
2031; 10.5% to states for
conservation, extra reductions,
and other activities; 7.5% for
various sequestration activities;
11% allocated for electricity
and natural gas consumer
assistance; 5% for early
reductions; 0.5% for tribal
governments; 1% for methane
reduction projects and 21.5%
(plus an early auction of 5%)
auctioned to fund technology
deployment, carbon capture
and storage, low income and
rural assistance, and adaptation
activities, as well as program
management. The percentage
auctioned for CCCC activities
increases steadily, reaching
69.5% by 2031 and thereafter.
Beginning in 2012, 24%
of available allowances
are auctioned to fund
low income assistance,
technology, and
adaptation activities.
The percentage
auctioned increases
steadily, reaching 53%
by 2030; after that it
increases 1 percentage
point annually through
Beginning in 2012, 6.1% of total
allowances are auctioned for
deficit reduction. Further,
21.5% of “remainder
allowances” (plus 5% from an
early auction of 2012
remainder allowances) are
auctioned to fund the activities
of the CCCC. This percentage
increases steadily to 69.5% by
2031 and thereafter.
Revenues from the auction are
ȱ
Topic
S. 280 (Lieberman)
The CCCC may buy and
sell allowances, and use
the proceeds to reduce
costs borne by
consumers and other
purposes. (See “Revenue
recycling” below.)
Ȭşȱ
S. 309
(Sanders)
S. 317 (Feinstein)
Department of the
Treasury.
S. 485 (Kerry)
“Revenue
recycling” below.)
S. 1766 (Bingaman)
2043.
Revenues from the
auction are to be
deposited in one of
three funds created by
the Department of the
Treasury: the Energy
Technology
Deployment Fund, the
Climate Adaptation
Fund, and the Energy
Assistance Fund.
S. 3036 (Boxer) / S. 2191 as
amended (Lieberman)
to be deposited in one of ten
funds created in the
Department of the Treasury:
Deficit Reduction Fund,
Technology Deployment,
Energy Independence
Acceleration Fund, Energy
Assistance Fund, Climate
Change Worker Training Fund,
Adaptation Fund, and the
Climate Change and National
Security Fund, as well as a fund
for program management and
two Emergency Firefighting
Funds.
ȱ
Topic
Cost-limiting
safety valve
Penalty for
noncompliance
ȬŗŖȱ
S. 280 (Lieberman)
S. 309
(Sanders)
S. 317 (Feinstein)
S. 485 (Kerry)
S. 1766 (Bingaman)
No explicit provision.
No explicit
provision.
However, if the
President
determines a
national security
emergency
exists, the
President may
temporarily
adjust, suspend,
or waive any
regulation
promulgated
under this
program (subject
to judicial
review).
No explicit provision.
However, limited
borrowing against
future reductions is
permitted if EPA
determines allowance
prices have reached
and sustained a level
that is or will cause
significant harm to the
U.S. economy. Also,
EPA may increase to
50% the share of
international credits
that can be used in
such cases.
No explicit
provision.
A Technology
Accelerator Payment
(TAP) (i.e., safety valve)
may be paid in lieu of
submitting one or more
allowances. For 2012,
the TAP price is set at
$12 per metric ton,
rising 5% above inflation
annually thereafter.
If the President
determines the TAP
should be increased or
eliminated to achieve
the act’s purposes, his
recommendations are
to be considered by
Congress under
expedited procedures.
Excess emission penalties
are equal to three times
the market price for
allowances on the last
day of the year at issue.
Existing
enforcement
provisions of
Section 113 of
the Clean Air
Act are extended
to program.
$100 per excess ton
indexed to inflation
plus a 1.3 to 1 offset
from future allowances.
If the market price for
an allowance exceeds
$60, the penalty is
$200 per excess ton,
adjusted for inflation.
Excess emission
penalties are equal
to twice the market
price for allowances
as of December 31
of the year at issue,
plus a 1 to 1 offset
from next year’s
allowance
allocation.
Excess emissions
penalties are equal to
three times the TAP
price for that calendar
year. In addition, civil
penalties are $25,000 a
day for violating
provisions of the act.
S. 3036 (Boxer) / S. 2191 as
amended (Lieberman)
A Carbon Market Efficiency
Board is established to observe
the allowance market and
implement cost-relief measures
if necessary. Measures include
permitting increased allowance
borrowing from future
allocations; increased offsets
and foreign allowance use;
expanded payback period for
such allowances; lower interest
charged for borrowed
allowances; and expanded total
borrowed allowances.
Increased borrowing limited to
5% of emission cap and
repayment schedule can not be
longer than 15 years.
If the President determines a
national security emergency
exists, the President may
temporarily adjust, suspend, or
waive any regulation
promulgated under this
program (subject to judicial
review).
Excess emission penalties per
ton are equal to the higher of
$200 or three times the mean
market price for allowances
during the year the allowance
was due, plus a 1-to-1 offset
from a future year allocation.
ȱ
Topic
Offset
treatment
and other
flexibility
mechanisms
Banking
Ȭŗŗȱ
S. 280 (Lieberman)
S. 309
(Sanders)
S. 317 (Feinstein)
S. 485 (Kerry)
S. 1766 (Bingaman)
If the President
determines that
emission credits issued
under foreign programs
or foreign offset
projects are
comparable to U.S.
ones, he may
promulgate rules
allowing such credits or
offsets to be used to
meet the act’s emission
targets.
No more than 10% of
an entity’s emissions
target can be met
through foreign offset
project credits.
Establishes program to
provide credits
obtained through
verified reductions
from non-covered
activities. No limit on
their use to meet
reduction targets.
Banking of allowances is
permitted; allowances
may be saved for use in
future years.
Up to 30% of required
reductions may be
achieved through credits
obtained through precertified international
emissions trading
programs, approved
reduction projects in
developing countries,
domestic carbon
sequestration, and
reductions from noncovered entities.
Market trading
systems
incorporated
into Renewable
Portfolio
Standard, new
energy efficiency
performance
standard, and
new low-carbon
generation
requirement.
No limit on use
of domestic
biological
sequestration to
meet reductions
requirements.
Up to 25% (50% for
new affected units) of
required reductions
may be achieved with
credits obtained
through EPA-approved
foreign government
programs developed
under United Nations
Framework
Convention on Climate
Change (UNFCCC)
protocols.
EPA may increase to
50% the share of
international credits, if
EPA determines
allowance prices have
reached and sustained
a level that is causing
or will cause significant
harm to the U.S.
economy.
Market trading
systems
incorporated into
Renewable
Portfolio Standard
and new energy
efficiency
performance
standard.
No limit on use of
domestic biological
sequestration to
meet reductions
requirements.
Banking of allowances is
permitted; allowances
may be saved for use in
future years.
No specific
prohibition on
banking.
Banking of allowances
is permitted;
allowances may be
saved for use in future
years.
Banking of
allowances is
permitted;
allowances may be
saved for use in
future years.
S. 3036 (Boxer) / S. 2191 as
amended (Lieberman)
Up to 15% of allowance
requirement may be achieved
through credits obtained
through agricultural
sequestration, land use change,
forestry, manure management,
and other specified activities.
Percentage may be increased
by the Carbon Market
Efficiency Board
Up to 15% of allowance
requirement may be achieved
through allowances obtained
through certified foreign
allowance markets. Percentage
may be increased by the
Carbon Market Efficiency
Board.
Banking of allowances is
permitted; allowances may be
saved for use in future years.
ȱ
Topic
Borrowing
Early
reduction
credits and
bonus credits
ȬŗŘȱ
S. 280 (Lieberman)
S. 309
(Sanders)
Borrowing against future
reductions is permitted.
No specific
provision.
Entities with registered
emission reductions
achieved before 2012
may receive allowances
for them, including
reductions achieved
under more stringent
mandatory state
programs.
For the time period
2012-2017, entities that
have entered into an
agreement with EPA to
reduce emissions to 1990
levels by 2012 are
entitled to additional
allowances to cover their
additional reductions and
are allowed to achieve
40% of their reduction
requirement (as opposed
to 30%; see above)
through international
emissions trading and
projects, sequestration,
or reductions by noncovered entities.
Reductions
previously
achieved under
state programs
that are at least
as stringent as a
federal trading
program may be
recognized by
the federal
program.
Entities that
demonstrate
reductions
achieved early
(but not before
1992) that are as
verifiable as
reductions under
a federal trading
program may be
recognized by
the federal
program.
S. 3036 (Boxer) / S. 2191 as
amended (Lieberman)
S. 317 (Feinstein)
S. 485 (Kerry)
S. 1766 (Bingaman)
Limited borrowing
against future
reductions is permitted
if EPA determines
allowance prices have
reached and sustained
a level that is causing
or will cause significant
harm to the U.S.
economy.
Entities with reductions
achieved from 2000
through 2010 shall
receive credits under
specific criteria,
including EPA rules that
ensure reductions are
real, additional,
verifiable, enforceable,
and permanent, and
that they were
reported under either
1605(b) of the 1992
Energy Policy Act, or
according to a state or
regional registry.
Quantity of credits
given is limited to 10%
of the 2011 allowance
allocation.
No specific
provision.
No specific provision.
The Carbon Market Efficiency
Board may permit borrowing
against future reductions in
certain cases.
Recognizing and
rewarding early
reductions is a
stated goal of the
program.
One percent of
allowances available
from 2012 through
2020 are allocated to
early reductions
reported under the
1992 Energy Policy
Act’s 1605(b) program,
EPA’s Climate Leaders
Program, or a Stateadministered or
privately administered
registry.
Geologic sequestration
projects built from
2008 through 2030
receive bonus
allowances for the first
10 years of operation.
Five percent of “remainder
allowances” established for
2012 (declining steadily to 0 in
2017) are allocated to early
reductions reported under the
1992 Energy Policy Act’s
1605(b) program, EPA’s
Climate Leaders Program, a
State-administered or
voluntary program.
Four percent of remainder
allowances established for
2012 through 2035 available on
a steadily declining basis from
2012 through 2039 for
geologic sequestration projects
for electric generating plants
built from 2008 through 2035.
The bonus allowances are
limited to the first 10 years of
operation.
ȱ
Topic
Revenue
recycling
Other key
provisions
Ȭŗřȱ
S. 280 (Lieberman)
S. 309
(Sanders)
S. 317 (Feinstein)
S. 485 (Kerry)
S. 1766 (Bingaman)
Revenues generated by
allowance auctions and
trading proceeds are
received by a new
Climate Change Credit
Corporation (CCCC).
Activities to be funded
include mechanisms to
reduce consumer costs
and to assist dislocated
workers, low-income
persons, and affected
communities, along with
programs to encourage
deployment of new
technology and wildlife
restoration. Allocations
to the CCCC are to be
determined by EPA based
on the funding needs of
the advanced
technologies
demonstration and
deployment programs.
Further, at least 50% of
revenue received must be
used for technology
deployment.
Allowances may
be allocated by
EPA to
households,
dislocated
workers, energy
efficiency and
renewable
energy activities,
sequestration
activities, and
ecosystem
protection
activities.
Revenues generated
from the auction are to
be deposited in the
Climate Action Trust
Fund created by
Department of the
Treasury. Activities to
be funded include an
Innovative Low- and
Zero-emitting Carbon
Technologies Program,
a Clean Coal
Technologies Program,
and an Energy
Efficiency Technology
Program, along with
research and
development.
Adaptation and
mitigation activities to
be funded include
affected workers and
communities, and fish
and wildlife habitat.
Revenues
generated by
allowance auctions
and penalties are
received by a new
Climate
Reinvestment Fund
created by
Department of the
Treasury. Activities
to be funded
include mechanisms
to reward early
reductions,
maximize public
benefits, promote
economic growth,
assist households
and dislocated
workers, encourage
energy efficiency,
renewable energy,
and sequestration
activities, and assist
states in addressing
the impact of
climate change.
A new Energy
Technology
Deployment Fund is
funded by TAPs
received and some
auction proceeds.
Activities to be funded
include zero- or lowcarbon energy,
advanced coal and
sequestration, cellulosic
biomass, and advanced
technology vehicles.
A new Climate
Adaptation Fund is
funded by some auction
proceeds. Activities to
be funded include
coastal, arctic, and fish
and wildlife impact
mitigation.
A new Energy
Assistance Fund is
funded by some auction
proceeds. Activities to
be funded include lowincome and rural
energy assistance, and
weatherization.
Provisions include studies
of research on abrupt
climate change and
Provisions
include
mandatory
Establishes program to
encourage offsets from
the agricultural sector.
Provisions include
mandatory
greenhouse gas
Provisions include
periodic review of the
activities of the nation’s
S. 3036 (Boxer) / S. 2191 as
amended (Lieberman)
Off the top, a growing share of
allowances are auctioned for
deficit reduction.
Revenues received by
“remainder allowance”
auctions are to be received by
the Climate Change Credit
Corporation (CCCC).
Activities to be funded include
technology deployment
activities (including zero- or
low-carbon energy, advanced
coal and sequestration,
cellulosic biomass, and
advanced technology vehicles);
assistance activities (including
low income, weatherization,
and rural assistance); worker
transition assistance; and
adaptation activities (including
wildlife conservation and
restoration, aquatic
ecosystems, and coastal
habitats).
Revenues would also fund a
Climate Change and Natural
Security Council to report
annually on the ramifications of
climate change for national
security.
Such sums as are necessary to
maintain a fund of $1.1 billion
is directed toward wildland fire
suppression activities by the
Bureau of Land Management
and the Forest Service.
Provisions require new
appliance standards in 2012
and provide for new model
ȱ
Topic
ȬŗŚȱ
S. 280 (Lieberman)
impact of climate change
on the world’s poor,
among others, and
creation of a national
greenhouse gas database.
A new Innovation
Infrastructure is created,
along with program
initiatives to promote
less carbon- intensive
technology, adaptation,
sequestration, and
related activities.
Requires periodic review
of target adequacy by the
Under Secretary of
Commerce for Oceans
and Atmosphere.
S. 309
(Sanders)
greenhouse gas
emission
standards for
vehicles by 2010,
for new electric
powerplants that
begin operation
after December
31, 2011, and a
new energy
efficiency
performance
standard.
Establishes a
Renewable
Portfolio
Standard and
credit program.
Establishes a new
low-carbon
generation
requirement and
trading program.
Requires
periodic review
of target
adequacy by the
National
Academy of
Sciences (NAS).
S. 317 (Feinstein)
Offset credits available
for agricultural,
forestry, grazing, and
wetlands management,
sequestration projects,
or practices that meet
specific criteria in the
proposal.
Offset credits also
available for approved
emission reduction
offset projects from a
variety of activities
listed in the proposal.
Requires periodic
review of target
adequacy by EPA,
taking into account the
recommendations of a
newly established
Climate Science
Advisory Panel.
S. 485 (Kerry)
emission standards
for vehicles by
2010, and a new
energy efficiency
standard beginning
in 2009. Establishes
a Renewable
Portfolio Standard
and credit program.
Increases biofuel
mandates under the
Renewable Fuels
Standard, and
mandates
infrastructure for
biofuels.
Expands and
extends existing tax
incentives for
alternative fuel and
advanced
technology vehicles,
and establishes
manufacturer tax
credit for advanced
technology vehicle
investment.
Establishes new
National Climate
Change
Vulnerability and
Resilience Program.
Requires periodic
review of target
adequacy by the
NAS.
S. 1766 (Bingaman)
5 largest trading
partners, an NAS
assessment of the
status of the science
and control
technologies, and
energy security
implications.
Beginning in 2019,
requires foreign
countries that do not
take comparable
emission reduction
actions to submit
international reserve
allowances (or foreign
equivalents) to
accompany exports of
any covered
greenhouse gas
intensive goods and
primary products to
the United States. Least
developed nations or
those that contribute
no more than 0.5% of
global emissions are
excluded. Proceeds
from the sale of such
reserve allowances are
to be deposited in an
International Energy
Deployment Fund to
encourage and finance
international
technology
development.
S. 3036 (Boxer) / S. 2191 as
amended (Lieberman)
building efficiency standards by
2010.
Beginning in 2018, requires
annual review of foreign
countries’ GHG control
actions.
Beginning in 2019, requires
foreign countries that do not
take comparable emission
reduction actions to submit
international reserve
allowances (or foreign
equivalents) to accompany
exports of any covered
greenhouse gas intensive goods
and primary products to the
United States. Least developed
nations or those that
contribute no more than 0.5%
of global emissions are
excluded.
Requires periodic review of
the bill’s implementation and
purposes by the NAS.
Establishes a separate cap-andtrade program to limit U.S.
consumption of
hydrofluorocarbons.
Establishes a low carbon fuel
standard (LCFS) requiring
transportation fuels to have,
on average, 10% lower lifecycle
emissions per unit energy by
2020.
ȱ
¡ȱǯ ȱȱ ¢ȱȱȱ ȱ ȱ ȱ
ȱȱ
Topic
Emission
reduction/
limitation
scheme
Responsible
H.R. 620 (Olver)
H.R. 1590 (Waxman)
H.R. 4226 (Gilchrest)
H.R. 6186 (Markey)
H.R. 6316 (Doggett)
Absolute cap on total
emissions from all covered
entities in the electric power,
transportation, industry, and
commercial sectors.
Absolute cap on total
emissions economywide.
Absolute cap on total
emissions from all
covered entities in the
electric power,
transportation, industry,
and commercial sectors.
Absolute cap on total emissions
from all covered entities in the
electric power, transportation,
industry, and commercial sectors.
EPA
EPA
EPA
Absolute cap on total
emissions from all
covered entities in the
electric power,
transportation, industry,
and commercial sectors.
Also includes emission
performance standards
that would apply to
specific non-capped
sectors.
EPA
Same six gases as S. 280.
(Carbon dioxide, methane,
nitrous oxide (N2O),
hydrofluorocarbons (HFCs),
perfluorocarbons (PFCs), and
sulfur hexafluoride (SF6).)
Same six gases as S. 280.
Same six gases as S. 280.
Treasury Department
agency
Greenhouse
gases defined
Ȭŗśȱ
Same six gases as S. 280,
plus nitrogen trifluoride
(NF3).
Same six gases as S. 280.
ȱ
Topic
Specific
emissions limits
Covered entities
ȬŗŜȱ
H.R. 620 (Olver)
H.R. 1590 (Waxman)
H.R. 4226 (Gilchrest)
H.R. 6186 (Markey)
H.R. 6316 (Doggett)
Beginning in 2012, emissions
from covered entities are
capped at 6.15 billion metric
tons, minus 2012 emissions
from non-covered entities.
Beginning in 2020, emission
cap declines to 5.232 billion
metric tons, minus 2020
emissions from non-covered
entities.
Beginning in 2030, emission
cap declines to 3.858 billion
metric tons, minus 2030
emissions from non-covered
entities.
Beginning in 2050, emission
cap further declines to 1.504
billion metric tons, minus
annual emissions from noncovered entities.
Beginning in 2010,
emissions economywide to be reduced by
roughly 2% annually to
cap emissions at 1990
levels by 2020.
Beginning in 2021,
through 2050, emissions
economy-wide to be
reduced roughly 5%
annually from previous
year’s level.
Beginning in 2050,
emission cap set at 80%
below 1990 levels.
Beginning in 2012,
emissions from covered
entities are capped at
6.098 billion metric tons;
Cap is reduced annually
thereafter until 2050.
Emission cap for covered
sources in 2020 is 4.983
billion metric tons.
Emission cap for covered
sources in 2030 is 3.633
billion metric tons.
Emission cap for covered
sources in 2040 is 2.283
billion metric tons.
Emission cap for covered
sources in 2050 is 0.930
billion metric tons.
Beginning in 2012, emissions from
covered entities are capped at
6.351 billion metric tons; Cap is
reduced annually thereafter until
2050.
Emission cap for covered sources
in 2020 is 6.087 billion metric tons.
Emission cap for covered sources
in 2030 is 3.508 billion metric tons.
Emission cap for covered sources
in 2040 is 1.928 billion metric tons.
Emission cap for covered sources
in 2050 is 0.348 billion metric tons.
In metric tons of carbon
dioxide equivalent: any
electric power, industrial, or
commercial entity that emits
over 10,000 metric tons
carbon dioxide equivalent
(mtCO2e) annually from any
single facility owned by the
entity; any refiner or importer
of petroleum products for
transportation use that, when
combusted, will emit over
10,000 mtCO2e annually; and
any importer or producer of
HFCs, PFCs, or SF6 that,
when used, will emit over
10,000 mtCO2e.
EPA promulgates rule
within two years of
enactment that applies
the most cost-effective
reduction options on
the largest emitting
sources or sectors to
achieve reduction goals.
Beginning in 2012,
emissions from covered
entities are capped at
2006 levels, minus 2012
emissions from noncovered entities.
Beginning in 2020,
emission cap declines to
85% of 2006 levels, minus
2020 emissions from
non-covered entities.
Beginning in 2030,
emission cap declines to
63% of 2006 levels, minus
2030 emissions from
non-covered entities.
Beginning in 2050,
emission cap further
declines to 25% of 2006
levels, minus annual
emissions from noncovered entities.
In metric tons of carbon
dioxide equivalent: any
electric power, industrial,
or commercial entity that
emits over 10,000
mtCO2e annually from
any single facility owned
by the entity; any refiner
or importer of petroleum
products for
transportation use that,
when combusted, will
emit over 10,000
mtCO2e annually; and
any importer or
producer of HFCs, PFCs,
or SF6 that, when used,
will emit over 10,000
Any electric power or
industrial facility that
emits over 10,000
mtCO2e; any producer
or importer of petroleum
or coal-based liquid
products that, when
combusted, will emit
over 10,000 mtCO2e
annually; local
distribution company that
delivers natural gas that,
when combusted, will
emit over 10,000
mtCO2e annually;
producer or importer of
HFCs, PFCs, SF6, or NF3
[that when used, will
Assuming no capture of GHGs, any
producer or importer of
petroleum- or coal-based liquid or
gaseous fuel that emits GHGs, or
any facility that produces or
imports more than 10,000 CO2e of
GHG chemicals annually; any facility
that uses more than 5,000 tons of
coal annually; any natural gas
processing plant or importer
(including LNG); or, any facility that
emits more than 10,000 CO2e of
HFCs annually as a byproduct of
hydrochlorofluorocarbon
production.
ȱ
Topic
H.R. 620 (Olver)
H.R. 1590 (Waxman)
General
allocating and
implementing
strategy
A tradeable allowance system
is established: EPA shall
determine allocations based
on several economic, equity,
and sector-specific criteria,
including economic efficiency,
competitive effects, and
impact on consumers.
Allowances are to be
allocated upstream to refiners
and importers of
transportation fuel, along with
producers of HFCs, PFCs, and
SF6, and downstream to
electric generation, industrial,
and commercial entities.
Allocations to covered
entities are provided at no
cost.
A tradeable allowance
system is established.
The President submits
to Congress an
allocation plan within
one year of enactment
that includes a
combination of auctions
and free allocation of
allowances. To the
maximum extent
practicable, the
allocation and revenues
received should
maximize public
benefits, promote
economic growth, assist
households and
dislocated workers,
encourage energy
efficiency, renewable
energy, and
sequestration activities,
and assist states in
addressing the impact of
climate change.
Congress has one year
to enact an alternative
to the plan; otherwise,
EPA shall implement it.
Ȭŗŝȱ
H.R. 4226 (Gilchrest)
mtCO2e.
H.R. 6186 (Markey)
emit] over 10,000
mtCO2e; a site at which
CO2 is geologically
sequestered on a
commercial scale.
A tradeable allowance
A tradeable allowance
system is established:
system is established;
EPA shall determine
although the vast
allocations based on
majority of the
several economic, equity, allowances would be
and sector-specific
auctioned, between 2012
criteria, including
and 2019, 6% of
economic efficiency,
allowances would be
competitive effects, and
distributed to
impact on consumers.
manufacturers of “tradeAllowances are to be
exposed primary goods,”
allocated upstream to
including (per bill text)
refiners and importers of aluminum, cement,
transportation fuel, along iron/steel, glass, and
with producers of HFCs, paper; EPA would
PFCs, and SF6, and
develop distribution
downstream to electric
system.
generation, industrial, and
Auction revenues
commercial entities.
distributed (in FY2010Allocations to covered
FY2019) as follows:
entities are provided at
58.5% to middle- and
no cost.
low-income households
as tax credits and/or
rebates; 12.5% for
development and
promotion of low-carbon
technology; 12.5% for
energy efficiency
programs; 4.5% for
biological sequestration;
1.5% for worker
transition assistance; 2%
for domestic adaptation
efforts; 1.5% for
protection of natural
resources; 1.5% for
H.R. 6316 (Doggett)
A tradeable allowance system is
established. Beginning in 2012, 5%
of the allowances are allocated to
electric generators, declining to 0%
in 2020; 10% are allocated to
energy intensive industries,
declining to 0% in 2020.
Remaining allowances are auctioned
by the Treasury Department with
15% of revenues transferred to the
Deficit Reduction Trust Fund and
85% transferred to the Citizen
Protection Trust Fund.
ȱ
Topic
H.R. 620 (Olver)
H.R. 1590 (Waxman)
H.R. 4226 (Gilchrest)
Public
sale/auction of
allowances
EPA shall determine the
number of allowances
allocated to the Climate
Change Credit Corporation
(CCCC) (established by the
bill).
The CCCC may buy and sell
allowances, and use the
proceeds to reduce costs
borne by consumers and
other purposes. (See
“Revenue recycling” below.)
The President shall
determine the number
of allowances to be
auctioned. The proceeds
of the auction are to be
deposited with the
Climate Reinvestment
Fund created by the
Department of the
Treasury. (See “Revenue
recycling” below.)
Cost-limiting
No explicit provision.
No explicit provision.
EPA shall determine the
number of allowances
allocated to the Climate
Change Credit
Corporation (CCCC)
(established by the bill).
The CCCC may buy and
sell allowances, and use
the proceeds to reduce
costs borne by
consumers and other
purposes. (See “Revenue
recycling” below.)
No explicit provision.
A Carbon Market
Efficiency Board is
established to observe
the allowance market and
implement cost-relief
measures if necessary.
Measures include
permitting increased
allowance borrowing
from future allocations;
expanded payback period
for such allowances;
lower interest charged
for borrowed allowances;
and expanded total
borrowed allowances.
Increased borrowing
limited to 5% of emission
cap and repayment
schedule cannot be
longer than 15 years.
safety valve
ȬŗŞȱ
H.R. 6186 (Markey)
international forest
protection; 3.5% for
international clean
technology; 2% for
international adaptation
efforts.
Between 2012 and 2019,
94% of allowances
auctioned; 100%
auctioned thereafter.
H.R. 6316 (Doggett)
Beginning in 2012, 85% of
allowances are auctioned. This
increases steadily to 100% in 2020
and thereafter.
A Carbon Market Efficiency Board
is established to observe the
allowance market and implement
cost-relief measures if necessary.
Measures include increasing
available allowances by up to 5% in
a given year, by making a
compensating reduction in
allowance availability in future
years, and by permitting increased
use of offsets and foreign
allowances in a given year by
covered entities.
If the President determines a
national security emergency exists,
the President may temporarily
adjust, suspend, or waive any
regulation promulgated under this
program (subject to judicial
review).
ȱ
Topic
Penalty for
non-compliance
Offset
treatment and
other flexibility
mechanisms
Banking
Ȭŗşȱ
H.R. 620 (Olver)
H.R. 1590 (Waxman)
H.R. 4226 (Gilchrest)
H.R. 6186 (Markey)
H.R. 6316 (Doggett)
Excess emission penalties are
equal to three times the
market price for allowances
on the last day of the year at
issue.
Excess emission
penalties are equal to
twice the market price
for allowances as of
December 31 of the
year at issue, plus a 1to-1 offset from next
year’s allowance
allocation.
Excess emission penalties
are equal to three times
the market price for
allowances on the last
day of the year at issue.
Excess emission penalties per ton
are equal the greater of $200 or
three times the mean market price
for allowances during the year the
allowance was due;
In addition, the covered facility is
required to offset excess emissions
at a 1-to-1 ratio in the following
year (or longer period prescribed
by EPA).
Up to 15% of required
reductions may be achieved
through credits obtained
through pre-certified
international emissions trading
programs, approved reduction
projects in developing
countries, domestic carbon
sequestration, and reductions
from non-covered entities.
Market trading systems
are incorporated into
new energy efficiency
performance standard.
No explicit provision on
use of domestic or
international offsets to
meet reduction
requirements. However,
one goal of program is
to encourage
sequestration of carbon
in the forest and
agricultural sectors.
Up to 15% of required
reductions may be
achieved through credits
obtained through precertified international
emissions trading
programs, approved
reduction projects in
developing countries,
domestic carbon
sequestration, and
reductions from noncovered entities.
Excess emission penalties
per ton are equal the
greater of $200 or three
times the mean market
price for allowances
during the year the
allowance was due;
In addition, the covered
facility is required to
offset excess emissions at
a 1-to-1 ratio in the
following year (or longer
period prescribed by
EPA).
Covered entities
permitted to use
domestic offsets to meet
up to 15% of their
allowance submissions;
Covered entities may use
either international
emission allowances,
international offsets, or
some combination
thereof to satisfy another
15% of their allowance
submission;
Banking of allowances is
permitted; allowances may be
saved for use in future years.
Banking of allowances is
permitted; allowances
may be saved for use in
future years.
Banking of allowances is
permitted; allowances
may be saved for use in
future years.
Banking of allowances is
permitted; allowances
may be saved for use in
future years.
Use of domestic offsets is limited to
no more than 10% of a covered
entity’s allowance submission;
certain agricultural projects are
subject to review by the National
Academy of Sciences and ultimately
limited to 5% of allowance
submission;
Use of foreign allowances is limited
to 15% of a covered entity’s
allowance submission;
Use of international forest
allowances is limited to 15% of a
covered entity’s allowance
submission;
Overall limitation: covered entities
permitted to use a combination of
domestic offsets and foreign
allowances to meet up to 25% of
their allowance submissions.
Banking of allowances is permitted;
allowances may be saved for use in
future years.
ȱ
Topic
Borrowing
Early reduction
credits and
bonus credits
ȬŘŖȱ
H.R. 620 (Olver)
H.R. 1590 (Waxman)
H.R. 4226 (Gilchrest)
H.R. 6186 (Markey)
H.R. 6316 (Doggett)
Borrowing against future
reductions is permitted.
No specific provision.
Borrowing against future
reductions is permitted.
Borrowing against future
reductions is permitted,
but limited.
Entities with registered
emission reductions achieved
before 2012 may receive
allowances for them.
For the time period 20122017, entities that have
entered into an agreement
with EPA to reduce emissions
to 1990 levels by 2012 are
entitled to additional
allowances to cover their
additional reductions and are
allowed to achieve 35% of
their reduction requirement
(as opposed to 15%; see
above) through international
emissions trading and
projects, sequestration, or
reductions by non-covered
entities.
Recognizing and
rewarding early
reductions is a stated
goal of the program.
Entities with registered
emission reductions
achieved before 2012
may receive allowances
for them.
For the time period
2012-2017, entities that
have entered into an
agreement with EPA to
reduce emissions to 1990
levels by 2012 are
entitled to additional
allowances to cover their
additional reductions and
are allowed to achieve
35% of their reduction
requirement (as opposed
to 15%; see above)
through international
emissions trading and
projects, sequestration,
or reductions by noncovered entities.
Under certain conditions,
EPA may issue credits for
offset projects that are
developed before the
2012.
The Carbon Market Efficiency
Board may permit borrowing
against future reductions in certain
cases.
One percent of revenues allocated
to the Citizen Protection Trust
Fund is to be distributed to facilities
making reductions from 1994 to
enactment. Eligibility to be
determined by EPA regulations.
ȱ
Topic
Revenue
recycling
ȬŘŗȱ
H.R. 620 (Olver)
H.R. 1590 (Waxman)
H.R. 4226 (Gilchrest)
H.R. 6186 (Markey)
H.R. 6316 (Doggett)
Revenues generated by
allowance auctions and trading
proceeds are received by a
new Climate Change Credit
Corporation (CCCC).
Activities to be funded include
mechanisms to reduce
consumer costs and to assist
dislocated workers and
affected communities, along
with programs to encourage
deployment of new
technology and wildlife
restoration.
Revenues generated by
allowance auctions and
penalties are received by
a new Climate
Reinvestment Fund
created by the
Department of the
Treasury. Activities to
be funded include
mechanisms to reward
early reductions,
maximize public
benefits, promote
economic growth, assist
households and
dislocated workers,
encourage energy
efficiency, renewable
energy, and
sequestration activities,
and assist states in
addressing the impact of
climate change.
Revenues generated by
allowance auctions and
trading proceeds are
received by a new
Climate Change Credit
Corporation (CCCC).
Activities to be funded
include mechanisms to
reduce consumer costs
and to assist dislocated
workers and affected
communities, along with
programs to encourage
deployment of new
technology and wildlife
restoration. Bill specifies
that 25% of allowances
allocated to the CCCC
be used to restore largescale freshwater aquatic
and estuarine
ecosystems.
Auction revenues
distributed (in FY2010FY2019) as follows:
58.5% to middle- and
low-income households
as tax credits and/or
rebates; 12.5% for
development and
promotion of low-carbon
technology; 12.5% for
energy efficiency
programs; 4.5% for
biological sequestration;
1.5% for worker
transition assistance; 2%
for domestic adaptation
efforts; 1.5% for
protection of natural
resources; 1.5% for
international forest
protection; 3.5% for
international clean
technology; 2% for
international adaptation
efforts.
Revenues generated by allowance
auctions and penalties are
deposited by the Treasury
Department into two funds: 15% to
the Deficit Reduction Trust Fund
and 85% to the Citizen Protection
Trust Fund. Distribution to the
Citizen Protection Trust Fund are
as follows:
54% for consumer assistance (66%
of which goes towards providing
health insurance coverage, the
remainder for rebates and tax
relief), 7% for natural resource
adaptation, 1% for early action;
2.7% for states and tribes; 11.4%
for international activities, 4% for
worker assistance, 3% for forestry
and agricultural activities, 0.4% for
education, 7.5% for energy
efficiency, 2% for transportation
alternatives, and 7% for green
energy research.
ȱ
Topic
Other key
provisions
ȬŘŘȱ
H.R. 620 (Olver)
H.R. 1590 (Waxman)
H.R. 4226 (Gilchrest)
H.R. 6186 (Markey)
H.R. 6316 (Doggett)
Provisions include studies of
the impact of climate change
on coastal ecosystems and
communities, and the world’s
poor, among others;
assessment of adaptation
technologies; and creation of a
national greenhouse gas
database.
Requires periodic review of
target adequacy by the Under
Secretary of Commerce for
Oceans and Atmosphere.
Provisions include
mandatory greenhouse
gas emission standards
for vehicles by 2010, and
a new energy efficiency
standard beginning in
2010. Establishes a
Renewable Portfolio
Standard.
Requires periodic
review of target
adequacy by the NAS.
The President may
establish a program to
require importers to pay
the value of GHGs
emitted during the
production of goods or
services imported into
the United States from
countries that have no
comparable emission
restrictions to those of
the United States. The
program’s requirement
may not be imposed on
countries until
negotiations to achieve
agreement on such
restrictions have been
attempted.
Provisions include studies
of the impact of climate
change on coastal
ecosystems and
communities, and the
world’s poor, among
others; assessment of
adaptation technologies;
creation of a national
greenhouse gas database;
and an outreach initiative
to inform agriculture of
the bill’s revenue
opportunities.
Requires periodic review
of target adequacy by the
Under Secretary of
Commerce for Oceans
and Atmosphere.
Establishes a program to
require importers to
purchase “international
reserve allowances” to
account for GHG
emissions from the
production of “tradeexposed goods” (e.g.,
iron/steel, cement,
aluminum) from
countries that have no
comparable emission
restrictions to those of
the United States; least
developed nations or
those that contribute less
than 0.5% of global
emissions are excluded;
Requires NAS to conduct
a periodic review of
climate change science
and the performance of
the act; directs GAO to
periodically review the
effectiveness of auction
revenue distribution,
both for domestic and
international objectives;
Directs EPA to develop
emission performance
standards for noncovered entities that
exceed 10,000 mtCO2e
per year; such sources
may include coal mines,
landfills, wastewater
treatment operations,
and animal feeding
operations; agricultural
soil management and
forest management
would be specifically
excluded;
Creates a performance
standard for coal-fired
power plants that
commence construction
Establishes a program to require
importers to purchase
“international reserve allowances”
to account for GHG emissions
from the production of “primary
goods” (e.g., iron/steel, cement,
aluminum) from countries that have
no comparable emission
restrictions to those of the United
States; least developed nations or
those that contribute less than 0.5%
of global emissions are excluded;
Requires EPA to promulgate
regulations within two years of
enactment requiring that emissions
in uncovered sectors do not grow
(no baseline specified).
ȱ ȱDZȱȬȬȱȱȱȱŗŗŖ ȱȱ
ȱ
¡ȱǯ ȱȱ
Allocation schemes (upstream and downstream). Regulatory approaches to allocating
allowances (as opposed to auction schemes) can choose different points and participants along the
production process to assign allowances and the resulting compliance responsibility. Upstream
allocation schemes establish emission caps and assign allowances at a production, importation, or
distribution point of products that will eventually produce greenhouse emissions further down the
production process. For example, in the natural gas sector, emission caps could be established and
allowances assigned at processing facilities where facilities and participants shrink from about
400,000 wells and 8,000 companies to 500 facilities and 200 companies. In contrast, downstream
allocation schemes establish emission caps and assign allowances at the point in the process
where the emissions are emitted. In the case of the natural gas industry, to achieve the same
coverage as the upstream scheme, this would involve assigning allowances to natural gas-fired
electric generators, industry, and even residential users. Thus, some downstream proposals choose
either to exempt certain sectors (such as residential use) from a cap-and-trade program or to
employ a hybrid allocation scheme where some of the allowances are allocated upstream and
others downstream (such as the electric generators).
Allowance. An allowance is generally defined as a limited authorization by the government to
emit 1 ton of pollutant. In the case of greenhouse gases, an allowance generally refers to a 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 in several different
ways. For example, Title IV of the 1990 Clean Air Act Amendments uses an annual auction to
ensure the liquidity of the credit trading program. For this purpose, a small percentage of the
credits permitted under the program are auctioned annually, with the proceeds returned to the
entities that would have otherwise received them. Private parties are also allowed to participate. A
second possibility is to use an auction to raise revenues for a related (or unrelated) program. For
example, the Regional Greenhouse Gas Initiative (RGGI) is exploring an auction to implement its
public benefit program to assist consumers or pursue strategic energy purposes. A third possibility
is to use auctions as a means of allocating some, or all, of the allowances established under a
GHG control program. Obviously, the impact that an auction would have on cost would depend
on how extensively it was used in any GHG control program, and to what purpose the revenues
were expended.
Banking. Although allowances are generally allocated on an annual basis, most cap-and-trade
programs do not require participants to either use the allowance that year or else lose it. Under
many proposals, allowances can be banked by the receiving participant (or traded to another
participant who can use or bank it) to be used or traded in a future year. Banking reduces the
absolute cost of compliance by making annual emission caps flexible over time. The limited
ability to shift the reduction requirement across time allows affected entities to better
accommodate corporate planning for capital turnover, allow for technological progress, control
equipment construction schedules, and respond to transient events such as weather and economic
shocks.
ȱȱȱ
Řřȱ
ȱ ȱDZȱȬȬȱȱȱȱŗŗŖ ȱ
ȱ
ȱ
Bubble. A bubble is a regulatory device that permits two or more sources of pollutants to be
treated as one for the purposes of emission compliance.
Cap-and-trade program. A cap-and-trade program is based on two premises. First, a set amount
of pollutant emitted by human activities can be assimilated by the ecological system without
undue harm. Thus, the goal of the cap-and-trade program is to impose a ceiling (i.e., an emissions
cap) on the total emissions of that pollutant at a level below the assimilative capacity. Second, a
market in pollution licenses (i.e., allowances) between polluters is the most cost-effective means
of reducing emissions to the level of the cap. This market in allowances is designed so that
owners of allowances can trade those allowances with other emitters who need them or retain
(bank) them for future use or sale. In the case of the sulfur dioxide program contained in the 1990
Clean Air Act Amendments, most allowances were allocated free by the federal government to
utilities according to statutory formulas related to a given facility’s historic fuel use and
emissions; other allowances have been reserved by the government for periodic auctions to
ensure market liquidity.
Carbon tax. A carbon tax is generally conceived as a levy on natural gas, petroleum, and coal
according to their carbon content, in the approximate ratio of 0.6 to 0.8 to 1, respectively.
However, proposals have been made to impose the tax downstream of the production process
when the carbon dioxide is actually released to the atmosphere. In contrast to a cap-and-trade
program, in which the quantity of emissions is limited and the price is determined by an
allowance marketplace, with a carbon tax, the price is limited and the quantity of emissions is
determined by the participants based on the cost of control versus the cost of the tax.
Coverage. Coverage is the breadth of economic sectors covered by a particular greenhouse gas
reduction program, as well as the breadth of covered entities within a covered sector.
Emissions cap. A mandated limit on how much pollutant (or greenhouse gases) an affected entity
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.
Generation performance standard (GPS). Also called an output-based allocation, allowances
are allocated gratis to entities in proportion to their relative share of total electricity generation in
a recent year.
Grandfathering. Grandfathering generally refers an allocation scheme in which allowances are
distributed to affected entities on the basis of historic emissions. These allowances are generally
distributed free-of-charge by the government to the affected entities. Grandfathering can also
refer to entities that because of age or because they have met an earlier standard, or other factors,
are exempted from a new regulatory requirement.
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).
Hybrid Program. Generally a greenhouse gas reduction program that allows emitters to choose
between complying with the reduction requirement of a cap-and-trade program or paying a set
price (safety valve price) to the government in lieu of making reductions.
ȱȱȱ
ŘŚȱ
ȱ ȱDZȱȬȬȱȱȱȱŗŗŖ ȱȱ
ȱ
Leakage. Decreases in greenhouse gas-related reductions or benefits outside the boundaries set
for defining a project’s or program’s net greenhouse gas impact resulting from mitigation
activities. For example, emissions could be reduced in an area with greenhouse gas controls by
moving an emitting industry to an area without such controls.
“No regrets” policy. A “no regrets” policy is one of establishing programs for other purposes that
would have concomitant greenhouse gas reductions. Therefore, only those policies that reduce
greenhouse gas emissions at no additional cost are considered.
Offsets. Offsets generally refer to 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 reduction achieved by entities that are not regulated by
a greenhouse gas reduction program.
Revenue recycling. Some greenhouse gas reduction programs create revenues through auctions,
compliance penalties, or imposition of a carbon tax. Revenue recycling refers to how a program
disposes of those revenues. How a program handles revenues received can have a significant
effect on the overall cost of the program to the economy.
Safety valve. Devices designed to prevent or to respond to unacceptably high compliance costs
for greenhouse gas reductions. Generally triggered by prices in the allowance markets, safety
valve approaches can include (1) a set price alternative to making reductions or buying
allowances at the market price, (2) a slowdown in tightening the emissions cap, and (3)
lengthening of the time allowed for compliance. Depending on the interplay between the
emissions cap and safety valve and actual compliance costs, a safety valve can affect the integrity
of the emissions cap.
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.
ȱȱ ȱ
(name redacted)
Specialist in Energy and Environmental Policy
/redacted/@crs.loc.gov, 7-....
(name redacted)
Analyst in Environmental Policy
/redacted/@crs.loc.gov, 7-....
(name redacted)
Specialist in Energy and Environmental Policy
/redacted/@crs.loc.gov, 7-....
ȱȱȱ
Řśȱ
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