Climate Change: Senate Proposals to Reduce Greenhouse Gas Emissions

Order Code RS21581

Updated October 7, 2003

CRS Report for Congress

Received through the CRS Web

Climate Change: Senate Proposals to Reduce

Greenhouse Gas Emissions

name redacted

Specialist in Energy and Environmental Policy

Resources, Science, and Industry Division

Summary

A number of congressional proposals to advance programs that reduce greenhouse

gases have been introduced in the 108th Congress. Proposals receiving particular

attention would create a market-oriented 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. One bill (S. 139) focuses directly on reducing

greenhouse gas emissions, while two others (S. 366 and S. 843) incorporate carbon

dioxide reduction schemes into an overall framework to reduce pollution from power

plants. This paper includes a side-by-side comparison of the major provisions of those

bills.

Under an agreement reached between S. 139's sponsors and the Senate leadership,

S. 139 will be brought to the Senate floor this fall for debate and a vote. The sponsors

have the right to introduce an amendment to S. 139 (the only amendment allowed under

the agreement). The sponsors have announced that they will propose an amendment to

their bill to strike the second phase of the reduction program. This report will be

updated if events warrant.

Introduction

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 greenhouse gases.1 Over the past

1

Under the United Nations Framework Convention on Climate Change (FCCC) those gases are:

carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs),

perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). Other greenhouse gases are controlled

under the Montreal Protocol on Substances that Deplete the Ozone Layer, and not covered under

proposed legislation or other international agreements.

(continued...)

Congressional Research Service ˜ The Library of Congress

CRS-2

decade, a variety of voluntary and regulatory actions have been proposed or undertaken

in the United States, including monitoring of utility carbon dioxide emissions, improved

appliance efficiency, and incentives for developing renewable energy sources.

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. This focus is particularly evident in the

Administration’s 2002 Climate Action Report (CAR) submitted under the provisions of

the UNFCCC. Of the over 50 programs summarized in the 2002 CAR, only six are

described as “regulatory.”3 These regulatory programs were generally implemented to

achieve energy or environmental goals other than the reduction of greenhouse gas

emissions, but produced a concomitant emissions reduction. In this sense, they could be

considered the results of a “no regrets”4 policy where climate change effects resulting

from related air quality and energy policies are included in the decision-making process

on new or modified rules.

A number of congressional proposals to advance programs that reduce greenhouse

gases have been introduced in the 108th Congress. These efforts have generally followed

one of three tracks. The first is to improve the monitoring of greenhouse gas

emissions–as a basis for research and development and for any future reduction scheme.

The second is to enact a market-oriented 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 also have the added effect of reducing greenhouse gases. 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, specifically comparing the major provisions of bills introduced in the

Senate.

Proposed Senate Legislation

In the 108th Congress, three bills have been introduced that would impose controls

on emissions of greenhouse gases. A comparison of major provisions is provided in

Appendix 1.

1

(...continued)

2

For further information see CRS Report RL30692, Global Climate Change: The Kyoto

Protocol.

3

Most of the programs outlined in the report involve research, technical assistance, information

gathering, or technical assistance programs initiated by the federal government, or voluntary

emissions reduction programs coordinated by the government.

4

The “no regrets” policy was one of establishing programs for other purposes, that would have

concomitant greenhouse gas reductions. Therefore, only those policies that reduced greenhouse

gas emissions at no cost were considered.

CRS-3

One bill focuses directly on reducing greenhouse gas emissions. S. 139, introduced

by Senators McCain and Lieberman, would cap emissions of the six greenhouse gases

specified in the United Nation’s 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 two phases, with an emissions cap in the year 2010 based on

affected facilities’ 2000 emissions (for any entity that emits more than 10,000 metric tons

of greenhouse gases (carbon dioxide equivalent)), and a further reduction cap imposed in

the year 2016, based on affected facilities’ 1990 emissions. The program would be

implemented through an expansive allowance trading program that would allow crosssector trading, increases in carbon sequestration, and limited acquisition of allowances

from foreign sources.5

Under an agreement reached between the bill’s sponsors and the Senate leadership,

S. 139 will be brought to the Senate floor this fall for debate and a vote. The sponsors

have the right to introduce an amendment to S. 139 (the only amendment allowed under

the agreement). The sponsors have announced that they will propose an amendment to

their bill to strike the second phase of the reduction program.

The other two bills incorporate carbon dioxide reductions into an overall framework

to reduce pollution from power plants. These bills reflect an interest in finding

mechanisms to achieve public health and environmental goals in simpler, more costeffective ways. Specifically, these bills use a “multi-pollutant” strategy – a framework

based on a consistent set of emissions caps, implemented through emissions trading.6

During the 108th Congress, two multi-pollutant bills that have been introduced in the

Senate include carbon dioxide among the emissions to be reduced.7

S. 366, introduced by Senator Jeffords, is a modified version of the multi-pollutant

bill (S. 556) reported out by the Senate Environment and Public Works Committee during

the 107th Congress. Placing emission caps on nitrogen oxides, sulfur dioxide, and carbon

dioxide, S. 366 would require electric generating facilities 15 MW or greater to meet an

aggregate carbon dioxide emissions cap in the year 2009. The national carbon dioxide

emissions cap would be set at 1990 emissions levels for electric generating facilities,

would be implemented through a tradeable allowance program, and would include

significant penalties for non-compliance. In addition to these emission caps, S. 366

would place facility-specific emission limitations on mercury.

S. 843, introduced by Senator Carper, is a modified version of S. 3135, which he

introduced in the 107th Congress. Placing emission caps on nitrogen oxides, sulfur

dioxide, mercury, and carbon dioxide, S. 843 would require electric generating facilities

25 MW or greater to reduce carbon dioxide emissions in two phases: (1) capping

emissions at 2006 levels by 2009, and (2) further reducing emissions to 2001 levels by

5

For further discussion of S. 139, see: (name redacted) and (name redacted),

Climate Change:

Summary and Analysis of the “Climate Stewardship Act of 2003" (S. 139), CRS Report RS21637.

6

For a discussion of the issue, see: (name redacted),

Electricity Generation and Air Quality: MultiPollutant Strategies, CRS Report RL30878.

7

For a side-by-side comparison of these bills, see: (name redacted),

Air Quality: Multi-Pollutant

Legislation in the 108th Congress, CRS Report RL31779.

CRS-4

2013. The program would be implemented through a tradeable allowance program and

would include significant penalties for non-compliance.

Using the 2002 Climate Action Report8 (CAR) for projections to the year 2010,

Table 1 compares estimates of U.S. greenhouse gas emissions for S. 139, S. 366, and S.

843. As indicated in Table 1, although S. 366 only addresses carbon dioxide emissions

from electric generating facilities, its reductions would be deeper and occur earlier than

those estimated for the other bills. Advocates of the Senate bills described above believe

that the failure of voluntary programs to arrest the rise in U.S. greenhouse gas emissions

during the 1990s under the previous Bush and Clinton Administrations does not bode well

for the future effectiveness of the current Administration’s voluntary program.

It should be noted that through 2010/2012, none of the proposals would be sufficient

to reduce U.S. emissions to the voluntary level agreed to under the UNFCCC. Phase two

of S. 139 has a 2016 reduction requirement for affected sources in line with the emissions

target set under the UNFCCC (return to 1990 levels). However, as noted earlier, it is

expected that the bill’s sponsors will amend S. 139 to eliminate this second phase.

Table 1. Year 2010 Comparison of Proposed Legislation

Percentage Change relative

to Business as Usual (2010)

Percentage Change relative

to 1990 levels per UNFCCC

Business as Usual

0

+34.4%

S. 139*

-5%

+27.7%

S. 366

-7.5%

+24.2%

S. 843**

-5.1%

+27.5%

* Phase 1 only. Phase 2 would involve a 2016 reduction down to 1990 levels by affected sources.

Depending on S. 139's actual coverage and the implementation strategies employed by affected

sources, reductions achieved by S. 139 could be above the 5% estimate presented here. CRS

estimates reductions based on 85% coverage and U.S.-only implementation would be about 8.8%

in 2010, 22.6% above 1990 levels.

** Assumes requirement of S. 843 is achieved in 2010, rather than 2013

Source: For S. 366, S. 843, CRS calculations based on projections contained in 2002 Climate

Action Report. For S. 139: 2010 reduction estimate from bill sponsors; 1990 reduction calculated

by CRS based on 2010 sponsor estimate and 2002 Climate Action Report projections.

8

This is the U.S. report to the UNFCCC Secretariat on U.S. emissions and measures taken to

reduce them. The Climate Action Report — 2002, available at

[http://www.epa.gov/globalwarming/publications/car/index.html].

CRS-5

Appendix 1: Comparison of Senate Proposals

Provisions

S. 139 (McCain/

Lieberman)

S. 366 (Jeffords)

S. 843 (Carper)

all six GHGs capped

at an estimated 5.7

billion tons in 2010,

declining to an

estimated 5.1 billion

tons by 2016; for

electric generators,

emissions estimated at

2.4 billion in 2010

declining to1.93

billion tons in 2016 if

reduced

proportionally

2.05 billion tons in

2009 (electric

generators only)

estimated at 2.6

billion tons in 2009,

declining to an

estimated 2.3 billion

tons in 2013 (electric

generators only)

not covered

not covered

Emission Caps

on other

pollutants

not covered

sulfur dioxide,

nitrogen oxides, and

mercury

sulfur dioxide,

nitrogen oxides, and

mercury

Scope

50 states and DC

50 states and DC

50 states and DC

Affected Units

in metric tons of

carbon dioxide

equivalence: any

electric power,

industrial, or

commercial entity that

emits over 10,000

metric tons annually;

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 metric

tons

electric generating

facilities 15 Mw or

greater

fossil fuel-fired

electric generating

facilities greater than

25 Mw

Penalties for

non-compliance

excess emissions

penalty equal to three

times the market price

for allowance on the

last day of the year at

issue

same as CAA, title

IV except excess

emission penalty is

three times the

average market

price for allowances

excess emission

penalty of $100 per

ton plus one-for-one

offset from future

emission allocations

Emissions Cap

on CO2

Emissions Cap

on other

greenhouse

gases

CRS-6

Provisions

Special

Provisions

S. 139 (McCain/

Lieberman)

international

emissions trading,

carbon sequestration,

and reductions from

non-covered entities

permitted for 15% of

required reductions in

2010, declining to

10% in 2016

early action credits

permitted for 20% of

required reductions

through 2015

S. 366 (Jeffords)

S. 843 (Carper)

within 4 years of

enactment, EPA

shall submit

recommendations

for allocating

allowances for

biologic carbon

sequestration

tonnage limitations in

effect for 20 years;

EPA to reassess after

15 years

allowances

allocated for energy

efficiency,

renewable energy

and geologic carbon

sequestration

CO2 limitations

include provisions

providing CO2

allowances for

renewable energy,

sequestration, and

other greenhouse gas

emission reduction

projects

revenue recycling

provided via a

Climate Change

Credit Corporation

Implementation

Strategy

tradeable allowance

system. EPA shall

determine allocations

based on several

economic and equity

criteria including

efficiency and impact

on consumers.

Allowances to be

allocated upstream to

refiners and importers

of transportation fuel

along with producers

of HFCs, PFCs, and

SF6; downstream to

electric generation,

industrial, and

commercial entities

tradeable allowance

system. Allowances

allocated to various

sectors and

interests, including

households,

dislocated workers

and communities,

electricity intensive

industries, affected

utilities, energy

efficiency and

renewable energy

activities, and

sequestration

activities

tradeable allowance

system. Allocation

formulas based on

generating efficiency.

Allocations includes

a new source reserve

to provide allowances

to newly constructed

sources

Unless otherwise noted, estimates by CRS using Department of Energy and Environmental

Protection Agency data.

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