Monday, October 26, 2009

Chairman's Mark & Economic Analysis For Kerry-Boxer (S. 1733) Bill

Oct 23: Late Friday, U.S. Senator Barbara Boxer (D-CA), Chairman of the Senate Committee on Environment and Public Works, released the text of the Chairman's Mark of the Clean Energy Jobs and American Power Act (S. 1733, i.e. Kerry-Boxer bill). Senator Boxer said, "We've reached another milestone as we move to a clean energy future, creating millions of jobs and protecting our children from dangerous pollution. I look forward to the hearings and the markup as we move ahead to the next step."

According to a release from Senator Boxer, new and revised language in the Chairman's Mark include: • Specifies distribution of emissions allowances; • Ensures that the majority of investments in the bill are for consumer protection; • Includes new provisions to address clean coal technology; • Increases investments in energy efficiency and renewable energy; • Reduces greenhouse gas emissions and increases investments in the transportation sector; • Enhances agriculture and forestry provisions; • Directs assistance to rural communities; • Includes greater assistance for small and medium refineries; • Enhances the role of tribes;• Increases the size of the market stability reserve; and • Promotes advanced renewable fuels.

U.S. EPA also released a detailed economic analysis of The Clean Energy Jobs and American Power Act that found no significant change in the estimated cost to American families, compared with H.R. 2454, the Waxman-Markey legislation approved by the House this past summer. EPA's analysis of the House bill found that "average household consumption would be reduced by less than 1% in all years" compared with a business-as-usual scenario, and estimated the overall impact on the average household would be 22 to 30 cents per day ($80 to $111 per year).

On Tuesday, October 27, the Senator Boxer reminded that the Environment and Public Works Committee will start comprehensive legislative hearings on the bill. Senators will hear testimony from nine panels totaling 54 witnesses over the course of three days. Senator Boxer has indicated that the EPW Committee will mark up the legislation as soon as possible following the completion of legislative hearings (See links below for hearing and witness information).

Of interest in the allowance allocations for S. 1733, customers of electric utilities will receive approximately 35% of distributed allowances, representing a significant portion of current utility emissions. Local electric distribution companies (LDCs), whose rates are regulated by the States, will receive 30% of the allowances, which are required to be used to protect consumers from electricity price increases. Merchant coal and long-term power purchase agreements will receive 5% of the allowances. The allowances will phase out over a five-year period from 2026 through 2030.


Additionally, 15% of distributed allowances will be auctioned each year with the proceeds distributed to low- and moderate-income families to protect against any energy cost increases. The allocation increases to 18.5% after 2029. Also, from 2012 through 2029, 10% of allowances annually will be auctioned with the proceeds used to reduce the Federal deficit, increasing to 22% in 2030 through 2039 and 25% from 2040 through 2050.

Regarding investments in "clean coal" the Chairman's Mark includes new provisions to stimulate development of commercial-scale carbon capture and sequestration (CCS) technologies; The bonus allowance program is modified to allow for advanced payments of bonus allowances for early actors with a requirement that funded projects will achieve at least a 50% reduction in greenhouse gas emissions; Provisions that require coal fired power plants to meet emissions performance standards once sufficient commercial-scale CCS technology has been deployed, while also ensuring timely reductions in global warming pollution from coal plants.

Also, regarding agriculture impacts the summary indicates, "A more robust supplemental agriculture and forestry program is included with allocations throughout the life of the bill. The Supplemental Agriculture and Forestry Greenhouse Gas Reduction and Renewable Energy Program is strengthened to ensure measurable reductions in global warming pollution."


In its economic analysis, U.S. EPA indicates, ". . . it is important to recognize that some minor differences between the policy designs in H.R. 2454 and S. 1733 are made irrelevant by the set-up of the models. . . EPA’s assessment of the two bills indicates that the full suite of EPA models would likely show that the impacts of S. 1733 would be similar to those estimated for H.R. 2454."

EPA notes that the 2020 cap level in S. 1733 requires a 20% reduction from 2005 emissions levels instead of the 17% reduction required in H.R. 2454. Moving from a 17% to 20% target would raise costs slightly in the models. Also, EPA indicates that S. 1733 allows landfill and coal mine CH4 as offset sources, whereas H.R. 2454 instead subjected them to performance
standards. This will lower costs slightly and result in a small increase in overall emissions.

Outspoken critic of climate change science and legislation, Senator James Inhofe (R-OK), Ranking Member of the Environment and Public Works Committee, issued a statement late Friday night after receiving what he called "incomplete analysis of the Kerry-Boxer cap-and-trade bill from the Environmental Protection Agency (EPA)," along with the latest version of the Kerry-Boxer bill from Chairman Boxer.

Senator Inhofe said, “It's not unreasonable to demand that a committee, prior to legislative hearings, would actually have the bill in question with adequate time for review and analysis. On top of that, one would think that, prior to legislative hearings, the committee would have a thorough, comprehensive economic analysis to understand how a 900-plus page bill, designed to fundamentally reshape the American economy, affects consumers, small businesses, farmers, and American families. But this is clearly not the case. Instead, the majority prefers to keep this bill under wraps for the very straightforward reason that it will destroy jobs, stifle economic growth, and tax the energy Americans use every day.”

Access a release from Senator Boxer (
click here). Access a 4-page Summary of Allowance Allocations for S. 1733 (click here). Access a 2-page summary of Key Changes in the Chairman’s Mark (click here). Access the 925-page complete Chairman's Mark of S. 1733 (click here). Access EPA's 38-page economic analysis of S. 1733 (click here). Access additional climate legislation economic analyses from EPA (click here). Access the hearing websites for Oct. 27 (click here); Oct. 28 (click here); and Oct. 29 (click here), for webcasts and links to testimony.