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Cap and Trade in Congress: Warner and Lieberman Offer a Plan

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Time is running out in the race against global warming. Fortunately, Sens. Joseph Lieberman (I-CT) and John Warner (R-VA) are off to a good start in the legislative marathon to reduce the pollution that causes global warming. Their “America’s Climate Security Act” would establish a cap-and-trade program to slow global warming. It has bipartisan momentum that could help it go the distance to become law. Lieberman and Warner deserve credit for their efforts to surmount special interest opposition and other hurdles to address this threat.

The Lieberman-Warner bill would target three-quarters of U.S. global warming pollution to reduce these emissions 70 percent by 2050. The remaining quarter of emissions would be reduced by significant enhancements to efficiency standards for buildings and appliances, and incentives for states to make their electricity systems more efficient. The bill also rewards, rather than preempts, states with greenhouse gas reduction programs.

Compared to their August draft bill outline, the latest version quickens the pace of greenhouse gas cuts to 1990 levels by 2020—a 15 percent reduction. It also increases the billions of dollars dedicated to public benefits, such as help with electric bills for middle-and low-income people, transition assistance for workers in high emissions industries, energy efficiency, wildlife habitat restoration, and investments in clean energy technologies.

Sens. Lieberman and Warner resisted pressure from large electric utilities to include a “safety valve” that could delay or weaken the mandated reductions if the cost of emissions permits reaches a certain level. Instead, emitters can borrow against future allowances to reduce their short-term costs.

The bill includes at least one provision that leads to a dead end. It would give utilities bonus allowances to encourage the adoption of “carbon capture and sequestration technology” for power plants. These incentives do not guarantee the deployment of this technology. The bonus allowances could be a windfall for utilities, enabling them to delay emission reductions at existing plants, and forcing other industries to make deeper emission cuts to offset this inaction.

The bill should instead include an emissions performance standard for new power plants. This is the simplest, most effective way to reduce greenhouse gas emissions from new sources. The additional cost of using this technology would be offset via assistance from emission allowances auction revenues. Such a standard will quicken the commercialization and deployment of carbon capture and sequestration technology in the United States and ready it for sale or transfer overseas.

To maximize the price signals created under a cap-and-trade program, the bill should require that all covered sources buy emission allowances in an auction. The billions of dollars of revenue from a larger auction could provide more assistance with energy bills for low-income families, investments in green job training programs, and funds for research and development of zero-emission technologies. The bill should also guarantee ample aid to developing nations most at risk from the effects of global warming. The auction of more carbon credits will make it easier to pay for this aid.

The addition of a carbon capture and sequestration emissions performance standard for new coal plants, the auction of significantly more allowances, and a much greater commitment of revenue for international aid would make the America’s Climate Security Act the pace setter in the pursuit of global warming solutions. We commend Sens. Lieberman and Warner for their leadership, and urge them to make these changes so that the bill can accomplish their ambitious goals.

For more information on American Progress’ comprehensive carbon capture and sequestration recommendations, please see:

 

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