Transcript The Clear Act - The United States Climate Partnership Association

The CLEAR Act
Carbon Limits and Energy for
America’s Renewal
Office of Senator Maria Cantwell
What is the CLEAR Act?
• A simple, market-based way to reduce CO2 emissions
while protecting household incomes.
• An innovative policy that limits fossil carbon as it enters
commerce, sends consistent, economy-wide price signals
on fossil fuels, and recycles most of the revenues to
households.
• A source of funding for new clean energy investments,
mitigation of a broad suite of greenhouse gases, climate
change adaptation and other climate-related priorities.
Office of Senator Maria Cantwell
The CLEAR Act
Policy Overview
• Upstream cap on fossil carbon achieves broad, economy-wide
coverage of fossil carbon.
• 100% auction establishes a robust price signal and protects
consumers from industry windfalls.
• Equal dividends to all legal U.S. residents from 75% of auction
revenues keeps 70 to 80% of income earners whole.
• Dedicated energy and climate fund from 25% of auction
revenues pays for key climate programs.
• Price safeguards act as insurance against price volatility and
excessive costs.
Office of Senator Maria Cantwell
The CLEAR Act
Upstream Cap on Fossil Carbon
COAL
NATURAL GAS
PETROLEUM
Upstream
Mining/
Imports
Production Wells/
Imports
Production Wells/
Imports
(500 companies)
(750 natural gas/
petro companies)
(750 natural gas/
petro companies)
Upstream cap covers
all fossil carbon
entering the economy,
completely and
equitably
Midstream
Rail, Barge,
Pipelines,
Trucking, and
Processing,
Power Plants Boilers, Furnaces,
and Power Plants
Refining, Mobile
Sources, and
Power Plants
Consumers
Products,
Electricity, and
Gasoline
Office of Senator Maria Cantwell
Price signal passed
downstream, leaving
all midstream user
revenue neutral
Price signal passed
through to end
consumers who are
reimbursed with
dividend
Dividend
The CLEAR Act
Upstream Cap on Fossil Carbon
Yearly CO2 Emissions (Gigatons per year)
8
7
6
5
4
3
2
1
Science-based 2050 Target
No Policy
CLEAR Act
Waxman-Markey Goals
EPA Analysis of Waxman-Markey (ADAGE Scenario 2)
Van Hollen (H.R. 1862)
0
2010
2015
2020
2025
2030
2035
2040
2045
2050
Year
• Cap starts slowly and accelerates over time
• Emissions still decline by 80% of 2005 levels before 2050
Office of Senator Maria Cantwell
The CLEAR Act
Price Safeguards
200
Reference
Advanced Nuclear and Carbon Sequestration
Advanced Renewables and Efficiency
Comprehensive Advanced Technology
EPA Analysis of Waxman-Markey (IGEM Scn. 7 No Int'l Offsets)
Price Safeguards
Permit prices per ton CO2 (in $2005)
180
160
140
120
100
80
60
40
20
0
2010
2015
2020
2025
2030
2035
2040
2045
2050
Year
•
•
•
•
Floor ($7) and ceiling ($21) prices rise annually at 6% real rate.
Carbon share prices always remain within 50% of mean.
All valid bids are accommodated at the safety valve price.
All revenues from carbon share sales in excess of the cap at the ceiling price are
directed to the CERT Fund, explicitly for non-CO2 greenhouse gas mitigation
Office of Senator Maria Cantwell
The CLEAR Act
Refund Covers Costs
Net Impact of Cap and Refund
•
75% of auction
revenues distributed
on an equal per capita
basis returned tax-free
each month to all legal
U.S. residents
•
Several existing
programs prove this is
logistically possible
7%
U.S. average
Percent of Income
6%
5%
4%
3%
2%
1%
0%
-1%
1
2
3
4
5
6
7
8
9
10
Nationally, only the top
two income deciles
receive a very marginal
cost after the refund.
Income Decile
Source: Boyce and Riddle (2009), assumes 80% refund, $25/ton permit price.
Office of Senator Maria Cantwell
The CLEAR Act
Energy and Climate Trust Fund
The Clean Energy Reinvestment Trust (CERT) fund accelerates and
eases the transition to a green economy through:
• Targeted and region-specific transition assistance to workers, communities,
industries, and small businesses of the United States experiencing the greatest
economic dislocations due to efforts to reduce carbon emissions and address
climate change and ocean acidification;
• Targeted and region-specific compensation for early retirement of carbonintensive facilities, machinery, or related assets in the United States that are
stranded by new market dynamics;
• Targeted relief for energy-intensive industries, including agriculture, that
export their goods or products to countries that do not have similar
restrictions on fossil fuels;
• Mitigation of greenhouse gases other than carbon dioxide from fossil carbon
and non-greenhouse substances that exacerbate or accelerate climate change
(such as black carbon);
Office of Senator Maria Cantwell
The CLEAR Act
Energy and Climate Trust Fund
(continued)
•
•
•
•
•
•
•
•
•
Cost-effective domestic and international projects that verifiably reduce, avoid, or
sequester greenhouse gas emissions, such as agriculture, forestry, or other land use
practices;
Investments in low and no carbon energy and fuels research, development, and
deployment activities;
Projects or initiatives that verifiably increase energy efficiency or energy productivity;
Projects or initiatives that support residential fuel switching, particularly home heating oil;
Projects that verifiably increase energy efficiency and otherwise might not be undertaken
without assistance;
Weatherization and energy efficiency improvements of low-income and public buildings;
Funding for climate change mitigation and adaptation projects, activities and research to
increase the resilience of human populations and communities, fish and wildlife, and
managed and unmanaged terrestrial, aquatic and marine ecosystems;
Cost-effective projects that provide adaptation services in areas and countries in which
climate change or ocean acidification impacts are likely to be most severe;
Ensuring that the program does not contribute to the budget deficit of the Federal
Government.
Office of Senator Maria Cantwell
The CLEAR Act
Predictable Carbon Price Signal Greatly
Diversifies America’s Energy Mix
Energy portfolios under four technology scenarios, with and without the CLEAR Act
Office of Senator Maria Cantwell
The CLEAR Act
Impact on Foreign Oil Dependence
Primary Energy Consumption (in Exajoules)
Primary Energy in 2050 under CLEAR Act (GCAM) and Waxman-Markey (ADAGE)
120
Energy Reduction
Renewable Elec.
100
Hydro
Nuclear
Oil w/ ccs
80
Petroleum
Gas w/ ccs
60
Natural Gas
Coal w/ CCS
Coal w/o CCS
40
Under the Housepassed bill,
petroleum use
increases from 38.9
EJ in 2020 to 39.8
EJ in 2050.
20
0
CLEAR Act
Reference
Technology
CLEAR Act
Advanced
Nuclear and
Carbon
Sequestration
Office of Senator Maria Cantwell
CLEAR Act
CLEAR Act
EPA Analysis of
Advanced
Comprehensive Waxman-Markey
Renewables and Adv. Technology
Efficiency
Under the CLEAR
Act, petroleum use
decreases from
33.8-36.4 EJ in 2020
to 11.9-26.6 EJ in
2050.
The CLEAR Act
Carbon Leakage
The CLEAR Act requires border equalization fees for the
“production-process carbon” in imported, energyintensive commodities as long as they are:
• Compliant with the World Trade Organization (WTO).
• Restricted to industries with demonstrable
disadvantages.
• Applied only to imports from countries without
comparable carbon controls.
Office of Senator Maria Cantwell
The CLEAR Act