Climate Change: Senate Proposals to Reduce Greenhouse Gas Emissions

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.

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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 cross-
sector 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 cost-
effective 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: Multi-
Pollutant 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.

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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
Percentage Change relative
to Business as Usual (2010)
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].

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Appendix 1: Comparison of Senate Proposals

S. 139 (McCain/
Provisions
Lieberman)
S. 366 (Jeffords)
S. 843 (Carper)
Emissions Cap
all six GHGs capped
2.05 billion tons in
estimated at 2.6
on CO2
at an estimated 5.7
2009 (electric
billion tons in 2009,
billion tons in 2010,
generators only)
declining to an
declining to an
estimated 2.3 billion
estimated 5.1 billion
tons in 2013 (electric
tons by 2016; for
generators only)
electric generators,
Emissions Cap
emissions estimated at
not covered
not covered
on other
2.4 billion in 2010
greenhouse
declining to1.93
gases
billion tons in 2016 if
reduced
proportionally
Emission Caps
not covered
sulfur dioxide,
sulfur dioxide,
on other
nitrogen oxides, and
nitrogen oxides, and
pollutants
mercury
mercury
Scope
50 states and DC
50 states and DC
50 states and DC
Affected Units
in metric tons of
electric generating
fossil fuel-fired
carbon dioxide
facilities 15 Mw or
electric generating
equivalence: any
greater
facilities greater than
electric power,
25 Mw
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
Penalties for
excess emissions
same as CAA, title
excess emission
non-compliance
penalty equal to three
IV except excess
penalty of $100 per
times the market price
emission penalty is
ton plus one-for-one
for allowance on the
three times the
offset from future
last day of the year at
average market
emission allocations
issue
price for allowances

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S. 139 (McCain/
Provisions
Lieberman)
S. 366 (Jeffords)
S. 843 (Carper)
Special
international
within 4 years of
tonnage limitations in
Provisions
emissions trading,
enactment, EPA
effect for 20 years;
carbon sequestration,
shall submit
EPA to reassess after
and reductions from
recommendations
15 years
non-covered entities
for allocating
permitted for 15% of
allowances for
CO limitations
2
required reductions in
biologic carbon
include provisions
2010, declining to
sequestration
providing CO2
10% in 2016
allowances for
allowances
renewable energy,
early action credits
allocated for energy
sequestration, and
permitted for 20% of
efficiency,
other greenhouse gas
required reductions
renewable energy
emission reduction
through 2015
and geologic carbon
projects
sequestration
revenue recycling
provided via a
Climate Change
Credit Corporation
Implementation
tradeable allowance
tradeable allowance
tradeable allowance
Strategy
system. EPA shall
system. Allowances
system. Allocation
determine allocations
allocated to various
formulas based on
based on several
sectors and
generating efficiency.
economic and equity
interests, including
criteria including
households,
Allocations includes
efficiency and impact
dislocated workers
a new source reserve
on consumers.
and communities,
to provide allowances
Allowances to be
electricity intensive
to newly constructed
allocated upstream to
industries, affected
sources
refiners and importers
utilities, energy
of transportation fuel
efficiency and
along with producers
renewable energy
of HFCs, PFCs, and
activities, and
SF6; downstream to
sequestration
electric generation,
activities
industrial, and
commercial entities
Unless otherwise noted, estimates by CRS using Department of Energy and Environmental
Protection Agency data.

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