At a news conference Wednesday, six major energy companies announced their endorsement of legislation sponsored by U.S. Senator Dianne Feinstein (D-Calif.) to establish a national program to reduce greenhouse gas emissions from the electricity sector.
The bill would establish a national cap-and-trade system that would first cap, and then ratchet down electricity sector emissions by 25 percent below projected levels by 2020. The bill is also sponsored by Senator Tom Carper (D-Del.)
“A scientific consensus has been forged: global warming is real. It’s happening. It can’t be stopped. But if we act now, and if we act with purpose, the most serious consequences can be averted,” Senator Feinstein said. “The bill we have introduced is a cap-and-trade bill for the electricity sector, which is the single largest piece of the global warming puzzle. It accounts for 33 percent of all U.S. emissions. If passed, this bill would reduce emissions from this sector by 25 percent below projected levels by 2020. So, that would make a real impact.”
The bill is one of five that Feinstein will introduce over the coming weeks and months to address the root causes of global warming. The other bills will include:
• A cap-and-trade bill for the industrial sector;
• A bill that increases fuel economy standards by 10 miles per gallon over the next 10 years;
• A bill to promote bio-diesel and E-85, and other low carbon fuels; and
• An energy efficiency bill modeled after California’s programs.
“The bottom line is this: the time to act is now. If we fail to act, and temperatures spike by 5 degrees or more, the world around us will change forever. There’s no going back,” Senator Feinstein concluded.
The endorsement of the Electric Utility Cap-and-Trade Act comes under the auspices of the Clean Energy Group’s Clean Air Policy Initiative, which includes:
• Calpine: Operates power plants in 20 states and Canada , which generate nearly 26,000 megawatts of electricity.
• Entergy: Operates power plants in Arkansas, Louisiana, Mississippi and Texas, which generate approximately 30,000 megawatts.
• Exelon: Operates power plants in Illinois and Pennsylvania, which generate approximately 38,000 megawatts.
• Florida Power & Light: Operates power plants in 24 states, and generates more than 30,000 megawatts of electricity.
• PG&E Corporation: PG&E Corporation is the parent of Pacific Gas and Electric Company. Currently, PG&E Corporation operates only in California. It is the state’s largest utility and serves approximately 1 in every 20 Americans. They currently own approximately 6,500 megawatts of generation.
• Public Service Enterprise Group: The largest provider of energy in New Jersey, the company generates approximately 15,000 megawatts.
Together, these companies operate in 42 states and supply more than 15 percent of the electricity consumed in the U.S. today, or approximately 150,000 megawatts out of the 1 million megawatts produced nationwide. This is enough energy to power 50 million homes.
Specifically, the bill would:
• Establish a cap-and-trade program for the electricity sector, which is the single largest piece of the global warming puzzle, accounting for 33 percent of all U.S. emissions.
• Set a cap at 2006 levels in 2011 – a six percent reduction from anticipated levels of greenhouse gases from the electric sector.
• In 2015, it would ratchet the cap down to 2001 levels -? a 16 percent reduction from anticipated levels.
• 2016 -? one percent reduction from 2001 levels
• 2017 -? an additional one percent reduction
• 2018 -? an additional one percent reduction
• 2019 -? an additional one percent reduction
• By 2020, emissions would be reduced 25 percent below anticipated levels.
• And after that, emissions will be reduced even further — by an additional 1.5 percent a year and potentially more, if the EPA, based on scientific evidence, believes that more needs to be done to avert the most dire consequences of global warming.
Taken together, this legislation would reduce emissions by the equivalent of taking 79 million cars off the road by 2020.
• Establish an 11-member independent scientific panel to make recommendations to the EPA every four years on the reduction rate required to prevent catastrophic climate change. In 2011, and every four years thereafter, an independent panel consisting of eight scientists appointed by the National Academy of Sciences and three former EPA Administrators, will recommend to EPA the target greenhouse gas level needed to stabilize the climate, and the timetable for achieving the target.
• Require electric utilities regulated by the bill to account for each ton of greenhouse gas emitted annually. For each ton of carbon dioxide equivalent emitted, a company would have to trade a carbon credit to EPA.
• If a utility emits more tons of carbon dioxide than it can account for with its credits, this utility would have to do one of the following:
• Purchase credits from another regulated utility which has a surplus of credits; or
• Purchase an offset credit from an established agricultural, forestry, or wetland carbon sequestration project or industrial greenhouse gas emission reduction project.
Agricultural offset projects may include crop management practices that sequester carbon, and conversion of cropland to rangeland or grassland. Forestry and wetland offset projects may include afforestation, wetland restoration, and avoided conversion of forested land or wetlands to other uses. Industrial offset projects may include projects that reduce emissions from manufacturing and production processes.
• Require EPA each year to publicly auction many of the credits created by the bill to raise revenue for clean technology development.
• In 2011, EPA will auction 15 percent of the total credits. The percent auctioned will increase by 3 percent per year over the next 19 years, reaching 72 percent auctioned in 2030. Over the following six years, the percent auctioned increases by 5 percent per year, reaching a 100 percent auction in 2036 and thereafter.
• The auction will raise billions each year:
• $1.9 to $11.7 billion in 2011 (auctioning 15 percent of credits)
• $3.6 to $22 billion in 2016 (auctioning 30 percent of credits)
• $5.2 to $31 billion in 2021 (auctioning 45 percent of credits)
• $9 to $55 billion in 2036 (auctioning 100 percent of credits)
• 80 percent of the auction revenue will be used for developing new zero- and low-carbon technologies, including clean coal, renewable energy, and energy efficiency.
• The remaining 20 percent will be split evenly between mitigating the effects of climate change on affected communities and low-income persons, and mitigating the effects on fish and wildlife habitat.
The bill provides incentives for electric utilities to use renewable energy or other low carbon technologies through the manner by which credits are allocated:
• From 2011 to 2036, EPA will make a portion of credits available to companies for free. EPA will distribute these free credits to utilities based on the amount of electricity each utility produces.
• This strategy rewards clean utilities — they will receive more free credits than they will need to account for their emissions. Clean utilities can sell their excess credits to power plants with significant greenhouse gas emissions.
• New coal plants commencing operation after January 1, 2007 without the use of clean coal technologies get no free credits and will have to purchase credits to account for every ton of greenhouse gases they emit. Thus, utilities will suffer a significant financial penalty if they build new coal plants without the clean coal technologies.