The Heat Is Online

McCain-Liberman Bill Would Cut GHG Emissions

U.S. Senate Bill Would Cap Greenhouse Gas Emissions

ENS, Jan. 8, 2003

WASHINGTON, DC, January 8, 2003 (ENS) - A bipartisan bill introduced in a U.S. Senate hearing today would attempt to curb global warming by establishing a market based trading system in greenhouse gas emissions. The bill, the first major piece of environmental legislation to be introduced in the 108th Congress, was met with rousing endorsements from the conservation community.

Senators Joe Lieberman, a Connecticut Democrat, and John McCain, an Arizona Republican, said their bill would spur innovation by giving companies maximum flexibility in meeting national greenhouse gas emissions goals.

"By capping emissions and tapping market forces to meet those goals, this bill will heat up American innovation and cool down our changing climate," Lieberman said.

"Our approach promises environmental progress in reducing harmful global warming, economic progress by creating new high-tech jobs to meet emissions goals, and international progress by showing our allies that we’re serious about this global problem."

The bill, which will be formally introduced soon, was the subject of a hearing today in the Senate Commerce Committee, which McCain will soon chair. The legislation, which is modeled after the successful acid rain trading program of the 1990 Clean Air Act, would require a reduction to 2000 carbon dioxide emission levels by the year 2010, and a reduction to 1990 levels by the year 2016.

"Too much attention has been focused on the uncertainties, and not enough on what is known in tackling the problem at hand," McCain said. "This bill uses the best approach we know - a market based trading system - to reduce emissions and give companies maximum flexibility in meeting requirements. Ultimately, the bill rewards improvements in energy efficiency and encourages advances in technologies."

McCain and Lieberman began work on the legislation in August 2001. The bill creates a comprehensive cap on greenhouse gas pollution, paired with an allowance trading system aimed at reducing the costs of meeting the caps while offering a range of opportunities for reducing greenhouse gas pollution and boosting the uptake of carbon by soils, crops and trees.

The bill "marks an end to stalling and the start of the search for serious solutions to the global warming problem," said Fred Krupp, president of the conservation group Environmental Defense.

"The bill’s cap on greenhouse gas pollution takes on the problem of global warming in a strong and sensible way," added Krupp. "The bill’s cost lowering emissions trading market will cut more dangerous pollution than traditional bureaucratic approaches and promote innovation while spurring American economic growth."

REP America, the national grassroots organization of Republicans for Environmental Protection praised the legislation today. "Finally, someone in Washington DC is exercising the thoughtful leadership we urgently need to combat the threat global warming poses to our environment, economy, and long term security. We’re not surprised that someone is John McCain, who has never been afraid to tackle the big issues of our time," said Jim DiPeso, REP America policy director.

But the nonprofit Competitive Enterprise Institute, a conservative public policy group that seeks to limit government interference with "free enterprise," calls the bill "a regressive energy tax," that would "place an enormous burden on the U.S."

While the bill will likely be supported in McCain’s Commerce Committee, and is touted by its authors as an economic bill more than an environmental bill, it will face tough opposition from the Senate Environment and Public Works Committee, whose new chair, Oklahoma Republican James Inhofe, opposes mandatory limits on greenhouse gas emissions.

The bill would apply to emissions from the electricity generation, petroleum refining, industrial and commercial economic sectors, which together account for 85 percent of overall U.S. greenhouse gas emissions. It would apply to all entities that emit more than 10,000 metric tons of greenhouse gases per year, and therefore would not apply to individual car owners, homeowners or the agricultural sector.

The bill is designed to reduce emissions by allowing the trading of emissions allowances on the open market, supported by a government inventory of emissions and emission reductions for individual companies and utilities. Most companies would be required to submit one tradable allowance for each metric ton of greenhouse gasses they emit, while petroleum refiners and importers would have to submit an allowance for each unit of petroleum product sold that will produce a metric ton of emissions.

The Commerce Secretary would determine the number of emissions allowances each company would receive free of charge, and how many would be auctioned off. Proceeds from the auction of these allowances would be used to reduce the energy costs of consumers and assist workers affected by the new policy.

Companies could buy and sell credits among themselves, and could satisfy up to 15 percent of its emission reduction requirements by submitting tradeable allowances from another nation’s market in greenhouse gases, or by contributing to projects that sequester carbon dioxide emissions.

Automakers could earn credits by increasing the average fuel efficiency of the vehicles they sell. (Photo courtesy National Renewable Energy Laboratory)

Automakers could earn credits that they could sell to other companies if they exceeded the Corporate Average Fuel Economy (CAFE) standards by more than 20 percent. The CAFE standards spell out the average number of miles per gallon that a manufacturer’s vehicles must achieve. Many automakers now meet this standard by offering a small number of very efficient vehicles, such as electric or hybrid gasoline-electric cars, to offset the poor efficiency performance of popular sport utility vehicles and other large vehicles.

Any company that failed to meet the emissions limits set by the bill would be fined for each ton of greenhouse gases over the cap at the rate of three times the market value of a ton of greenhouse gas. The market value would be based upon the price of emission credits from trading system provided for in the bill.

Companies would have the economic choice of reducing their emissions to reduce their required allowances, or purchasing other companies’ allowances to cover their continued emissions. Companies that have voluntarily undertaken efforts to reduce their greenhouse gases would receive credit for those actions.

The "cap and trade" approach, which is expected to be adopted by Japan, the European Union, and other parties that have ratified the Kyoto Protocol, is supported by the environmental community and the independent Pew Center on Global Climate Change. The approach has successfully reduced the emissions of acid rain causing pollutants through a program established in the 1990 Clean Air Act.

So far, the Bush administration has declined to embrace a "cap and trade" concept, or offer any kind of plan that would reduce greenhouse gas emissions. President George W. Bush has also withdrawn U.S. support for the Kyoto Protocol, an adjunct to the United Nations Framework Convention on Climate Change which will become law when a minimum of 55 countries covering at least 55 percent of 1990 greenhouse gas emissions have ratified the pact.

The announcement of the new emissions trading bill was seen by conservation groups as a sign that the Bush administration’s past policy toward global warming will be challenged, even under the Republican controlled Congress.

"It’s encouraging to see real action on the environment by senior statesmen so early in the new Congress," said Katherine Silverthorne, deputy director of the U.S. climate change program at the World Wildlife Fund. "The McCain-Lieberman bill could jump start U.S. policy on global warming."

The two senators worked with both industry and conservation groups as they designed the legislation, attempting to craft an approach that would address the concerns of American businesses while taking positive steps toward reducing global warming.

"This effort to solve global warming puts to rest all the excuses for doing nothing: This bill is bipartisan, it achieves environmental goals by encouraging innovation and American ingenuity, and its flexible approach is supported by industry," said Mark Van Putten, president of the National Wildlife Federation. "This is an opportunity for Congress to provide responsible environmental leadership where the White House has failed."

Global warming is a growing problem, with 2002 closing as the second warmest year on record. The 10 warmest years have all occurred since 1987, with nine of them happening since 1990.

Two studies in the current edition of the journal "Nature" show that global warming is already posing a threat to a variety of plants and animals, and other research suggests that the sea ice around the Earth’s poles could melt entirely by the end of this century.

"We are already beginning to see the environmental impacts of global warming coast to coast, from coral reef bleaching in the Caribbean to the loss of treasured pine forests in coastal Alaska," said Van Putten. "Each year we procrastinate makes the problem harder to solve."

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