Senators Kerry and Lieberman Release Draft Climate and Energy Legislation: The American Power Act

Today, Senators Kerry and Lieberman released draft climate and energy legislation entitled the American Power Act. The draft bill proposes options to strengthen domestic sources of energy and energy efficiency, while capping greenhouse gas emissions at 17 percent below 2005 levels by 2050, consistent with H.R. 2454, the American Clean Energy and Security Act of 2009, which passed the House of Representatives last June.

The American Power Act promotes development of nuclear power; allows limited offshore oil and gas development; and encourages development and deployment of clean coal and carbon capture and sequestration technologies with certain performance standards. The proposed legislation also seeks to reduce greenhouse gas emissions through efficient transportation planning, improved electric vehicle infrastructure and natural gas vehicles, as well as through a cap-and-trade program regulating electric utilities and manufacturers. The structure of the cap-and-trade program is similar to H.R. 2454, but the American Power Act would provide certainty on the cost of emissions allowances and restrict trading of allowances by non-regulated entities. Producers and importers of refined transportation fuels would be required to buy pollution permits, but would not participate in their trading.

Regarding allowance allocations, the draft bill provides for emission allowances to be distributed for three primary goals: to protect consumers from energy price increases, to assist industry in the transition to a clean energy economy, and to spur energy efficiency and the deployment of clean energy technology. Energy-intensive and trade-sensitive manufacturers and industries would receive free allowances at the outset and a portion of emissions revenues would be sent directly back to consumers in the form of a rebate to help offset any increase in electricity prices.

Another difference from H.R. 2454 is that the American Power Act would pre-empt state greenhouse gas reduction programs. The draft bill would provide emissions allowances to those states that currently have in place cap-and-trade programs. Furthermore, the draft bill would restrict EPA's authority to regulate greenhouse gases under several sections of the Clean Air Act.

Senate action on the American Power Act is still uncertain. Majority Leader Reid is expected to meet with the various committee chairmen with jurisdiction over the bill after the Memorial Day recess, but he is unlikely to formally start the floor debate until he has a commitment for support from 60 senators.

For more information, please contact Mary Beth McGowan, Government Policy Advisor, at 202-906-8631.

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