Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) today rolled out a draft of the American Power Act, long-awaited climate and energy legislation developed with Sen. Lindsey Graham (R-S.C.). The 1,000-page-plus bill covers a variety of issues, from a mandatory cap on greenhouse gas (GHG) emissions to expanded nuclear power and boosts for carbon capture and sequestration.

“The path to 60 votes in the Senate has been long, but despite Washington conventional wisdom, we are closer than ever to a breakthrough,” Sen. Kerry said at a press conference in Washington. “Two Congresses ago, we had 38 votes for energy and climate legislation. Last Congress we had 54 Senators prepared to vote yes. Now we’re asking this Senate to hold a debate and insist on a vote again, with a fundamentally new policy approach that should secure bi-partisan support.”

Sen. Graham, who had worked on the bill for months with his colleagues, recently stopped working with Kerry and Lieberman because there were indications that the Senate would take up the issue of immigration reform before climate change, a priority change Graham is opposed to. Graham may still support the climate change bill.

It is unclear whether the Senate will debate the bill later this spring or summer. Majority Leader Harry Reid (D-Nev.) told reporters on Tuesday that he planned to huddle with the six major committee leaders with jurisdiction over the issue after the Memorial Day recess to “take a look at what we need to do with energy this year.”

Setting a Cap on Carbon

The 21-page section-by-section summary (PDF) shows that the bill will include 12 titles, many of which center around the creation of a cap-and-trade program to achieve a 17% reduction of carbon dioxide emissions from 2005 levels by 2020, 42% by 2030, and 83% by 2050.
States won’t be allowed to participate in the program, and those states already involved in regional trading programs would be compensated. The bill also hands the federal Environmental Protection Agency authority over a number of new climate programs, but it essentially restricts its ability to regulate greenhouse gases under several sections of the Clean Air Act.

The bill only requires the largest sources of pollution to comply with reduction targets: those who produce more than 25,000 tons of carbon pollution annually. This means the program only focuses on 7,500 factories and power plants. The summary indicates that power plants will face the first carbon-emission restrictions, followed six years later by energy-intensive manufacturers.

Local distribution companies that service electric utilities and natural gas consumers can expect free allowances through 2029. The bill also includes a hard price collar for carbon, with an introductory floor set at $12—increasing at 3% over inflation annually—and a ceiling set at $25, which will increase by 5% over inflation.

Tax Incentives for Nuclear Power, CCS, Natural Gas

The draft, rife with tax credits for new nuclear power facilities, also calls for the Nuclear Regulatory Commission (NRC) to develop and implement procedures to expedite its issuance of combined construction and operating licenses (COLs) for qualified new reactors. The bill would also increase funds for the federal nuclear loan guarantee program to $54 billion from the current $18.5 billion. This includes a measure to ensure that loan funds are returned to the program as quickly as possible.

The section-by-section summary does not delve into aspects of nuclear waste management, though it does indicate that the DOE would be called upon to strategically reduce the cost of nuclear reactor systems, including small-scale and modular reactors.

Under the bill, carbon capture and sequestration (CCS) technologies would get a boost with annual incentives of $2 billion for research and development. It also provides incentives for the commercial deployment of 72 GW of carbon capture and sequestration, and it aims to set up a regulatory framework for CCS.

The summary says the bill would create a “level playing field for natural gas” in the power sector by “removing disincentives” for natural gas generation at merchant plants.


Even before the bill was rolled out, reactions came pouring in.

“Legislation that creates certainty about the legal and regulatory framework around carbon dioxide emissions is needed to enable our customers to make fully informed investment decisions,” Alstom U.S. Country President Pierre Gauthier said in a statement. “Such certainty is critical because investments to replace and retrofit ageing power plants and infrastructure are essential for security of supply as well as to tackle climate change. By acting to establish such a legal framework as soon as possible, the U.S. Congress can help stimulate the economy, create skilled jobs, and safeguard competitiveness.”

America’s Natural Gas Alliance (ANGA) hailed the bill for its inclusion of language that sought to help the “move” to greater use of natural gas in merchant power plants and in vehicles. “While a useful starting point, we believe much more could be done right now to significantly reduce greenhouse gases and other pollutants by providing clean energy transition incentives to electric utilities as well,” it said.

"As lawmakers continue to work on a constructive path forward, we urge them to take full advantage of the many benefits of our abundant domestic supply of natural gas.  It is now the established, scientific consensus that the United States has as much natural gas as Saudi Arabia has oil. We are the envy of the world for this resource.  It is time we put it to greater use for our nation’s economy, environment and security."

Read the bill.

Read a short summary of the bill.

Read a section-by section-summary of the bill.

Sources: Washington Post, POWERnews