So the ball is officially rolling now in the US on delivering climate legislation asap. Waxman and Markey, both US senators, have released a draft climate bill titled The American Clean Energy and Security Act of 2009. Not only does it kick the cap and trade debate up a notch in the US, it provides a horizon point for Canadian policy development.
Main elements of the draft bill include clean energy, energy efficiency, reducing global warming pollution, and transitioning to clean energy economy.
The cap and trade elements are found in Title 3 – Reducing Global Warming Pollution. Key policies in the draft bill include:
– Regulations in force by 2012
– Emission-based threshold of 25 kt CO2e (uses 2007 IPCC AR4 GWP values which are typically higher than 2001 and 1996 values used in other jurisdictions)
– Emissions cap based on historical emissions from 2005
– Declining cap starting at 3% (from 2005) in 2012, 20% in 2020, 42% in 2030, and 83% in 2050 (yes… the bill sets out the cap for each year until 2050).
– Offsets allowed with no limit but must use 1.25 offsets for each ton of emissions being offset
– Allowances will be bankable (i.e. can ‘bank’ allowance for use in future years)
– Can borrow allowances from one year ahead to meet compliance obligations
– Borrowing of allowance from 1-5 years ahead allowed but interest will be applied at rate of 8%
– A set aside will be auctioned if market price of carbon rises unexpectedly high
A brief summary, but it should give some insight into where the US is at in terms of their policies – auctioning allowances, low thresold, historic declining cap, single year baseline, banking/borrowing of credits, and a price containment set aside.
Look to Canada to hopefully follow this if we’re going to successfully merge with the US in a North American cap and trade system.