May 12, 2010 — Details on the much-anticipated climate change and energy policy bill are beginning to surface in the media. The legislation, crafted by Sens. John Kerry (D-Mass.), Joe Lieberman (I-Conn.) and Lindsey Graham (R-S.C.) is styled “the American Power Act.”
Summaries of the act spell out a goal of reducing greenhouse gas emissions by 17 percent by 2020 and 80 percent by 2050. To achieve these cuts, the act will reportedly use a carbon cap-and-trade program.
The national cap-and-trade program would replace existing state and regional programs of a similar kind, and compensate the governments affected for their lost revenue.
Only the largest polluters would be required to participate in the program: Those who emit more than 25,000 tons of carbon dioxide per year.
The act would create a price collar for carbon emissions, with initial floor and ceiling prices set at $12 per ton (increasing at 3 percent over inflation annually) and $25 per ton (increasing at 5 percent), respectively.
The act would expand the clean energy manufacturing tax credit by $5 billion and provide incentives for the production of advanced vehicles and component parts and funding investments in energy efficiency innovation.
The act includes a bundle of financial incentives that provide regulatory risk insurance for 12 nuclear power projects, accelerated depreciation for nuclear plants, $5.4 billion in loan guarantees for nuclear projects, an investment tax credit to promote new nuclear construction and a manufacturing tax credit designed to spur the manufacture of nuclear parts in the U.S.
In the natural gas sector, the act would remove disincentives in the power sector for natural gas-fired generation at merchant plants.
To provide cost protections for consumers, energy bill discounts and direct rebates will be paid out, with further assistance given to Americans who could be disproportionately impacted by potential energy price jumps via tax cuts and an energy refund program.