MOST RECENT DEVELOPMENTS

In the 108th Congress, six bills have been introduced to control greenhouse gas emissions. S. 139, introduced by Senators McCain and Lieberman, would reduce and cap emissions of greenhouse gases from electricity generation, transportation, industrial, and commercial sectors. The reductions would be implemented in two phases with an emissions cap in the year 2010 based on affected facilities' 2000 emissions, and a further reduction cap imposed in the year 2016 based on affected facilities? 1990 emissions. The program would be implemented through an expansive allowance trading program that includes cross-sector trading and limited acquisition of allowances from foreign sources. The second bill, S. 366, introduced by Senator Jeffords, is a modified version of the multi-pollutant bill reported out by the Senate Environment and Public Works Committee in the 107th Congress. It would reduce and cap emissions of carbon dioxide from electricity generation at their 1990 levels by the year 2009. Similar to S. 139, the program would be implemented through an allowance trading program. The third and fourth bills, S. 843, introduced by Senator Carper, and H.R. 3093, introduced by Representative Bass are multi-pollutant control bills that include carbon dioxide reductions. S. 843 and H.R. 3093 would cap carbon dioxide emissions from powerplants at their 2006 levels by 2009 and further cap emissions at their 2001 levels by 2013. The fifth bill, H.R. 2042, introduced by Representative Waxman, is also a multi-pollutant control bill and would cap carbon dioxide emissions from powerplants at their 1990 levels by the year 2009. The sixth and most recent bill is H.R. 4067. Introduced March 30, 2004, by Representative Gilchrest, it is modeled on S. 139 but includes only the first phase of S. 139?s two-phase reduction program. Like S. 139, H.R. 4067 is a stand-alone greenhouse gas reduction program.

In October 2003, the Senate debated and defeated an amended version of S. 139 (S.Amdt. 2028), the Climate Stewardship Act of 2003. S.Amdt. 2028 would have frozen greenhouse gas emissions from major economic sectors at their 2000 levels, but was defeated on a 43-55 vote. The sponsors of S. 139 have announced their intention to seek another vote on the measure before the end of the 108th Congress.

Previous releases:

/NLE/CRSreports/03Sep/IB97057.pdf

/NLE/CRSreports/03Aug/IB97057.pdf

/NLE/CRSreports/03Jul/IB97057.pdf

/NLE/CRSreports/03Jun/IB97057.pdf

/NLE/CRSreports/03May/IB97057.pdf

/NLE/CRSreports/03Feb/IB97057.pdf

/NLE/CRSreports/03Jan/IB97057.pdf

http://NCSEonline.org/NLE/CRSreports/Climate/clim-5.pdf

http://NCSEonline.org/NLE/CRSreports/Climate/clim-5.cfm

http://www.NCSEonline.org/nle/clim-5.html

Abstract: The possibility that human activities are releasing gases, including carbon dioxide (CO2), at rates that could affect global climate has resulted in proposals for national programs to curtail emissions. An international framework for specific reductions in greenhouse gases was negotiated at a meeting in Kyoto in December 1997. Concern about costs has encouraged consideration of CO2 reduction proposals that employ market-based mechanisms. The passage in 1990 of a tradeable allowance system for sulfur dioxide (SO2) control in the United States to reduce acid rain provides a precedent for such mechanisms.

The two mechanisms receiving the most attention are a tradeable permit program (similar to the acid rain program) and carbon taxes. Proposed CO2 reduction schemes present large uncertainties in terms of the perceived reduction needs and the potential costs of achieving those reductions. Tradeable permit programs would reduce CO2 emissions to a specific level with the control cost handled efficiently, but not at a specific cost level. Carbon taxes would effectively cap marginal control costs at the specific tax level, but the precise level of CO2 reduction achieved would be less certain. Hence, a major policy question is whether one is more concerned about the possible cost of the program and therefore willing to accept some uncertainty about emission reduction in order to have some limits on costs (i.e., carbon taxes) or whether one is more concerned about achieving a specific emission reduction level with costs handled efficiently, but not capped (i.e., tradeable permits).

The specific effects of both a carbon tax and tradeable permit program would depend on the specific levy (carbon tax) or allocation scheme (tradeable permit) chosen, the scope of the program, the timing of the reductions, and the recycling of any revenues.

In addition, many tradeable permit proposals include provisions allowing countries to accumulate permits by reducing emissions in other countries. Two such schemes, joint implementation and the Clean Development Mechanism (CDM), were approved at the Kyoto conference in December 1997.

The climate change issue and CO2 control raise numerous equity issues. In one sense, climate change is a concern about intergenerational equity ? the well-being of the current generation versus generations to come. On a global level, the issue also involves the North-South debate. At the domestic level, equity questions include the regional distribution of costs under a tradeable permit or carbon tax scheme. For example, an important impact of either a carbon tax based on the carbon content of fossil fuels or a tradeable permit program would be the pressure for fuel shifts away from coal and toward gas. Regions such as fast-growing areas in need of more energy and owners of ¨all electric¨ homes, among others, would likely be disproportionately hit by a CO2 control scheme. In addition, people may be affected differently according to income class. These issues, however, have not been sufficiently analyzed at the current time to be sure of how various sectors would be affected.

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Topics: Climate Change, International, Economics & Trade