On May 13 Senators John Kerry (D-Mass.) and Joseph Lieberman (I-Conn.) dropped the American Power Act. The bill provides for the establishment of a cap and trade system for greenhouse gas (GHG) emission allowances and sets goals of reducing U.S. emissions by 20 percent by 2020 and by 83 percent (basically pre-industrial levels) by 2050.
As with previous legislation, natural gas receives considerably more ‘transition” allowances than either fuel oil or propane. Natural gas starts at 9 percent in 2016 and it stays there until 2029, at which point it drops to 1.8 percent until phase-out at 2035. Fuel oil and propane start at 1.9 percent in 2013, drop to 1.5 percent in 2016 and plummet to 0.3 percent from 2020 to the allowance phase-out in 2035.
The highlights among many provisions include the establishment of economy-wide GHG emission reduction goals; transportation-related GHG emissions reduction goals and standards; performance standards for new coal-fired power plants; an Office of Consumer Advocacy within the Federal Energy Regulatory Commission (FERC); a national product carbon disclosure program; efficiency standards for buildings; and a range of initiatives to expand the climate bureaucracy in Washington though a range of agencies as well as support GHG initiatives internationally.
The bill has an uphill fight for passage, particularly in an election year and without a groundswell of popular support. Such legislation is typically seen as a good idea by voters if it comes at little or no cost, and that is not likely to be the case with either the economy or jobs. Much political capital was expended forcing through the recent healthcare bill that did not result in a favorable ‘bounce” for its supporters after passage. However, as the healthcare bill clearly shows, anything is possible and this issue might garner more bipartisan support. The bill is not without support among the major integrated oil companies, who see advantages relative to their natural gas operations. Both Shell Oil and ConocoPhillips have presented press releases in support of the bill and specifically cite natural gas as a major cornerstone of that support.
“This legislation ensures America’s global competitiveness and recognizes the role clean natural gas can play in growing the economy and protecting the environment,” Shell said in a released statement. ConocoPhillips in a release highlighted the ‘recognition of the role and benefits of natural gas in lowering carbon emissions.”
While it is too early for a detailed analysis of the ramifications of the bill, the following organizations have cautiously gone on record.
R. Bruce Josten, U.S. Chamber of Commerce executive vice president of Government Affairs, stated the following in a press release: ‘The Kerry-Lieberman bill is a work in progress. Few in Congress or the business community have had a chance to review the entire bill. Once all the details of the bill are known, the Energy Information Administration (EIA) and the business community will need sufficient time to analyze the bill to ascertain its effects on the economy, jobs, the environment, and energy markets.”
The American Gas Association noted: ‘We commend Senators Kerry and Lieberman for their willingness to work with all sectors of the economy in their attempt to craft comprehensive climate legislation,” said David N. Parker, president and CEO of the American Gas Association. ‘While we are encouraged that natural gas utilities, which deliver natural gas to 170 million Americans, are treated more equitably than in previous climate bills, we remain hopeful that the Senate will more fully recognize that natural gas customers represent the only sector of the population that has reduced carbon emissions by 40 percent over the last 40 years. As such, any climate legislation should continue to promote what works best. Congress could help even more American homes and businesses reduce their carbon footprint by including language in the bill that would accurately measure energy efficiency from the point of origin to the end-use application.”