Lieberman-Warner

Reduction Schedule 2012: 2005 Levels 2012: 2005 Levels 2020: 15% reduction 2020: 15% reduction 2030: 33% reduction 2030: 33% reduction 2040: 50% reduction 2040: 50% reduction 2050: 70% reduction 2050: 70% reduction 2005 Emissions of Covered Units: 5,200 Million Metric Tons of CO2

Covered Entities Fossil-Fuel Power Plants 2300 MMT CO2 Industrial Plants 950 MMT CO2 Transportation Sector 1900 MMT CO2 Chemical Producers/ Importers 300 MMT CO2 Represent 75% of US greenhouse gas emissions 2012 Emission Cap 5200 MMT CO2

2012 Allocation to Covered Entities 5200 MMT CO2 total Allowances 5200 MMT CO2 total Allowances 40% of Allowances Freely Given to Covered Entities 40% of Allowances Freely Given to Covered Entities 20%20% 0% Fossil-Fuel Power Plants 2300 MMT CO2 emissions 1040 allowances Industrial Plants 950 MMT CO2 emissions 1040 allowances Transportation 1900 MMT CO2 emissions 0 allowances

Electric Power Sector 20% of the allowances (1040 MMT CO2) will be distributed to covered electric power sector facilities from 2012 through % of the allowances (1040 MMT CO2) will be distributed to covered electric power sector facilities from 2012 through The percentage then declines by 1% each year, such that zero allowances are allocated to the electric power sector in The percentage then declines by 1% each year, such that zero allowances are allocated to the electric power sector in Incumbents are defined as those facilities that operated during the calendar year preceding the enactment date. Incumbents are defined as those facilities that operated during the calendar year preceding the enactment date. Allowances are distributed in proportion to each facility’s recent, historical emissions (the three calendar years preceding the enactment date). Allowances are distributed in proportion to each facility’s recent, historical emissions (the three calendar years preceding the enactment date). New Entrants are defined as those covered facilities that commence operation on or after January 1, New Entrants are defined as those covered facilities that commence operation on or after January 1, The new entrant set aside will be distributed to new entrants based on their electricity generation: The new entrant set aside will be distributed to new entrants based on their electricity generation:

Industrial Sector The allowances allocated to the industrial sector decrease in the same manner as the allowances allocated to the electric power sector. The allowances allocated to the industrial sector decrease in the same manner as the allowances allocated to the electric power sector. 20% is allocated in 2012 to 2016 (1040 MMT CO2), and then the percentage declines by 1% each year, such that it reaches 0% in % is allocated in 2012 to 2016 (1040 MMT CO2), and then the percentage declines by 1% each year, such that it reaches 0% in 2036.

Transportation Sector Transportation Fuel Producers and Importers (i.e. oil companies) will be responsible for all CO2 emissions caused by the production and the use of their fuels. Transportation Fuel Producers and Importers (i.e. oil companies) will be responsible for all CO2 emissions caused by the production and the use of their fuels. This is called an “upstream cap” since the point of regulation is at the fuel production and not the fuel use (i.e vehicle emissions). This is called an “upstream cap” since the point of regulation is at the fuel production and not the fuel use (i.e vehicle emissions). The Transportation Sector receives no free allowances. The Transportation Sector receives no free allowances.

2012 Allocation to Non-Covered Entities 5200 MMT CO2 total Allowances 5200 MMT CO2 total Allowances 40% of Allowances Freely Given to Covered Entities 40% of Allowances Freely Given to Covered Entities 36% of Allowances Freely Given to Non- Covered Entities 36% of Allowances Freely Given to Non- Covered Entities 10% Electricity Consumers 520M Allowances 4% Carbon Capture and Sequestration 208M Allowances 5% Domestic Agriculture and Forestry 260M Allowances 3% International Forest Protection 156M Allowances 5% Early Reduction Credit 260M Allowances 9% States and Tribes 468M Allowances

Electricity Consumers 10% of the allowances (520 MMT CO2) to load serving entities (LSEs) based on kWh delivered 10% of the allowances (520 MMT CO2) to load serving entities (LSEs) based on kWh delivered An LSE must sell its allowances within one year of receiving an allowance and must pursue fair market value An LSE must sell its allowances within one year of receiving an allowance and must pursue fair market value LSEs must use the proceeds from the sale of the allowances for two purposes: LSEs must use the proceeds from the sale of the allowances for two purposes: to mitigate economic impacts on low- and middle-income energy consumers, including by reducing transmission charges or issuing rebates; and to mitigate economic impacts on low- and middle-income energy consumers, including by reducing transmission charges or issuing rebates; and to promote energy efficiency on the part of energy consumers. to promote energy efficiency on the part of energy consumers.

States and Tribes 9% of Allowances 1% to states that have adopted regulation to reduce energy demand 1% to states that have adopted regulation to reduce energy demand 1% to states for that are in compliance with State Building Energy Efficiency Codes 1% to states for that are in compliance with State Building Energy Efficiency Codes 2% to states that, before the bill’s enactment, enacted statewide GHG emission reduction targets that are more stringent than the bill’s nationwide targets and by the time of the allocation, require covered facilities to meet emission limits more stringent than those imposed on covered facilities under the bill. 2% to states that, before the bill’s enactment, enacted statewide GHG emission reduction targets that are more stringent than the bill’s nationwide targets and by the time of the allocation, require covered facilities to meet emission limits more stringent than those imposed on covered facilities under the bill. 4.5% to all states based on the following formula: 4.5% to all states based on the following formula: ⅓ of the available allowances based on Low Income Home Energy Assistance Program expenditures; ⅓ of the available allowances based on Low Income Home Energy Assistance Program expenditures; ⅓ of the available allowances based on population; and ⅓ of the available allowances based on population; and ⅓ of the available allowances based on “quantity of carbon dioxide embedded within coal that is mined, natural gas that is processed, and petroleum that is refined within the boundaries of a State, as determined by the Secretary of Energy.” ⅓ of the available allowances based on “quantity of carbon dioxide embedded within coal that is mined, natural gas that is processed, and petroleum that is refined within the boundaries of a State, as determined by the Secretary of Energy.”

States and Tribes States must either retire or use at least 90% of its allocation in the following ways: to mitigate impacts on low-income energy consumers; to mitigate impacts on low-income energy consumers; to promote energy efficiency; to promote energy efficiency; to promote investment in non-emitting electricity generation technology; to promote investment in non-emitting electricity generation technology; to improve public transportation and passenger rail service and promote reductions in vehicle miles traveled; to improve public transportation and passenger rail service and promote reductions in vehicle miles traveled; to encourage advances in energy technology that reduce or sequester GHG emissions; to encourage advances in energy technology that reduce or sequester GHG emissions; to address local or regional impacts of climate change, including the relocation of communities displaced by the impacts of climate change; to address local or regional impacts of climate change, including the relocation of communities displaced by the impacts of climate change; to mitigate obstacles to investment by new entrants in electricity generation markets and energy-intensive manufacturing sectors; to mitigate obstacles to investment by new entrants in electricity generation markets and energy-intensive manufacturing sectors; to address local or regional impacts of climate change policy, including providing assistance to displaced workers; to address local or regional impacts of climate change policy, including providing assistance to displaced workers; to mitigate impacts on energy-intensive industries in internationally competitive markets; to mitigate impacts on energy-intensive industries in internationally competitive markets; to reduce hazardous fuels and to prevent and suppress wildland fires; or to reduce hazardous fuels and to prevent and suppress wildland fires; or to fund rural, municipal, and agricultural water projects that are consistent with sustainable use of water resources. to fund rural, municipal, and agricultural water projects that are consistent with sustainable use of water resources.

Early Action Credit allowances to owners and operators of covered facilities for actions taken since January 1, 1994 that resulted in verified and credible reductions of GHG emissions: allowances to owners and operators of covered facilities for actions taken since January 1, 1994 that resulted in verified and credible reductions of GHG emissions: 5% in 2012; 5% in 2012; 4% in 2013; 4% in 2013; 3% in 2014; 3% in 2014; 2% in 2015; and 2% in 2015; and 1% in % in 2016.

Carbon Capture and Sequestration 4% of the allowances are to be placed into a Bonus Allowance Account. 4% of the allowances are to be placed into a Bonus Allowance Account. Bonus Allowances are to be used as a reward for electricity generators that actually inject CO2 into geological formations. Bonus Allowances are to be used as a reward for electricity generators that actually inject CO2 into geological formations. The number of bonus allowances that a company receives for injecting a metric ton of CO2 underground starts out at 4.5 in 2012 and gradually decreases, until it reaches zero in The number of bonus allowances that a company receives for injecting a metric ton of CO2 underground starts out at 4.5 in 2012 and gradually decreases, until it reaches zero in billion total allowances are available for the Bonus Allowance Account 3.9 billion total allowances are available for the Bonus Allowance Account

Domestic Agriculture and Forestry 5% of the Allowances are to be used in— 5% of the Allowances are to be used in— reducing greenhouse gas emissions from the agriculture and forestry sectors of the United States economy; and reducing greenhouse gas emissions from the agriculture and forestry sectors of the United States economy; and increasing greenhouse gas sequestration from those sectors. increasing greenhouse gas sequestration from those sectors. The Secretary of Agriculture is to establish a program to distribute the allowances to entities that carry out sequestration projects on agricultural and forest land that achieve long-term greenhouse gas emission mitigation benefits. The Secretary of Agriculture is to establish a program to distribute the allowances to entities that carry out sequestration projects on agricultural and forest land that achieve long-term greenhouse gas emission mitigation benefits.

International Forest Protection 3% of the allowances are for carrying out forest protection activities in countries other than the United States. 3% of the allowances are for carrying out forest protection activities in countries other than the United States. Eligible Forest Protection activities are those carried out and managed in accordance with widely-accepted environmentally sustainable forestry practices; and designed— Eligible Forest Protection activities are those carried out and managed in accordance with widely-accepted environmentally sustainable forestry practices; and designed— to promote native species and restoration of native forests, where practicable; and to promote native species and restoration of native forests, where practicable; and to avoid the introduction of invasive nonnative species. to avoid the introduction of invasive nonnative species.

Distribution of Allowances in 2012

2012 Allowance Auction 5200 MMT CO2 total Allowances 5200 MMT CO2 total Allowances 40% of Allowances Freely Given to Covered Entities 40% of Allowances Freely Given to Covered Entities 36% of Allowances Freely Given to Non-Covered Entities 36% of Allowances Freely Given to Non-Covered Entities 24% of Allowances to be Auctioned 24% of Allowances to be Auctioned

Allowance Auction A newly established Climate Change Credit Corporation will be responsible for administering the auction and administering the proceeds. A newly established Climate Change Credit Corporation will be responsible for administering the auction and administering the proceeds. The Corporation will have a board of directors composed of five individuals appointed by the President and approved by the Senate for staggered five-year terms. The Corporation will have a board of directors composed of five individuals appointed by the President and approved by the Senate for staggered five-year terms. Early Auction: Within 180 days of the enactment date, the Administrator will auction: Early Auction: Within 180 days of the enactment date, the Administrator will auction: 6% of the emission allowances for % of the emission allowances for % of the emission allowances for % of the emission allowances for % of the emission allowances for % of the emission allowances for 2014 all the proceeds of the early auctions are to go to the Energy Technology Deployment Program all the proceeds of the early auctions are to go to the Energy Technology Deployment Program Annual Auction: In addition to the 6% above, Annual Auction: In addition to the 6% above, 18% of the emission allowances would be auctioned for % of the emission allowances would be auctioned for % of the total emission allowances will be auctioned in % of the total emission allowances will be auctioned in By 2050, 73% of the emission allowances are auctioned. By 2050, 73% of the emission allowances are auctioned.

Distribution of Auction Proceeds The Climate Change Credit Corporation is directed to use the proceeds from the annual auction to carry out the following programs: The Climate Change Credit Corporation is directed to use the proceeds from the annual auction to carry out the following programs: 1. Zero- or low-carbon energy technologies: 24.75% 2. Energy Assistance Fund: 17.78% 3. Adaptation Fund: 17.78% 4. Advanced coal and sequestration technologies: 15.4% 5. Advanced technology vehicles manufacturing: 11% 6. Climate Change and National Security Program: 5% 7. Climate Change Worker Training Fund: 4.44% 8. Cellulosic biomass ethanol technology: 3.85%

Zero- or Low-Carbon Energy Technologies An award for zero- or low-carbon generation under this subsection shall be in the form of a contract to provide a production payment for each year during the first 10 years of commercial service of the generation unit. An award for zero- or low-carbon generation under this subsection shall be in the form of a contract to provide a production payment for each year during the first 10 years of commercial service of the generation unit. Similar to the Production Tax Credit currently provided for renewables. Similar to the Production Tax Credit currently provided for renewables.

Energy Assistance Fund: Monies in the Energy Assistance Fund are to be distributed to the following programs: Monies in the Energy Assistance Fund are to be distributed to the following programs: 50 percent of the funds to the low-income home energy assistance program established under the Low Income Home Energy Assistance Act 50 percent of the funds to the low-income home energy assistance program established under the Low Income Home Energy Assistance Act 25 percent of the funds to the Weatherization Assistance Program for Low-Income Persons 25 percent of the funds to the Weatherization Assistance Program for Low-Income Persons 25 percent of the funds to rural energy assistance. 25 percent of the funds to rural energy assistance.

Adaptation Fund To carry out activities that assist fish and wildlife, fish and wildlife habitat, plants, and associated ecological processes in adapting to and surviving the impacts of climate change. To carry out activities that assist fish and wildlife, fish and wildlife habitat, plants, and associated ecological processes in adapting to and surviving the impacts of climate change. 40 percent shall be allocated to States through the Wildlife Conservation and Restoration Account to carry out adaptation activities in accordance with comprehensive wildlife conservation strategies and, where appropriate, other fish and wildlife conservation strategies. 40 percent shall be allocated to States through the Wildlife Conservation and Restoration Account to carry out adaptation activities in accordance with comprehensive wildlife conservation strategies and, where appropriate, other fish and wildlife conservation strategies. The remaining funds will dispersed to the Department of Interior, Environmental Protection Agency, the Department of Agriculture, Department of Commerce, and the Army Corps of Engineers. The remaining funds will dispersed to the Department of Interior, Environmental Protection Agency, the Department of Agriculture, Department of Commerce, and the Army Corps of Engineers.

Advanced Coal and Sequestration Technologies: 25% to support demonstration projects using advanced coal generation technology, including retrofit technology that could be deployed on existing coal generation facilities. 25% to support demonstration projects using advanced coal generation technology, including retrofit technology that could be deployed on existing coal generation facilities. 25% to provide Federal financial incentives to facilitate the deployment of not more than 20 gigawatts of advanced coal generation technologies. 25% to provide Federal financial incentives to facilitate the deployment of not more than 20 gigawatts of advanced coal generation technologies. 50% for large-scale geological carbon storage demonstration projects that store carbon dioxide captured from facilities for the generation of electricity using coal gasification or other advanced coal combustion processes. 50% for large-scale geological carbon storage demonstration projects that store carbon dioxide captured from facilities for the generation of electricity using coal gasification or other advanced coal combustion processes.

Advanced Technology Vehicles Manufacturing Facility conversion funding awards to automobile manufacturers and component suppliers to pay up to 30 percent of the cost of— Facility conversion funding awards to automobile manufacturers and component suppliers to pay up to 30 percent of the cost of— (1) reequipping or expanding an existing manufacturing facility to produce— (1) reequipping or expanding an existing manufacturing facility to produce— (A) qualifying advanced technology vehicles; or (A) qualifying advanced technology vehicles; or (B) qualifying components; and (B) qualifying components; and (2) engineering integration of qualifying vehicles and qualifying components. (2) engineering integration of qualifying vehicles and qualifying components. Period of Availability.— Period of Availability.— (1) facilities and equipment placed in service after the date of enactment of this Act and before January 1, 2016; and (1) facilities and equipment placed in service after the date of enactment of this Act and before January 1, 2016; and (2) engineering integration costs incurred after the date of enactment of this Act. (2) engineering integration costs incurred after the date of enactment of this Act.

Climate Change Worker Training Fund All funds deposited into the Climate Change Worker Training Fund are to be used by the Department of Labor: All funds deposited into the Climate Change Worker Training Fund are to be used by the Department of Labor: to provide quality job training to any workers displaced by this Act; to provide quality job training to any workers displaced by this Act; to provide assistance in the form of temporary wages and health care benefits to workers in training; to provide assistance in the form of temporary wages and health care benefits to workers in training; to transition workers into jobs created as a result of this Act; to transition workers into jobs created as a result of this Act; to provide skilled workers to enterprises developing and marketing advanced technologies and practices that reduce greenhouse gas emissions of the United States; and to provide skilled workers to enterprises developing and marketing advanced technologies and practices that reduce greenhouse gas emissions of the United States; and to provide funding for State worker training programs. to provide funding for State worker training programs.

Cellulosic Biomass Ethanol Technology Deployment incentives to encourage a variety of projects to produce transportation fuels from cellulosic biomass, relying on different feedstocks in different regions of the United States. Deployment incentives to encourage a variety of projects to produce transportation fuels from cellulosic biomass, relying on different feedstocks in different regions of the United States.

Global Competitiveness The Executive Branch is directed to intensify its efforts to convince other nations to start reducing their greenhouse-gas emissions. The Executive Branch is directed to intensify its efforts to convince other nations to start reducing their greenhouse-gas emissions. If a major emitting nation has not taken comparable action, the President can require importers of greenhouse-gas-intensive manufactured products (steel, aluminum, etc.) to submit credits equal to those required of US manufacturers. If a major emitting nation has not taken comparable action, the President can require importers of greenhouse-gas-intensive manufactured products (steel, aluminum, etc.) to submit credits equal to those required of US manufacturers.

Offsets Beginning with calendar year 2012, the owner or operator of a covered entity may satisfy 15 percent of the total allowance submission requirement by submitting offset allowances. Beginning with calendar year 2012, the owner or operator of a covered entity may satisfy 15 percent of the total allowance submission requirement by submitting offset allowances. Offset allowances must be generated by projects in the United States and can come only from certain agricultural, forestry, and other land use-related projects. Offset allowances must be generated by projects in the United States and can come only from certain agricultural, forestry, and other land use-related projects. The Administrator may identify other types of projects that can be used for offsets. The Administrator may identify other types of projects that can be used for offsets.