Four U.S. Senators Introduce Economic Relief Plan For U.S. Carbon Market With Assistance From Duke University’s Nicholas Institute
Nicholas Institute Director Tim Profeta to testify at Environment and Public Works Subcommittee hearing on proposal at 2:30 p.m. July 24
July 24, 2007
Contacts: Nicole St. Clair Knobloch, (202) 797-6501, nicole.stclair@duke.edu; or Tim Profeta, (703) 346 – 4998, tim.profeta@duke.edu.
WASHINGTON, D.C. – A bipartisan group of U.S. Senators considered critical to the passage of legislation to limit U.S. greenhouse gas emissions today offered a proposal to reduce costs and provide oversight to the new emissions permit trading market. The plan was developed jointly with the Nicholas Institute for Environmental Policy Solutions of Duke University.
Senators Mary Landrieu (D-La.), Lindsey Graham (R-S.C.), Blanche Lincoln (D-Ark.) and John Warner (R – Va.) introduced a bill to minimize any negative economic impacts to consumers and industry of the transition to a lower-carbon economy while achieving critical environmental goals. The bill is designed to be incorporated into broader climate change legislation.
The Senate offices discussed the proposal in a press conference call at 11:30 a.m. July 24.
Nicholas Institute Director Tim Profeta is scheduled to testify on the proposal at hearing of the Senate Environment and Public Works global warming and wildlife, co-chaired by Warner and Sen. Joseph Lieberman (I-Conn.) at 2:30 p.m. July 24 in 406 Dirksen Senate Building room.
Concerns about containing costs have been a stumbling block for the passage of legislation to reduce U.S. greenhouse gas emissions. The new proposal focuses on providing the market with flexibility to help reduce costs. It offers two measures to relieve excessively high costs that would indicate a scarcity of low-carbon options.
The first measure is to expand companies’ ability to borrow permits against future year reductions.
The second measure, to be used if high prices are not relieved by the first measure, is to add a slightly larger number of permits to the market. This temporary increase would be compensated for by reducing available permits in a later year, when more options have been developed.
The measures would be implemented by a Carbon Market Efficiency Board, which would oversee what is estimated to be a multi-billion dollar emissions trading market. The board would operate much like the Federal Reserve Board, providing information on price and low-emission technology investment trends to Congress and the public, and it would employ cost-relief measures when a market correction is needed.
“If we are going to succeed with reducing U.S. greenhouse gas emissions, we have to understand the major economic responsibility and opportunity we have here. This proposal aids the economy while securing the environmental goal, which in turn provides certainty for investment in low-carbon solutions,” said Profeta.
None of the four senators who introduced the bill today has voted for climate change legislation to date, though Warner recently announced that he and Lieberman would begin drafting legislation drawing on other bills. The two are likely to include this proposal as a part of that legislation.
The senators’ plan assumes that the “cap and trade” legislation it would amend will contain elements of flexibility that can help the market avoid excessive costs, including allowing companies to bank emissions permits, or borrow emissions permits from future years, allowing pollution offsets. Landrieu, Graham, Lincoln and Warner all voted in favor of the 2005 Sense of the Senate resolution recommending mandatory limits on greenhouse gas emissions. That resolution required any climate change legislation to avoid “significant harm” to the economy.
A Nicholas Institute white paper describing the proposal is available online >
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