U.S. climate and energy bill

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For anyone interested in what’s happening in the U.S. with respect to energy and climate legislation, a summary of the Waxman-Markey bill is available here.

So far reviews are mixed. Greenpeace sees it as a (timid) step in the right direction.

The draft bill, endorsed by the Obama administration, is broad in its scope. On the cap-and-trade front, it would establish a market-based program aimed at reducing global warming pollution from electric utilities, oil companies, large industrial sources, and other covered entities — together deemed responsible for 85% of U.S. global warming emissions. These entities would have to acquire “allowances” for each ton of pollution emitted into the atmosphere. Entities emitting less than 25,000 tons per year of CO2 equivalent would be exempt. Over time, the number of available allowances issued each year would be reduced to ensure that overall emissions from targeted entities are reduced by 20% below 2005 levels in 2020 (and 83% below 2005 levels in 2050).

That said, entities could increase their emissions above their allowances, provided they obtain “offsetting” reductions from other sources. The total amount of offsets (from domestic and international sources) per year could not exceed 2 billion tons, “a virtually unlimited amount equal to a quarter of all U.S. emissions,” according to Greenpeace.

On the plus side, targeted entities using offsets would have to purchase 5 tons of offsets to substitute for 4 tons of actual emissions reductions. International offsets would not be allowed from countries that have not agreed to reduce their emissions. Interestingly, Peter Wood points out that the 20% reduction on 2005 levels target in Waxman-Markey is an improvement on the “1990 levels by 2020″ target that Obama campaigned on. Wood estimates that it will amount to a 7% reduction on 1990 levels by 2020. That way, the US would achieve its Kyoto target by 2020 instead of 2010.