The Center for Climate and Energy Solutions seeks to inform the design and implementation of federal policies that will significantly reduce greenhouse gas emissions. Drawing from its extensive peer-reviewed published works, in-house policy analyses, and tracking of current legislative proposals, the Center provides research, analysis, and recommendations to policymakers in Congress and the Executive Branch. Read More
The most basic form of a market-based policy is a tax that sets a price on each unit of pollution. A tax on pollution provides an incentive for an entity to reduce the quantity of pollution produced by changing its processes or adopting new technology. Taxes on greenhouse gases (GHGs) can come in two broad forms: an emissions tax, which is based on the quantity of emissions an entity produces; and a tax on goods or services that are generally GHG-intensive (e.g. a carbon tax on gasoline).
A pollution tax differs from a cap-and-trade system in that the latter places a quantitative limit on emissions while the former places a limit on the price of the pollutant. Both policy instruments can be equally effective in reducing pollution.
Internationally, a number of countries, along with a number of local and regional governments, have implemented carbon taxes or energy taxes that are related to their carbon content. Most recently, in July 2012, Australia implemented a fixed price cap-and-trade program. This hybrid approach will operate essentially as a carbon tax at first, then in three years transition to a cap-and-trade program (under which price will fluctuate based on market supply and demand).
In the United States, the last several Congresses have seen the introduction of carbon tax proposals. Two proposals have been released to date in the current Congress (2013 – 2014). In February 2013, Senators Bernie Sanders (I-VT) and Barbara Boxer (D-CA) introduced the Climate Protection Act of 2013 (S. 332) proposal which would impose a “carbon pollution fee” on any manufacturer, producer, or importer of a “carbon polluting substance.” Revenue from this bill would be used to fund, among other things: rebates for all U.S. residents, investment in energy efficiency and renewable energies, deficit reduction, and weatherization of U.S. homes. In March 2013, Rep. Henry Waxman (D-CA) and Sen. Sheldon Whitehouse (D-RI) released a discussion draft of a carbon pollution fee bill.
There has been increased attention on a revenue neutral carbon tax as a way to pay for reductions in taxes on productive activities, such as income tax, or tax territoriality reform, and offsetting those reductions by taxing harmful activities. Recent studies estimate a $20 tax on carbon could raise between $1.2 to $1.5 trillion in the next ten years.
Neither Congressional leadership nor President Obama have expressed interest in a carbon tax. Nevertheless, the need for new revenues to address the looming fiscal shortfall may shape the discussion of a carbon tax in the current Congresses.
- Blog: Conservatives debate a carbon tax, June 20, 2013.
- Carbon Pricing Proposals of the 113th Congress, April 2013.
- Options and Considerations for a Federal Carbon Tax, February 2013.
- Market Mechanisms: Understanding the Options, March 2012.
- Australia's Carbon Price Mechanism, December 2011.
- Cap and Trade vs. Taxes. Climate Policy Memo, March 2009.
- Tax Policies to Reduce Greenhouse Gas Emissions. Congressional Policy Brief Series, November 2008.
- Joseph Aldy, and Robert N. Stavins, The Promise and Problems of Pricing Carbon: Theory and Experience, Discussion Paper (Washington, DC: Resources for the Future, 2011).
- The Economics of Carbon Taxes, American Enterprise Institute, Brookings Institution, International Monetary Fund, and Resources for the Future, last modified November 13, 2012.
- Introduction – What is a Carbon Tax?, Carbon Tax Policy Center, last modified December 12 2012.
- Congressional Budget Office, Effects of a Carbon Tax on the Economy and the Environment (Washington, DC: Congressional Budget Office, 2013).
- Terry Dinan, Offsetting a Carbon Tax's Costs on Low-Income Households, Working Paper 2012-16 (Washington, DC: Congressional Budget Office, 2012).
- Kevin A. Hassett, and Gilbert E. Metcalf, An Energy Tax Policy for the Twenty-First Century, AEI Online (Washington, DC: American Enterprise Institute, 2007).
- Donald Marron, and Eric Toder, Carbon Taxes and Corporate Tax Reform, (Washington, DC: The Urban Institute and Urban-Brookings Tax Policy Center, 2013).
- Aparna Mathur, and Adele Morris, Distributional Effects of a Carbon Tax in the Context of Broader Fiscal Reform, (Washington, DC: Brookings Institution, 2012).
- Warwick J. McKibbin, Adele Morris and Peter J. Wilcoxen, The Potential Role of a Carbon Tax in U.S. Fiscal Reform, (Washington, DC: Brookings Institution, 2012).
- Adele Morris, The Many Benefits of a Carbon Tax, The Hamilton Project (Washington, DC: Brookings Institution, 2013).
- National Research Council, Effects of U.S. Tax Policy on Greenhouse Gas Emissions (Washington, DC: The National Academies Press, 2013).
- Jonathan Ramseur, Jane Leggett, and Molly Sherlock, Carbon Tax: Deficit Reduction and Other Considerations, CRS Report for Congress R42731 (Washington, DC: Congressional Research Service, 2012).
- Sebastian Rausch, and John Reily, Carbon Tax Revenue and the Budget Deficit: A Win-Win-Win Solution?, Joint Program Report Series Report 228 (Cambridge, MA: Joint Program on the Science and Policy of Global Change, 2012).
- Fiscal Reform and Climate Protection: Considering a U.S. Carbon Tax, Resources for the Future and the Peterson Institute for International Economics, last access March 9, 2012.
- Robert N. Stavins, The Problem of the Commons: Still Unsettled after 100 Years, American Economic Review, 101(1):(2011): 81–108. DOI:10.1257/aer.101.1.81
While Americans bought nearly 18,000 PEVs last year, 2012 is the first full year when plug-in electric vehicles will be available nationwide. The long-term success of PEVs could bring some very real benefits to energy security, air quality, climate change, and economic growth.
Ridesharing: Context, Trends, and Opportunities
by Cynthia J. Burbank and Nick Nigro
March 6, 2012
Is enhanced oil recovery (EOR) the missing link in the United States' energy policy? During today's OnPoint, Judi Greenwald, vice president for technology and innovation at the Center for Climate and Energy Solutions and Robert Baugh, executive director of the AFL-CIO Industrial Union Council, outline the recommendations of the National Enhanced Oil Recovery Institute, a coalition of business and environmental groups. Greenwald and Baugh call on Congress to pass an enhanced oil recovery tax credit to spur innovation and growth in carbon capture and storage. They also address the environmental concerns associated with EOR. Click here to watch the interview.
Good afternoon. Thank you for joining us. I’m Eileen Claussen, President of C2ES, the Center for Climate and Energy Solutions. Some of you may have known us until recently as the Pew Center on Global Climate Change.
Judging from recent headlines, and from what you hear on the campaign trail, the biggest energy challenge facing America today is the rising price of a gallon of gas. And indeed, for many Americans, this is a genuine concern. But the reality – as I suspect you all know – is that there is virtually nothing that anyone at either end of Pennsylvania Avenue can do in the near term to bring prices down. Oil moves in a global market, and as long as oil remains a mainstay of our economy, we will be subject to its gyrations.
So the only real answer is to end our dependence on oil -- which of course is easier said than done. Even with our best possible efforts, weaning ourselves from oil will take not years, but decades -- which is all the more reason to get started on it right now.
We’re here today to talk about one part of the solution: plug-in electric vehicles. With PEVs, we now have a mass-produced alternative to the internal combustion engine. Depending on the model, PEVs either use no oil at all, or use it very sparingly. And, as they insulate their owners from rising gas prices, PEVs can deliver a whole range of other benefits as well.
By reducing our reliance on imported oil, they enhance our energy security. When they’re running on their batteries – which is all or most of the time -- they produce no tailpipe emissions, and that reduce local air pollution. If we can make real headway in decarbonizing our electricity supplies, PEVs can play a very significant role in reducing greenhouse gas emissions. And they present a genuine opportunity to put American industries and workers out front on a truly transformative technology.
So there are lots of reasons to like PEVs. And thanks in part to some help from Washington – including tax incentives enacted under the Bush administration, and investments under President Obama’s stimulus package – these cars are now in the showrooms and on the road. In their first year on the market, PEVs sold 50 percent better than hybrids did when they were first introduced. Nearly 10 companies already have models on the road, and over the next year or two, all of the major automakers will be offering them.
As GM can tell you, the PEV pathway is not without its bumps. But the same was certainly true for the internal combustion engine – and for so many other game-changing technologies that we now take for granted. For PEVs to take off – for them to truly deliver on their promise – we need to ramp up the effort. From the federal government, we need more support on the R&D side, in particular. But the real nuts-and-bolts challenges faced by PEVs are well outside Washington – and for the most part, so are the solutions. So that is where we at C2ES have chosen to focus our efforts.
It’s fairly obvious, I suppose, that if plug-in electric vehicles are to succeed, they need someplace to plug in. And creating that infrastructure – connecting plug-ins to the grid – involves a lot of different parties. It’s not just the consumers and carmakers. You need the electric utilities, which means you also need the state public utility commissions. You need the companies that make batteries and charging stations. You need people thinking about this from an environmental perspective. And you need them all working together.
That’s where we thought we could help. One year ago we convened the PEV Dialogue Group to bring together all of these interests. We said, let’s come up with a plan we can all agree on. And today, we are thrilled to be sharing with you the product of those efforts – An Action Plan to Integrate Plug-in Electric Vehicles with the U.S. Electrical Grid. A little later in the program, Judi Greenwald will give you a more detailed overview of the plan. In a nutshell, the plan provides a roadmap for coordinated action by the public and private sectors at the state and local level to ensure that PEV owners have a place to plug in – that they can conveniently charge their cars at home and on the road, without in any way compromising the reliability of the grid. It recommends ways to harmonize regulatory approaches across the country; balance public and private investments in charging infrastructure; and help consumers understand the benefits and choices offered by PEVs.
As I said earlier, we see this as just one part of the solution. On the transportation front, we need to keep pushing ahead with stronger fuel economy standards, and we need to be advancing other alternative fuels and technologies. At C2ES, for instance, we’re also looking at the options presented by natural gas.
But at a time of economic struggle, fiscal crisis and political gridlock, I believe this effort is an encouraging example of how we can and must make progress. Much as I would like to see comprehensive solutions to our climate and energy challenges, those don’t appear to be on the immediate horizon. But if we come at these issues one by one, look for opportunities where interests converge, and are open to compromise, we can arrive at practical solutions benefiting our economy and our environment.
This same approach delivered another success two weeks ago, when we announced recommendations from a coalition of industry, state, labor and environmental leaders to boost domestic oil production while reducing CO2 emissions. Another win-win. The opportunities are there, if only we seize them.
I want to thank all the members of PEV Dialogue Group for the hard work and dedication that brought us to this moment.
It’s been over a year since we assembled the Plug-in Electric Vehicle (PEV) Dialogue to work on the major market barriers to PEVs nationwide. Yesterday, we released the first product of this diverse and important group – An Action Plan to Integrate Plug-in Electric Vehicles with the U.S. Electric Grid.
We’ve talked in the past about how policies like fuel economy standards and technologies like PEVs, fuel cells, and advanced internal combustion engines are the key to reducing oil consumption and the impact our travel has on our environment. PEVs could play an important role in that effort, but only if they’re given a fair shot.
|C2ES's Nick Nigro interviews PEV Dialogue members, Watson Collins of Northeast Utilities and Zoe Lipman of National Wildlife Federation, about the PEV Action Plan. Listen to the podcast now.|
March 13, 2012
Contact: Tom Steinfeldt, email@example.com, 703-516-0638
Broad Coalition Offers Plan to Accelerate Adoption of Plug-In Electric Vehicles
C2ES-Led Group Recommends Strategies to Connect PEVs to the U.S. Electrical Grid
WASHINGTON, D.C. – A coalition including automakers, electric utilities, environmental groups, and state officials outlined joint recommendations today to accelerate the adoption of plug-in electric vehicles (PEVs) nationwide.
The PEV Dialogue Group, convened last year by the Center for Climate and Energy Solutions (C2ES), presented its recommendations at a Washington, D.C. event featuring remarks by group members from General Motors, Southern California Edison, the state of Michigan, and the Natural Resources Defense Council.
The group’s report, An Action Plan to Integrate Plug-in Electric Vehicles with the U.S. Electrical Grid, provides a roadmap for coordinated public and private sector action at state and local levels to ensure that PEV owners can conveniently plug in their cars without overtaxing the grid. It recommends steps to ensure compatible regulatory approaches nationwide, balance public and private investments in charging infrastructure, and better inform consumers about PEVs.
“With plug-in electrics, we now have a mass-produced alternative to the internal combustion engine,” said C2ES president Eileen Claussen. “This is a major opportunity to tackle both energy security and climate change, and to put American industries and workers out front on a truly transformative technology. But for PEVs to succeed, we need all the right parties working together. That’s what this plan is all about.”
Nearly 18,000 PEVs were sold in the United States last year; over the next year or two, all of the major automakers plan to have models on the road. Some PEVs like the Nissan Leaf rely entirely on battery power, while others like the Chevy Volt have small backup engines to extend their driving range.
Broad deployment of PEVs, which use little or no gasoline, can significantly reduce U.S. reliance on imported oil and curb harmful tailpipe emissions. If accompanied by the gradual decarbonization of U.S. electricity, PEVs can also significantly reduce emissions of greenhouse gases. But growth of the PEV market faces major challenges, including new infrastructure letting owners plug in at home and on the road while ensuring the reliability of the grid.
The PEV Dialogue Group’s Action Plan includes recommendations to:
- Encourage state public utility commissions and other policymakers to establish a consistent regulatory framework nationwide to harmonize technical standards; streamline the installation of household and commercial charging stations; and use electricity rate structures to promote charging at off-peak hours.
- Assist local policymakers and stakeholders in assessing local needs, developing tailored strategies, and optimizing public and private investment in charging infrastructure.
- Provide consumers with reliable information on the costs and benefits of PEVs and the choices among PEV technologies.
“Instead of policies that increase our addiction to oil, we need to provide Americans more transportation choices,” said Roland Hwang, transportation director at the Natural Resources Defense Council. “Putting millions of electric vehicles on the road will cut drivers’ fuel bills, help the auto industry, keep billions of dollars in the U.S. economy, and curb emissions of dangerous air pollutants. By working together across the political spectrum to enact this Action Plan, we can create a vibrant market for electric cars, restore U.S manufacturing leadership and create thousands of jobs.”
“The U.S. electrical grid is a national energy security asset and has the excess capacity, off-peak to support millions of electric vehicles right now,” said Edward Kjaer, director of PEV readiness, at Southern California Edison, a major electric utility. “With the PEV Action Plan, C2ES has spearheaded an important effort that will help us all use this critical domestic resource for transportation and begin to reduce this nation's dependence on imported oil."
“GM is glad to work with groups such as C2ES that are working to advance the adoption of electric vehicles through real-world best practices and stakeholder education,” said Michael Robinson, vice president of sustainability and global regulatory affairs at GM.
“It has been a pleasure to work with the other members of the PEV Dialogue Group and identify policies that will help seamlessly integrate plug-in electric vehicles with our electrical grid,” said Orjiakor Isiogu, a member of the Michigan Public Service Commission. “I look forward to continuing my work within the group and helping it properly balance the needs of electricity customers and the opportunity presented by PEVs.”
C2ES will work with the PEV Dialogue Group and others to promote implementation of the Action Plan. Over the coming months, C2ES is working with the Washington State Department of Transportation to advise transportation officials in seven states on steps to accelerate PEV adoption, and with the U.S. Department of Energy to support DOE-funded Clean Cities Coalitions working in dozens of communities across the country to develop local PEV deployment plans.
The Center for Climate and Energy Solutions (C2ES) is an independent non-profit, non-partisan organization promoting strong policy and action to address the twin challenges of energy and climate change. Launched in November 2011, C2ES is the successor to the Pew Center on Global Climate Change, long recognized in the United States and abroad as an influential and pragmatic voice on climate issues. C2ES is led by Eileen Claussen, who previously led the Pew Center and is the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.
PEV Dialogue Group Participants
- A123 Systems
- Argonne National Laboratory
- Alliance of Automobile Manufacturers
- Better Place
- Center for Climate and Energy Solutions
- City of Raleigh, NC
- U.S. Department of Energy
- Edison Electric Institute (EEI)
- Electric Drive Transportation Association (EDTA)
- Electrification Coalition
- Electric Power Research Institute (EPRI)
- General Electric
- General Motors
- Georgetown Climate Center
- Indiana Utility Regulatory Commission*
- Johnson Controls Inc.
- Metropolitan Washington Council of Governments
- Michigan Public Service Commission*
- National Wildlife Federation
- North Carolina Department of Transportation
- Northeast Utilities System
- Natural Resources Defense Council
- NRG Energy
- PJM Interconnection
- Rockefeller Brothers Fund
- Rocky Mountain Institute
- Southern California Edison
- U.S. Department of Transportation
- University of Delaware
- Washington State Department of Transportation
*The role of these group members must be limited to technical contribution because of their organizational function.
An Action Plan to Integrate Plug-in Electric Vehicles with the U.S. Electrical Grid
Americans purchased almost 18,000 plug-in electric vehicles (PEVs) in 2011, a strong first year for these transformative vehicles. Recently, private industry and government have invested valuable resources in developing, promoting, and deploying PEVs. These vehicles offer an uncommon opportunity to address energy security, air quality, climate change, and economic growth. However, market growth is uncertain due to policy, economic, and technical challenges, and other advanced vehicle technology may prove more popular with consumers over time. There are steps that can be taken now, however, to meet some of these challenges and ease adoption of PEVs nationwide. In An Action Plan to Integrate Plug-in Electric Vehicles with the U.S. Electrical Grid, the PEV Dialogue Group lays out some of these critical steps needed to enable a robust national PEV market.
With PEVs’ important opportunities and challenges in mind, the Center for Climate and Energy Solutions (C2ES) convened the PEV Dialogue Group—a unique, diverse set of stakeholders composed of leaders from the public and private sectors along with non-governmental organizations. The Group developed an Action Plan to fill gaps in the existing work on PEVs using a consensus process that aimed to optimize public and private investments and avoided favoring certain PEV technology.
|C2ES convened the PEV Dialogue Group in early 2011 to create an Action Plan that identifies many of the steps that would be necessary to integrate PEVs with the electrical grid nationwide.|
The Group believes PEVs could be an important part of the vehicle market in the United States and worldwide if they are given a fair chance to compete with conventional vehicles. The Group identified a series of market-based actions for all stakeholders that foster innovation, minimize public cost, educate consumers, and maintain electrical grid reliability.
The Group began by identifying key challenges and objectives that existing PEV efforts have not addressed adequately, such as integrating PEVs with the electrical grid. The Group did not focus on reducing vehicle upfront cost directly, since federal and state tax credits are already in place. The Group then held a series of face-to-face meetings to hash out the details of the Action Plan over the course of one year. The plan represents a unique and valuable contribution to the national conversation on PEVs by identifying practical steps that policymakers, regulators, local and state officials, private market participants, and others should consider as PEVs become more broadly available in the coming years.
The plan recommends specific actions in four categories summarized below:
- Create a Consistent Regulatory Framework Nationwide: Regulations by state public utility commissions that are compatible across the country can help foster innovation and increase the PEV value proposition while also maintaining the reliability of the electrical grid.
- Optimize Public and Private Investments in Charging Infrastructure: There are opportunities to accelerate private investment, encouraging innovative business models while also acknowledging that PEVs warrant some public investment in charging infrastructure.
- Facilitate PEV Rollout: Connecting stakeholders to provide a satisfactory PEV and electric vehicle supply equipment (EVSE) purchase and home EVSE installation is a necessary step to seal the deal once a consumer commits to purchasing a PEV.
- Educate Consumers: Explaining the PEV value proposition and bridging the consumer information gap about PEV technology can be accomplished through a combination of cutting-edge online resources and traditional touch-and-feel experiences.
The Action Plan represents Phase I of a larger initiative to pave the way for PEV adoption nationwide by helping level the playing field. Phase II aims to work with stakeholders “on the ground” to go about implementing the Action Plan with leaders across the country.
The table below provides an overview of the Action Plan, which is fleshed out in great detail in the body of the report. Next to each action component are a number of individual actions or the principles for the individual actions. Many activities for these actions can occur concurrently. Businesses, electric utilities, government, and non-governmental organizations (NGOs) will all play a role in each action component.
Create a Consistent Regulatory Framework Nationwide
Optimize Public & Private Investments of Charging Infrastructure Regarding Location, Amount, & Type
Facilitate PEV Rollout
Create a Consistent Regulatory Framework Nationwide
- Residential & Commercial EVSE Installation: Stakeholders should jointly create a competitive and innovative market for residential and commercial PEV charging services. Decisions by Public Utility Commissions (PUCs), local government, and PEV service providers regarding household EVSE installation should streamline the installation process. Regulations should reflect the local characteristics of markets, potential PEV users, PEV service providers, and electric utilities.
- Residential & Commercial Electricity Rate Structure: Stakeholders should work together to determine electricity rate structures that maintain the reliability of the electrical grid and reward households for charging PEVs at off-peak hours. Rate structures should offer households choices, including options that better reflect the cost of electricity generation.
- Transportation Infrastructure Finance: Stakeholders should work together to determine how PEV owners can pay their fair share of transportation infrastructure maintenance. Permanent or temporary methods should be implemented in a way that does not affect PEV market growth before PEVs have a noticeable impact on tax revenue for a state.
- Vehicle Charging Standards: Voluntary standards bodies should work together, with the assistance of stakeholders, to develop vehicle charging standards and best practices related to the vehicle charging connector, PEV interconnection and communication with the electrical grid, and EVSE installation.
- Protecting Consumer Privacy: Stakeholders should ensure that individual identity is impossible to glean from data collected from EVSE and vehicles released to NGOs, government, and other researchers while also maintaining the usefulness of these data for researchers.
Optimize Public and Private Investments in Charging Infrastructure
- Assess PEV Feasibility: Stakeholders should cooperatively develop a method to assess the suitability of deploying PEVs in a geographic area and share this information with area governments.
- Estimate Charging Equipment and Infrastructure Needs: Stakeholders should collaborate to estimate charging equipment and infrastructure needs in a geographic area based on the expected PEVs in an area, travel patterns, and area geography.
- Estimate the Extent of Public Investment in EVSE: Stakeholders should work together to estimate the amount of public investment in an area that is appropriate to overcome existing market deficiencies.
Facilitate PEV Rollout
Expedite EVSE Home Installation: Stakeholders should design an expedited EVSE home installation process. A locality can speed up permitting and inspection processes to reduce overall installation time. Localities can also promote training, best practices as identified by early-action cities, and guidelines for electrical contractors. PUCs and electric utilities should provide assistance when creating this process to ensure regulatory compliance. Steps should also be taken to encourage utility notification about EVSE installation.
- Remove Market Barriers for EVSE Service Providers: Stakeholders should cooperatively remove local and state market barriers for PEV service providers. Legal and regulatory hurdles that prevent a PEV service provider from competing in an area could exist. PEV service providers should identify local and state barriers that prevent them from introducing their product in a market. They should work together with automakers, PUCs, and local and state government to clear those barriers and facilitate new market introduction. Local and state government should encourage the training of inspectors and electrical contractors on all aspects of EVSE installation. Face-to-face meetings between PEV service provider representatives and government officials can begin this process.
- Create Tools to Help Consumers Understand PEV Value Proposition: The value proposition PEVs provide includes tangible operational cost savings such as lower fuel and maintenance costs throughout the vehicle’s lifetime. In the short term, however, consumers may find non-financial benefits more valuable, like the driving experience or the statement driving a PEV conveys. Since consumers attain most of their information about vehicles online, stakeholders should cooperate on unbiased web tools that accurately communicate the PEV value proposition.
- Close the PEV Technology Information Gap: The focus of an effort to close the technology information gap should be to increase PEV publicity, develop web tools on PEV technology, and improve stakeholder outreach. Stakeholders should develop engaging and sophisticated web tools to educate consumers about the difference between PEVs, other alternative vehicles, and conventional vehicles. While consumers obtain most of their information about vehicles online, there is no replacing test drives and other valuable hands-on experiences.
Consumers will ultimately decide whether PEVs will succeed or not in the vehicle marketplace. The inaugural year indicates there is strong consumer interest, but the number of early adopters and the ability of PEVs to reach the mainstream consumer are still uncertain. The benefits PEVs provide warrant action by relevant stakeholders to level the playing field in order to provide a fair chance for these vehicles to compete with conventional vehicles. Implementing the steps laid out in the PEV Dialogue Group’s Action Plan will enable a more viable transition to a nationwide PEV market.
Statement of Eileen Claussen
President, Center for Climate and Energy Solutions
March 1, 2012
From Texas to Ohio to California, 31 states have shown that a clean energy standard for electricity benefits both the economy and the environment. It can diversify our energy supplies, build homegrown industries, sharpen our competitive edge in the global clean tech market, and curb pollution that damages health and contributes to climate change. Sen. Bingaman’s Clean Energy Standard Act of 2012 presents an opportunity to achieve these benefits nationwide. The bill builds on these state-level successes, President Obama’s call for a federal clean energy standard, and earlier proposals from both sides of the aisle.
The Center for Climate and Energy Solutions has closely studied the issues and options in designing a federal clean energy standard. Congress faces some difficult questions: Do we focus on renewable energy only, or do we try to advance nuclear power and lower-carbon uses of fossils fuels as well? Do we set a performance goal and let the market decide how best to achieve it, or do we specify particular technologies in order to guarantee diversity of energy sources? How do we reward state leadership while putting all regions of the country on an equal footing?
There are important balances that must be struck, questions that must be resolved, and we shouldn't pretend that resolving them will be easy. But we must try. Maintaining a diverse energy supply, getting the United States into the international race for clean energy, curbing pollution -- these are challenges we must meet, and ignoring them won't make them go away.
Striking the right balance will require real effort by all sides, and Sen. Bingaman’s bill is an excellent place to start. We hope it launches a vital and constructive national conversation about how best to ensure reliable and affordable electricity for our country while tackling climate change. C2ES applauds Sen. Bingaman and the bill’s cosponsors, and looks forward to working with them, their colleagues and other stakeholders to move this forward.
For more information, view our Clean Energy Standards Resource page.
Contact: Rebecca Matulka, 703-516-4146, firstname.lastname@example.org
This document summarizes the Clean Energy Standard Act of 2012 of the 112th Congress, as introduced by Senator Jeff Bingaman (D-NM) on March 1, 2012.
Sec. 1. Short Title.
This Act may be cited as the “Clean Energy Standard Act of 2012.”
Sec. 2. Clean Energy standard.
This section adds a new section at the end of Title IV of the Public Utility Regulatory Policies Act of 1978:
“Sec. 610. Federal Clean Energy Standard.
This section creates a federal clean energy standard through regulations promulgated within 1 year of enactment.
Clean energy is defined to mean electricity generated:
- At a facility placed in service after December 31, 1991 using –
- renewable energy (solar, wind, ocean, current, wave, tidal, or geothermal);
- qualified renewable biomass produced in an ecologically sustainable manner;
- natural gas (includes coal mine methane), hydropower;
- nuclear power;
- qualified waste-to-energy (energy produced from the combustion of post-recycled municipal solid waste, biogas, landfill methane, animal waste or animal byproducts, or other biomass that has been diverted from or separated from other waste out of a municipal waste stream);
- At a facility placed in service after enactment of this section using –
- qualified combined heat and power (CHP) that uses the same energy source for the simultaneous or sequential generation for electricity energy and thermal energy; and generates at least 20 percent of its useful energy as electricity and 20 percent of its useful energy as heat. The energy efficiency of a combined heat and power system shall be determined in according with Sec. 48(c)(3)(C)(i) of the Internal Revenue Code of 1986;
- a source of energy, other than biomass, with lower annual carbon intensity than 0.82 metric tons of carbon dioxide (CO2) equivalent per megawatt-hour (MWh);
- Qualified efficiency improvements or quality additions means efficiency improvements or capacity additions made after December 31, 1991 to a nuclear or hydropower facility placed in service before December 31, 1991. The efficiency and capacity additions for hydropower shall be measured on the basis of the same water flow information that is used to determined the historic average annual generation and certified by the Secretary or the Commission.
- At a facility that captures and prevents the release of CO2 into the atmosphere.
Clean Energy Requirements
Starting in 2015, each electric utility that sells electricity to consumers will be required to obtain a minimum percentage of the electricity they sell to consumers in a calendar year from clean energy, as specified below:
Minimum Annual Percentage
An electric utility may deduct the amount of electricity sold from nuclear or hydropower facilities placed in service on or before December 31, 1991, from their overall sales amount before calculating the percentage of clean energy needed for that year.
Means of Compliance
To comply with the standard, utilities are required to submit clean energy credits (CECs) to the Secretary of Energy, make an alternative compliance payment of 3.0 cents per kilowatt-hour in 2015, or some combination of the two to ensure compliance.
Federal Clean Energy Trading Program
Within 180 days after enactment of this section, the Secretary is directed to establish a Federal clean energy trading program by which electric utilities may submit clean energy credits to demonstrate compliance under this section.
CECs can only be used once for the purposes of compliance, but can be sold, transferred, or traded. CECs may banked indefinitely.
The Secretary may delegate to one or more appropriate market-making entities the creation and administration of a transparent, national credit market. Appropriate entities may also be delegated the tracking of dispatch of renewable generation.
Determination of quantity of credit
The quantity of CECs issued to each electric utility generating electricity in the United States from clean energy is equal to the product of:
For each generator owned by a utility, the number of MWhs of electricity sold from that generator by the utility; and the difference between 1.0 and the quotient obtained by dividing the annual carbon intensity of the generator, expressed in metric tons per megawatt-hour by 0.82
The carbon intensity of the generator is measured in terms of metric tons of CO2 per MWh of electricity generated.
In general, no generator is issued negative CECs.
The quantity of CECs issued to an owner of a qualified combined heat and power system in the United States is equal to the difference between:
The product obtained from multiplying the number of MWhs of electricity generated by the system, and the difference between 1.0 and the quotient obtained by dividing the annual carbon intensity of the generator by 0.82; and the product obtained by multiplying the number of MWhs of electricity generated by the system that are consumed onsite by the facility and the annual clean energy requirement for the calendar year.
In addition, qualified combined heat and power systems are awarded additional credits for (GHG) emissions avoided as a result of using a qualified combined heat and power system, rather than a separate thermal source, to meet onsite thermal needs.
Qualified waste-to-energy facilities are awarded 1.0 CEC per MWh of electricity generated by the facility and sold by the utility.
Determination of annual carbon intensity of generating facilities
The Secretary determines the annual carbon intensity of generating facilities by dividing the net annual CO2-equivalent emissions of the generator by the annual quantity of electricity generated by the generator.
Within 180 days after enactment of this section, the Secretary, in consultation with the Administrator of the Environmental Protection Agency, shall issue interim regulations for determining the carbon intensity of each significant source of qualified renewable biomass.
The Secretary shall also commission the National Academy of Science to evaluate and report on the net GHG emissions associated with generating electricity from each significant source of qualified renewable biomass, including evaluation of additional sequestration or emissions associated with changes in land use by the protection of biomass, and provide recommendations for determining the carbon intensity of electricity generated from qualified biomass.
This study is to be completed within one year. The Secretary shall take the findings into account, and consult the Administrator of the EPA, Secretary of Agriculture, and Secretary of Interior, to issue final regulations determining the carbon intensity for qualified biomass within 180 days after the publication of the study.
An electric utility that fails to meet its annual clean energy requirements is subject to a civil penalty of 200 percent of the alternative compliance payment for each kilowatt-hour sold to consumers in violation of the requirement.
The Secretary may mitigate or waive the civil penalty if the electric utility failure to comply is determined to be out of reasonable control of the utility. The Secretary shall reduce the amount of the penalty by the amount paid by the electric utility to a State for failure to comply with a State renewable energy program, if the State requirement is more stringent than the federal clean energy standard.
The Secretary may asses a civil penalty in accordance with Sec. 333(d) of the Energy Policy and Conservation Act (42 U.S.C. 6303(d)).
Alternative Compliance Payment
An electricity utility may satisfy its requirement, in whole or in part, by submitting in lieu of a CEC, a payment at the level of that year’s alternative compliance payment.
State Energy Efficiency Funding Program
The Secretary shall establish a State energy efficiency funding program no later than December 31, 2015. All funds collected as alternative compliance payments or civil penalties shall be used solely to carry out this program.
In general, seventy-five percent of the funds in the State energy efficiency program shall be used by the Secretary, without further appropriations or fiscal year limitations, to provide funds to States to implement their energy efficiency plans under Sec. 362 of the Energy Policy and Conservation Act (42 U.S.C. 6322), in accordance with the proportion of those amounts collected by the Secretary from each State.
A State that receives funds under this program shall maintain records and evidence of compliance as required by the Secretary. The Secretary may, as determined to be appropriate, issue additional guidelines and criteria under this program.
In 2015, electric utilities that sold less than 2 million MWh in the previous calendar year are exempted from compliance under this section. The sales threshold for exemptions decreases by 100,000 MWh per year until it reaches 1 million MWh in 2025. The threshold remains 1 million MWh after 2025.
For the purpose of calculating electricity sold in determining exemption, the quantity of electricity sold by an affiliate of the electric utility or an associate company (as defined in Sec. 1262 of the Energy Policy Act of 2005 (42 U.S.C. 16451)) shall be treated as sold by the electric utility.
The establishment of a federal CES does not affect the authority of a State to regulate electric utilities or implement other clean or renewable energy laws or regulations. The Secretary shall coordinate between the federal CES and relevant state programs.
Adjustment of Alternative Compliance Payments
Starting annually no later than December 31, 2016, the Secretary shall increase by five percent the rate of the alternative compliance payment, and as the Secretary determines necessary, adjust that for the rate of inflation.
Report on Clean Energy Resources That Do Not Generate Electric Energy
The Secretary is to submit a report to Congress within three years on mechanisms to supplement this section by examining the benefits and challenges of integrating clean energy resources that do not generate electricity as credited resources but may substantially reduce energy loads (including energy efficiency, biomass converted to thermal energy, geothermal energy collected using heat pumps, thermal energy delivered through district heating systems, and waste heated used as industrial process heat), or through the implementation of complementary policies.
The report may provide legislative recommendations for changes to the federal CES established under this section or new complementary policies that would provide effective incentives for using additional clean energy resources.
This section does not apply to electric utilities located in Alaska or Hawaii.
“Sec. 611. Report on Natural Gas Conservation.
This section requires that within two years after the date of enactment, the Secretary must submit to Congress a report quantifying the losses of natural gas during its production and transportation, and make appropriate recommendations for programs and policies to achieve conservation of natural gas for beneficial use.