Details of a cap and trade system that would be used to regulate the emissions of green house gases in the United States are incorporated in Title III of the American Clean Energy and Security (ACES) Act. This bill was narrowly approved by the House of Representatives on 26th June and will now proceed to the Senate for review. If passed (possibly as a companion bill), details will have to be reconciled with the ACES Act before a final vote in both chambers and signature by President Obama. It seems unlikely that this process will be completed before December when the US will attend concluding negotiations in Copenhagen for a post-2012 extension to the Kyoto protocol.
Elements of the Act include:
- The regulation of seven greenhouse gases (GHGs): carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3).
- The registration of installations that emit more than 25,000 tons per year of GHGs, as well as refineries, importers of petroleum fluids, distributors of natural gas, commercial users, small industrial users and producers of fluorinated (F-) gases.
- The capping of emissions so that the aggregate value for all entities covered by the scheme will be 3% below their 2005 level in 2012 and 17% lower by 2020. Increasingly ambitious targets are set for 2030 and 2050.
- An initial auction of 20% of allowances, but businesses that are energy intensive or exposed to trade with nations that have not implemented an emissions scheme, as well as producers of merchant coal and oil refineries will be allocated allowances at no cost.
- Permits for use as offsets - this includes 1 billion tons of emissions from domestic sources and 1 billion from international sources.
Whilst subject to many detractors (even those in camps that one would have expected some support from), the Act does constitute the United States' first real attempt to engage in the GHG arena. For further commentary, see the following article from Foley Hoag and web pages managed by ClimateIntel on developments in US legislation and the Pew Center on the ACES Act.