Comparing the Renewable Energy Provisions, Including Nuclear, Clean Coal, and Off-Shore Oil and Gas, in Kerry-Lieberman and Waxman-Markey

by Marne Sussman

This blog post discusses the renewable energy provisions in the Kerry-Lieberman bill (KL), including provisions for nuclear energy, clean coal technologies, and off-shore oil and gas, and compares them to similar provisions in the Waxman-Markey bill (WM). Title I starting on page 14 of the KL discussion draft is titled “Domestic Clean Energy Development”. This encompasses Subtitle D “Renewable Energy and Energy Efficiency” starting on page 187, Subtitle A “Nuclear Power” starting on page 14, Subtitle C “Coal” starting on page 76, and Subtitle B “Off-Shore Oil and Gas” starting on page 60.

Title I of WM is entitled “Clean Energy” and starts on page 12 of the bill. It covers similar topics including Subtitle A “Combined Efficiency and Renewable Electricity Standard” on page 12, Subtitle I “Nuclear and Advanced Technologies” on page 265, and Subtitle B “Carbon Capture and Sequestration” on page 56.

Kerry-Lieberman Renewable Energy and Energy Efficiency

The renewable energy section of KL states that the Administrator shall distribute allowances allocated pursuant to § 781(c)(5)(C) of the Clean Air Act (CAA) to Indian tribes and States to carry out renewable energy and energy efficiency programs. The allowances are to be used for: energy efficiency purposes, including programs for energy efficient buildings and manufactured homes, building energy performance labeling, low income community improvements, and retrofits of existing buildings; renewable energy purposes, including deployment of technologies to generate electricity from renewable sources and deployment of equipment such as solar panels to generate electricity on buildings in an urban environment; cost effective energy efficiency programs for consumers of electricity, natural gas, home heating oil, or propane; enabling the development of a Smart Grid; and providing the non-Federal share of support for surface transportation capital projects. (§1603)

The bill also states that it is the policy of the U.S. to support the continued growth of voluntary renewable energy markets and that nothing in the act is intended to interfere or prevent the continued operation and growth of such markets. (§1604)

Compared to Waxman-Markey Combined Efficiency and Renewable Electricity Standard

In comparison to KL’s mere support of renewable energy and voluntary markets, WM sets a stringent federal standard for the use of renewable energy. Title I, Subtitle A, § 101 requires retail electric suppliers – utilities that sell more than 4 million MWh of electricity – to meet 6% of their load with electricity from renewable resources and electricity savings by 2012 and 20% by 2020. Up to one-quarter of the requirement may be met with electricity savings. Upon petition of any state Governor, the Federal Energy Regulatory Commission can increase that proportion up to two-fifths.

Retail electric suppliers must submit Federal renewable electricity credits and electricity savings each year equal. One renewable electricity credit is given for each MWh of electricity produced from a renewable resource. Certain projects, such as small wind and rooftop solar, are eligible for three credits for each MWh produced. In lieu of credits and energy savings, suppliers may submit a payment of $25 per MWh. States with preexisting renewable electricity standards that rely on state procurement of credits can assume responsibility for meeting the federal standards on behalf of retail suppliers.

WM also establishes a renewable electricity standard for federal agencies requiring 6% from renewable and other qualifying resources by 2012 and 20% by 2020. (§ 103)

Kerry-Lieberman Nuclear Power

KL’s nuclear provisions focus on establishing expedited construction and operating licenses for new nuclear reactors and developing technology neutral guidelines for plant licensing to allow for new technology to more easily enter the marketplace. (§ 1101) The provisions require the Secretary to designate a National Laboratory as a spent fuel recycling research and development center (§ 1104) and to research how to lower the cost of nuclear reactor systems (§ 1107).

KL also has multiple tax provisions relating to nuclear power including an investment tax credit for facility construction (§ 1122), the inclusion of nuclear power facilities in the advanced energy project credit (§ 1123), and grants to reimburse 10% of the facility expenditures for placing in service a qualified nuclear power facility (§ 1126).

Compared to Waxman-Markey Nuclear and Advanced Technologies

In comparison to KL, Title I, Subtitle I, §§ 181-191 of WM focuses less on government participation and research in the nuclear field and more on raising money to promote clean energy technologies in the private sector. WM establishes the Clean Energy Deployment Administration (CEDA) as an independent corporation owned by the U.S. government to promote the development and deployment of clean energy technologies. CEDA would partner with and support private capital markets to promote access to affordable financing for clean energy technologies that otherwise would be unable to secure financing. The initial capitalization of CEDA would occur through green bonds.

Kerry-Lieberman Coal

KL requires a report establishing a strategy to address legal, regulatory, and other barriers to the commercial-scale deployment of carbon capture and storage (CCS). (§ 1401) It establishes a task force to study geological storage sites for CO2 and requires a study of environmental laws that would apply to CO2 injection and geological storage. (§ 1402)

KL also creates a special funding program for the development and deployment of CCS if at least 30 states approve. (§ 1412) The program would support projects to accelerate the commercial availability of CCS technologies (§ 1414) and would be funded by an assessment on all fossil fuel-based electricity sold to consumers. (§ 1415)

The bill also allows for the distribution of emission allowances to support the commercial deployment of CCS technologies. To receive an allowance, a project must implement CCS technology at a qualifying electric generating unit or industrial source that will achieve emission limitations of at least 50% of CO2 produced, geologically sequester CO2 at a site that meets permitting requirements or convert CO2 to a stable form that will permanently sequester it, meet all other permitting requirements, and be located in the U.S. (§ 1431)

Finally, KL amends the CAA to add new performance standards for coal-fired power plants. (§ 1441)

Compared to Waxman-Markey Carbon Capture and Sequestration

The coal regulations in WM closely mirror those in KL. Title I, Subtitle B requires the Administrator to complete the same report on barriers to CCS as in KL (§ 111) and conduct the same study on sequestration sites and the effect of environmental laws on sequestration (§ 113). WM goes further than KL and requires a coordinated approach to certification and permitting of sites for geological sequestration and the promulgation of regulations to minimize the risk of escape of CO2 injected for sequestration. (§ 112)

Like KL, WM creates a funding program in corporate form to demonstrate and deploy CCS technologies but it is created by an affirmative vote of two-thirds of fossil-based electricity utilities, not the vote of states. The corporation may collect assessments on utilities for all fossil-fuel based electricity delivered to consumers with funds used to support large-scale demonstration of CCS technologies to accelerate commercial availability. (§ 114)

WM also establishes an incentive program to distribute allowances to support the commercial deployment of CCS technologies (§ 115) and amends the CAA to establish performance standards for new coal-fired power plants. (§ 116)

Kerry-Lieberman Offshore Oil and Gas

KL suggests that Congress consider: a moratorium on new drilling until the cause of the recent explosion is determined, mechanisms that ensure adequate funds for accidents, new safety measures, new investments in preparedness, education, and training, studies to assess the effects of spill procedures, the ability of States to veto drilling, revenue sharing with States, and investment of revenues to protect oceans and coastal areas. (§ 1201) Further sections delineate revenue sharing with States for outer continental shelf areas (§ 1202) and Alaska (§ 1203), give States the right to prohibiting leasing within 75 miles of the coastline (§ 1204), and require impact studies for certain drilling areas (§ 1205).

Compared to Waxman-Markey

WM does not mention offshore oil and gas.