Analysis of Kerry-Boxer Clean Energy Jobs and American Power Act S. 1766

1. Analysis of Kerry-BoxerClean Energy Jobs and American Power ActS. 1766 Gregory M. Adams Los Angeles Sanitation Districts October 22, 2009

2. Waxman-Markey vs. Kerry-Boxer Structural Differences: HR 2454 incorporates ~ 600 pages of energy bill changes while S. 1733 handled those provisions in S. 1462 through Senator Jeff Bingaman’s Energy and Natural Resources Committee Kerry-Boxer (S. 1733) Division A (Pollution Reduction, Transition and Adaptation) contains 3 Titles Title I - Greenhouse Gas Reduction Programs Title II - Research Title III -Transition and Adaptation Division B (Pollution Reduction and Investment) contains 2 Titles Title I - Reducing Global Warming Pollution (adds Title VII to the CAA) Title II - Program Allocations Baseline Year in S. 1733 for emissions reductions is 2005 vs. 2002 for Waxman-Markey hence considered more restrictive.

3. Division A - Authorization for Pollution Reduction, Transition, and AdaptationTitle I - Greenhouse Gas Reduction Programs • Subtitle D - Water Efficiency; Section 141 – WaterSense: This is basically a voluntary labeling program for highest performance water-efficient products, processes or services; specifically mentions the reduction of strain on water and wastewater infrastructure as a goal. [119] • Section 143 - State Residential Water Efficiency and Conservation Incentives Program: Establishes a grant program where allocation-eligible entities (includes wastewater or sewerage utility and municipal water authorities) establish financial incentive programs for their residential consumers for the purchase of residential water-efficient products, processes, buildings, landscapes or services. [129] • Title I, Subtitle F - Energy Efficiency and Renewable Energy: Section 161 (Renewable Energy) definition includes biomass and landfill gas and municipal solid waste but not digester gas or biosolids. The Administrator may provide grants, presumably to project developers, in states with binding renewable portfolio standards, up to 50% of the total cost of a renewable energy project. [168] • Section 162 - Advanced Biofuel: The Administrator must create a definition for “advanced biofuel” that we should weigh in on but otherwise, this is a grant program to support research and development of advanced biofuel projects. [171] • Section 163 - Energy Efficiency in Building Codes-Requires energy efficient residential and commercial building codes by 1/1/2014 (very similar to Waxman-Markey). [173]

4. Division A Title I - (Continued) • Section 164 - Retrofit for Energy and Environmental Performance (REEP): The purpose of the REEP program is to facilitate the retrofitting of existing buildings across the U.S. to achieve maximum cost-effective energy efficiency improvements and significant improvements in water use and other environmental attributes. Local governments can be used to carry out the grant work providing up to 50% of the cost of retrofits, with funding awards increasing in proportion to demonstrated efficiency attained. [175] • Subtitle H - Clean Energy and Natural Gas–Section 181 Clean Energy and Accelerated Emission reduction Program [200]: The Administrator to establish a program to provide incentive payments to promote dispatchable power generation projects whose emissions are below the 2007 U.S. utility average. Priority shall be given to projects to integrate intermittent renewable power in to the bulk power system. [201] • Section 182 - Advanced Natural Gas Technologies: The term “natural gas” includes renewable biogas. Grants are provided in this program for research and development of advanced technologies that reduce greenhouse gas emissions from natural gas-fueled electricity generation. [202]

5. Division A - Title II - Research • Subtitle B - Drinking Water Adaptation and Research; Section 211 [207] An extremely comprehensive, funded research program largely for the water industry with some mention of wastewater (6x), to the tune of $25MM per year for ten years. [217] • Subtitle C - Adapting to Climate Change; Section 366 Natural Resources Climate Change Adaptation Strategy: Goal is to make natural resources more resilient; mention of ocean acidification numerous times. • Subpart D - Additional Climate Change Adaptation Programs: Section 381-Water System Mitigation and Adaptation Partnerships: This is essentially the very favorable Congresswoman Lois Capps’ amendment carried over to the Senate. [360] This is a 50% grant-based program directly through the Administrator, very broadly (flexibly) worded, and only short of a specific % allocation. Allocation account in Division B [810] recognizes the details of the program. • Section 834 - Coastal and Great Lakes State Adaptation Program [375]. This program contains potential funding for coastal dischargers.

6. Division B – Pollution Reduction and Investment [380]Title I – Reducing Global Warming Pollution (Adds Title VII: Global Warming Pollution Reduction and Investment Program to the CAA. Many of these sections are similar to Waxman-Markey.) • Section 711: Designation of Greenhouse Gases: Includes CO2, CH4, N2O, SF6, hydrofluorocarbons emitted as a byproduct at a stationary industrial source, perfluorocarbons and nitrogen trifluoride. (Compounds can be added by petition similar to the Section 112 MACT standards.) [401] • Section 713: Greenhouse Gas Registry acknowledges The Climate Registry [413] but ignores the federal Mandatory Reporting Rule. A reporting entity can be any entity who emits any amount of GHGs if the Administrator determines that reporting by said entity will help achieve the purpose of the title. • Section 721: Emission Allowances. Allowances are not property rights so that the Administrator can terminate or limit them with impunity. [431] (See the PEW Chart for the distribution of allowances over the years.)

7. Division B - Title I - (Continued) • Section 722 - Prohibition of Excess Emissions - Allowances and credits held must exceed emitted GHGs. Electricity sources and industrial stationary sources can exclude contribution from renewable biomass or gas derived from renewable biomass. [442][445]. Section 722 (b) (11) Fugitive Emissions: Fugitive emissions of key operative paragraphs are excluded from consideration (may help POTWs). Many provisions on timing of program entry and use and limits of domestic and international credits, very similar to Waxman-Markey. Special treatment for algae-based fuels. [446][451] • Sections 723, 724, 725, and 726 dealing with penalties (double whammy), trading, banking and borrowing and market buffer reserve account very similar to Waxman-Markey. [459][461][462][465] • Section 727 - Permits: Contains some strange wording on Title V permits carried over from Waxman-Markey: “ Recordation by the Administrator of transfers of emissions allowances shall amend automatically all applicable proposed or approved permit applications, compliance plans, and permits.” [477] • Section 733 - Eligible [Offset] Project Types: The initial list of projects, which can be modified, contains favorable language for landfills, non-landfill methane collection, reduction in greenhouse gas emissions from manure and “effluent” [493], several opportunities to partner with the farming community and GHG emissions reductions from improvements and upgrades to mobile and stationary equipment (including engines). Well-developed methodologies (protocols) are a requisite. [490]

8. Division B - Title I - (Continued) • Section 734: Requirements for Offset Projects: Verifiable, additional, permanent, etc. [496] • Section 740 Early Offset Supply: For projects going back as far as 1/1/2001 but for emissions reductions from those projects that occurred after 1/1/2009, for three years total only, after the enactment of this title. (US Conference of Mayors issue??) [515] • Section 102 - Definitions [552] Entirely misplaced section similar to Waxman-Markey. See PEW HR 2454 comment. Renewable biomass definition unfavorable to municipal solid waste but great for algae. [567] • Subtitle B - Disposition of Allowances - Section 111 adds Section 771 - Allocation of Emission Allowances: It appears that the focus of allowance distribution is generally to protect consumers from energy price increases, to assist industry and workers in the transition to clean energy, and to spur energy efficiency and the deployment of clean energy technology. • Section 772 - Electricity Consumers: Contains several operative definitions as Renewable Energy Resource (renewable biomass, biogas derived exclusively from renewable biomass, biofuels derived exclusively from renewable biomass) that must be examined to see how waste treatment fares. [579][588] • Section 782: Early Action Recognition [684]: Allows for the re-couping of the monetary value of the early reductions between 1/1/2006 and 1/1/2009. Also, an entity who receives allocations under this subpart is not precluded from generating additional offset credits. [687]

9. Division B - Title I - (Continued) • Title VIII (CAA) Additional Greenhouse Gas Standards-Part A-Stationary Source Standards: Section 811 - Standards of Performance: Appears to be a significant difference between Waxman-Markey. Defines uncapped emissions as those to which Section 722 (Prohibition of Excess Emissions) does not apply and directs the Administrator to delay until 1/1/2020 any related NSPS standard for GHGs. Allows offset projects pursuant to Section 733 (Eligible Project Types) to exist during this timeframe, presumably. • Section 122 - HFC Regulation: Establishes separate trading program (might be an issue for POTWs or facilities with refrigeration systems.) [689] • Section 124 - States: Amends Section 116 of the CAA allowing states to regulate and limit GHGs including requirements to surrender to the state or a political subdivision thereof emission allowances or offset credits established or issued under the Act. [744] • Section 125 - State Programs: Adds Section 861 State Programs: Deals with federal pre-emption of the cap and trade provisions for the first 5 years and is much clearer than Waxman-Markey that a state can do everything else with its GHG program. [745]

10. Division B - Title II • Section 211 - State Programs for GHG Reduction and Climate Adaptation [799] A special State Climate Change Response (SCCR) account can be used for many of the goals of Section 381 (d) in Division A. There is no actual % allocation, however. [810]