Home / News / American Power Act

American Power Act

Back Industry News / May 24, 2010

May 21, 2010

What’s at Issue

On May 12, 2010, U.S. Senators John Kerry (D-MA), chairman of the Foreign Relations Committee, and Joe Lieberman (I-CT), chairman of the Homeland Security and Governmental Affairs Committee, introduced comprehensive energy and climate change legislation titled the American Power Act.  The bill’s sponsors allege that the legislation will accomplish four goals: create jobs, strengthen America’s energy independence, safeguard our national security, and restore our economic leadership. 

Why It’s Important

The bill sets national emission reduction targets but separates industries into three categories: power plants, heavy industry and transportation.  The emission reduction plan is to reduce U.S. greenhouse gas (GHG) emissions to 17 percent below 2005 levels by 2020 and 80 percent by midcentury. 

A provision is included in the legislation addressing international aviation emissions by requiring that the U.S. actively promote, within the International Civil Aviation Organization (ICAO), the development of a global strategy for the regulation of GHG emissions from civil aircraft.  The bill directs the U.S. Environmental Protection Agency (EPA) and the Federal Aviation Administration (FAA) to establish a program to distribute allowances (not a cap-and-trade program) for the GHG emissions of the fuel used for an air carrier or foreign air carrier engaged in foreign air transportation.

The bill would first install a cap-and-trade program on electric utilities, followed six years later on manufacturers and other energy intensive and trade sensitive industries like steel, concrete and chemical.  It would also require the transportation sector to purchase emissions allocations, but at a fixed price and outside a carbon-trading market.  A large amount of the transportation sector revenue will go to boost the federal highway trust fund.  In addition, the bill includes a provision to allow drilling as close as 75 miles offshore.

Major Provisions

TITLE I – DOMESTIC CLEAN ENERGY DEVELOPMENT

  • Nuclear Power
  • Encourages domestic nuclear power generation by expediting procedures for issuing combined construction and operating licenses for qualified new nuclear reactors.
  • Reduces the accelerated depreciation period to five years for new nuclear power plants.
  • Provides a ten percent credit for construction of nuclear power facilities.
  • Coal
  • Creates a special funding program for the development and deployment of carbon capture, sequestration, and conversion technologies.
  • Clean Transportation
  • Establishes a national transportation low-emission energy plan to projects’ needs for and location of electric drive refueling infrastructure and identifies infrastructure and standardization needs of electricity providers, vehicle manufacturers, and electricity purchasers.
  • Directs states and metropolitan planning organizations to address transportation-related GHG emissions by including emissions reduction targets and strategies to meet those targets.
  • Allocates additional funding for the Highway Trust Fund and mandates that the funds be used to promote the safety and effectiveness of transportation in the United States through measures that are consistent with transportation efficiency planning. 

TITLE II – GLOBAL WARMING POLLUTION REDUCTION

  • Amends the Clean Air Act by setting economy-wide global warming pollution reduction standards to 95.25 percent of 2005 levels by 2013; 83 percent by 2020, 58 percent by 2030, and 17 percent by 2050.
  • Designation and Registration of GHGs – Establishes a list of GHGs regulated such as carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons emitted as a byproduct, perfluorocarbons, and nitrogen trifluoride. The EPA administrator may designate additional anthropogenic GHGs by rule.
  • Emission Allowances – Establishes an annual tonnage limit on GHG emissions from specified activities. Directs the EPA administrator to establish allowances equal to the tonnage limit for each year.
    • Emissions from International Aviation – Requires that the U.S. actively promote, within the ICAO, the development of a global strategy for the regulation of GHG emissions from civil aircraft. 
    • The bill directs the EPA and FAA to establish a program to distribute allowances for the GHG emissions of the fuel used for an air carrier or foreign air carrier engaged in foreign air transportation.
  • Credit for Air Carriers Engaging in Foreign Air Transportation – Permits the EPA, FAA, in consultation with the secretary of state, to determine and distribute allowances for purchased fuel in the U.S. during a calendar year (2013-2050) for the purposes of engaging in foreign air transportation originating in the U.S.
  • The foreign air transportation must be covered by a foreign or international system designed to reduce GHG emissions.
  • Authorizes a study on the impact of international aviation agreements and the extent to which federal regulations are effectively and efficiently regulating the emission of GHGs by air carriers and foreign air carriers engaged in foreign air transportation originating in the U.S.
  • Prohibition of Excess Emissions – Prohibits covered entities from emitting or having attributable GHGs in excess of their allowable emissions level, which is determined by the number of emission allowances and offset credits they hold on the specified date.
  • Penalty for Noncompliance – Establishes monetary and injunctive penalties for parties that fail to comply with the specified requirements.
  • Trading – Restrictions are not made on who can hold an allowance, nor does it restrict the purchase, sale, or any other transactions involving allowances.
  • Compliance for Transportation Fuels and Refined Petroleum Products–Establishes the process for how each refined product provider shall pay an amount to demonstrate compliance with respect to refined products.
  • Offset Credit Program for Domestic Emission Reductions – Establishes an independent advisory committee composed of scientists and others with relevant expertise to provide scientific and technical advice on the establishment and implementation of the offset project program.
  • Eligible Projects–Requires the appropriate official to establish and update a list of offset project types that are eligible under the program, taking into account the recommendations of the advisory board.
    • Project types for consideration include fugitive methane emissions from coal mines, landfills, and oil and gas distribution facilities; agricultural, grassland, and rangeland sequestration and management practices; and changes in carbon stocks attributed to land use change and forestry activities.
  • Retention of State Authority – Bars states from implementing or enforcing a cap-and-trade program to control GHG emissions.
  • Regulation of Greenhouse Gas Markets – Restricts futures trading and gives jurisdiction over the trading of GHG instruments to the Commodity Futures Trading Commission and prohibits off-exchange trading of GHG futures.

TITLE III – CONSUMER PROTECTION

  • Low-Carbon Electricity and Energy Efficiency for Consumer Protection
    • Electricity Consumers–Beginning in 2013 and annually through 2029, the allowances will be distributed to electricity local distribution companies for the benefit of retail ratepayers for the quantity of emissions allowances allocated.
    • Natural Gas Consumers – Beginning in June 30, 2015, and annually through 2029, allowances will be distributed to natural gas local distribution companies for the benefit of retail ratepayers for the quantity of emission allowances allocated.
    • The allowances distributed are to be used exclusively for the benefit of the ratepayers of the electricity local distribution company. These allowances may not be used to support electricity sales or deliveries to individuals or other entities.

TITLE IV – JOB PROTECTION AND GROWTH

  • Clean Energy Technology and Jobs
  • Clean Energy Curriculum Development Grants –Authorizes the secretary of education to award grants, on a competitive basis, to eligible partnerships to develop programs of study focused on emerging careers and jobs in the fields of clean energy, renewable energy, energy efficiency, climate change mitigation, and climate change adaptation.
  • Establishes a Clean Vehicle Technology Fund within Treasury to enable the EPA to provide grants to manufacturers and component suppliers to refurbish or expand existing manufacturing facilities to produce advanced technology vehicles and to support engineering integration of certain vehicles and components such as plug-in electric drive vehicles.

TITLE V – INTERNATIONAL CLIMATE CHANGE ACTIVITIES

  • International climate change adaptation and global security program: Directs the secretary of state, in consultation with the administrator of USAID, the secretary of the treasury, and the EPA to establish a program to provide assistance to the most vulnerable developing countries to protect and promote the interests of the U.S.

 
TITLE VI —BUDGETARY EFFECTS

  • The bill is subject to the statutory pay-as-you-go (PAYGO) provision for the purposes of limiting the federal deficit by requiring that all increases in direct spending be offset by other spending decreases.

NATA Position

NATA is concerned with the broad framework of the American Power Act.  While the legislation is all encompassing with regard to fossil fuel emission reductions, NATA will continue to assess the value of international credits for foreign air transportation that includes Part 135 charter aircraft.  NATA remains concerned with climate change legislation that hasn’t been fully vetted in either the U.S. House of Representatives or the U.S. Senate, particularly during a time of a struggling economy and a record national deficit, even if the bill is subject to PAYGO.  The bill sponsors claim similar goals of the House climate change and energy bill (H.R. 2454), that the legislation will create jobs and reduce the amount Americans pay for energy costs and our nation’s dependency on foreign oil, without justification to the merit of their claim. 

Status

U.S. Senator Lindsey Graham (R-SC), an original co-sponsor of the America Power Act, removed his support for the bill because he was opposed to introducing the bill while the investigation was underway into the recent oil spill off the Gulf of Mexico and because the Democratic majority leader decided to address immigration reform this year.  Senator Graham’s support was key to garnering GOP support for the legislation.  Additionally, coastal Democrats are seeking added protection for their states.  Senator Bill Nelson (D-FL) has promised to filibuster a bill that includes President Obama’s recent blueprint for expanding drilling along the East Coast and eastern Gulf of Mexico.  With limited and varied support, the legislation’s future is anything but certain; however, the aviation industry must continue to be cautious about subsequent amendments to the current legislation while further investigating the current language as it relates to aviation emissions and credits.

Staff Contact:   Kristen Moore
Director, Legislative Affairs
kmoore@nata.aero

View in PDF format.