This Week’s Zigzag in the US Climate Regulation Journey

Reuters has reported that the US Senate anticipates bringing the latest carbon emission bill to the floor next week.  Although details are currently sketchy, there are some interesting facets revealed in that article:

–       The bill’s greenhouse gas (GHG) reduction target is 17% by the year 2020;

–       The baseline year for this reduction is 2005;

–       Regional and state-specific GHG cap-and-trade programs would be eliminated and replaced by a federal program.

–       Cap-and-trade for electric power generators would begin in 2012; for manufacturing, the program would begin in 2016;

–       Domestic and international off-sets would be allowable

–       Transportation emissions reductions would be achieved through a motor fuel fee that would hopefully spur various forms of innovation, efficiency and reductions

One glaring aspect of these few details is whether/how companies will get “early action credit” for their GHG reduction efforts achieved prior to this bill’s 2005 baseline year.  Corporations that made major strides in GHG reductions between 2000 and 2005 may find themselves on the wrong end of the “80/20 rule”.  Those who chose to wait for more certainty could be in an improved competitive situation by spending less money to harvest the “low hanging fruit” to hit the 17% target.

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