Amends the CAA to require the EPA Administrator to promulgate regulations to cap and reduce GHG emissions, annually, so that GHG emissions from capped sources are reduced to 97% of 2005 levels by 2012, 83% by 2020, 58% by 2030, and 17% by 2050.
Requires the EPA Administrator to set aside a specified percentage of emission allowances to be used to achieve a reduction of GHG emissions from deforestation in developing countries that have entered into and implemented agreements or arrangements relating to reduced deforestation.
Requires the EPA Administrator to report to Congress by July 1, 2013, and every four years thereafter, on an analysis of:
(1) key findings based on the latest scientific information relevant to global climate change;
(2) capabilities to monitor and verify GHG reductions on a worldwide basis; and
(3) the status of worldwide efforts for reducing GHG emission, preventing dangerous atmospheric concentrations of GHGs, preventing significant irreversible consequences of climate change, and reducing vulnerability to the impacts of climate change.
Requires the EPA Administrator to offer to enter into a contract with the National Academy of Sciences (NAS) to report to Congress and the EPA Administrator by July 1, 2014, and every four years thereafter on:
(1) the latest climate change science; and
(2) an analysis of technologies to achieve reductions in GHG emissions.
Requires the President to direct relevant federal agencies to use existing statutory authority to take appropriate actions and address shortfalls identified in the NAS reports by July 1, 2015, and every four years thereafter.
Requires the President, if the NAS report finds that emission reduction targets are not on schedule or that global actions will not maintain safe global average surface temperature and atmospheric GHG concentration thresholds, to submit a plan by July 1, 2015, to Congress identifying domestic and international actions that will achieve necessary additional GHG reductions.
Designates carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons (HFCs) from a chemical manufacturing process at an industrial stationary source, perfluorocarbons, and nitrogen trifluoride as GHGs and specifies a carbon dioxide equivalent value for each gas. Requires the EPA Administrator, by February 1, 2017, and every five years thereafter, to review and, if appropriate, revise such values.
Establishes a process by which EPA can designate other GHGs. Allows any person to petition EPA for other manmade gases to be added as GHGs. Requires the EPA Administrator to consult with the Science Advisory Board prior to making such determinations.
Prohibits any person from manufacturing, introducing into interstate commerce, or emitting a significant quantity of certain fluorinated gas that is generated as a byproduct during the production or use of another fluorinated gas.
Requires the EPA Administrator to issue regulations establishing a federal GHG registry.
Requires reporting entities to submit to the Administration data on:
(1) GHG emissions in the United States,
(2) the production, manufacture, and importation of fuels and products that lead to GHG emissions,
(3) deliveries of natural gas the combustion of which results in GHG emissions; and
(4) the capture and sequestration of GHGs. Requires such regulations to require reporting of electricity delivered to facilities in an energy-intensive sector.
Requires reporting entities to submit:
(1) 2007-2010 data by March 31, 2011; and
(2) data for 2011 and subsequent years quarterly.
Defines "reporting entity" to mean:
(1) a covered entity;
(2) an entity that would be covered if it had emitted, produced, imported, manufactured, or delivered in 2008 or any subsequent year more than the applicable threshold level of carbon dioxide;
(3) other entities that EPA determines will help achieve overall goals of reducing global warming pollution;
(4) any vehicle fleet with emissions of more than 25,000 tons of carbon dioxide equivalent on an annual basis, if its inclusion will help achieve such reduction;
(5) any entity that delivers electricity to a facility in an energy-intensive industrial sector that meets the energy or GHG intensity criteria.
Includes within the definition of "covered entity" specified:
(1) electricity sources:
(2) stationary sources that produce, and entities that import for sale or distribution in interstate commerce, petroleum-based or coal-based liquid fuel, petroleum coke, or natural gas liquid the combustion of which would emit 25,000 or more tons of carbon dioxide equivalent;
(3) stationary sources that produce, or entities that import for sale or distribution in interstate commerce, in bulk 25,000 or more tons of carbon dioxide equivalent of fossil fuel-based carbon dioxide, nitrous oxide, perfluorocarbons, sulfur hexafluoride, and specified fluorinated gases;
(4) stationary sources that have emitted 25,000 or more tons of carbon dioxide equivalent of nitrogen;
(5) geologic sequestration sites;
(6) stationary sources in the industrial sectors of adipic acid production, primary aluminum production, ammonia manufacturing, cement production (excluding grinding-only operations), hydrochlorofluorocarbon production, lime manufacturing, nitric acid production, petroleum refining, phosphoric acid production, silicon carbide production, soda ash production, titanium dioxide production, and coal-based liquid or gaseous fuel production;
(7) stationary sources in the chemical or petrochemical sector that produce acrylonitrile, carbon black, ethylene, ethylene dichloride, ethylene oxide, or methanol or that produce a chemical or petrochemical product the production of which results in annual combustion plus process emissions of 25,000 or more tons of carbon dioxide equivalent;
(8) stationary sources in the industrial sectors of ethanol production, ferroalloy production, fluorinated gas production, food processing, glass production, hydrogen production, iron and steel production, lead production, pulp and paper manufacturing, and zinc production that have emitted 25,000 or more tons of carbon dioxide equivalent;
(9) fossil fuel-fired combustion devices or groupings of such devices that are all or part of specified industrial sources and that have emitted 25,000 or more tons of carbon dioxide equivalent; and
(10) natural gas local distribution companies or groupings of such companies that in the aggregate deliver 460,000,000 cubic feet or more of natural gas and any other gas meeting the specifications for commingling with natural gas for purposes of delivery to customers that are not covered entities.
Requires the EPA Administrator to establish a specific quantity of emission allowances (the cap) starting in 2012. Prescribes the quantity of emission allowances for: (1) each of 2012-2049; and (2) 2050 and thereafter. Authorizes EPA to revise the annual caps if specified assumptions are subsequently found to be inaccurate.
Provides for the establishment and distribution of compensatory allowances for:
(1) the destruction, in 2012 or later, of fluorinated gases that are GHGs if allowances or offset credits were retired for their production or importation and such gases are not required to be destroyed under any other law;
(2) the nonemissive use, in 2012 or later, of petroleum-based or coal-based liquid or gaseous fuel, petroleum coke, natural gas liquid, or natural gas as a feedstock if allowances or offset credits were retired for the GHGs that would have been emitted from their combustion; and
(3) the conversionary use, in 2012 or later, of fluorinated gases in a manufacturing process if allowances or offset credits were retired for the production or importation of such gas.
Authorizes the EPA Administrator to study: (1) the extent to which petroleum-based or coal-based liquid or gaseous fuel, petroleum coke, natural gas liquid, or natural gas are used as feedstocks in manufacturing processes to produce products; and (2) the GHG emissions resulting from such uses.
Requires the EPA Administrator to complete by March 31, 2014, an assessment of the regulation of non-HFC fluorinated gases to determine whether the most appropriate point of regulation is at the gas manufacturer or importer level or at the source of emissions downstream.
Requires the EPA Administrator to change the definition of "covered entity" and compliance obligations with respect to non-HFC fluorinated gases and establish other requirements if the EPA Administrator determines that such emissions can best be regulated by designating downstream emission sources as covered entities.
Prohibits a covered entity, on or after January 1, 2012, from emitting GHGs and having attributable GHG emissions, in combination, in excess of its allowable emissions level (number of emission allowances or offset credits or other allowances a covered entity holds as of 12:01 a.m. on April 1 or a later date established by the EPA Administrator of the following calendar year).
Requires covered entities to demonstrate compliance through:
(1) holding emission allowances (including international emission or compensatory allowances) at least as great as attributable emissions (as specified); or
(2) using offset credits.
Phases in compliance provisions by entity.
Authorizes covered entities collectively to use offset credits to demonstrate compliance for up to a maximum of 2 billion tons of GHGs annually . Allows a covered entity to satisfy a percentage of the number of allowances required to be held to demonstrate compliance by holding 1 domestic offset credit or 1.25 international offset credits in lieu of an emission allowance.
Authorizes EPA to increase the allowable percentage for international offset to up to 1.5 billion tons if it determines use of domestic offsets will not be maximized.
Distributes the ability to use offset credits on a pro rata basis among covered entities.
Authorizes covered entities to use non-expired term offset credits instead of domestic offset credits for purposes of temporarily demonstrating compliance.
Requires covered entities to provide financial assurance to EPA to demonstrate that they have the resources to be in compliance when the term offset expires.
Requires EPA to retire the held allowances after the annual deadline has passed.
Sets forth penalties for noncompliance.
Authorizes holders of emission allowances, compensatory allowances, or offset credits to sell, exchange, transfer, hold, or retire them.
Provides that the privilege of purchasing, holding, selling, exchanging, transferring, and requesting retirement of such allowances and credits is not restricted to the owners and operators of covered entities.
Prohibits allowance transfers from being effective until EPA receives written certification.
Provides for the establishment of an allowance tracking system for issuing, recording, holding, and tracking allowances, offset credits, and term offset credits.
Authorizes allowances and offset credits to be banked or borrowed from the future.
Allows an emission allowance to be used to comply with emission requirements in the vintage year for the allowance or any subsequent calendar year.
Provides that allowances, international emission allowances, offset credits, and term offset credits do not expire unless they are:
(1) retired by the EPA Administrator; or
(2) determined to be expired or to have expired by a specific date by the EPA Administrator. Allows:
(1) an emission allowance to be used to demonstrate compliance in the calendar year immediately preceding the vintage year for the allowance;
(2) covered entities to demonstrate compliance in a specific calendar year for up to 15% of its emissions by borrowing, with interest, allowances with a vintage year one to five years later than the calendar year.
Requires the EPA Administrator to:
(1) establish a strategic reserve account of a specified amount of emission allowances;
(2) auction strategic reserve allowances quarterly.
Limits auctions to covered entities.
Requires auctions to have a minimum reserve price, which in:
(1) 2012 will be $28 per allowance;
(2) 2013 and 2014 will be the minimum strategic reserve auction price for the previous year increased by 5% plus the rate of inflation; and
(3) 2015 and thereafter will be 60% above a rolling 36-month average of the daily closing price for that year's emission allowance vintage as reported on registered carbon trading facilities.
Establishes limits on the number of emission allowances from the strategic reserve account that may be auctioned for 2012-2016 and for 2017 and thereafter.
(1) one-fourth of each year's annual strategic reserve auction limit to be made available for action in each quarter; and
(2) unsold allowances to be returned to the reserve.
Limits the number of allowances that covered entities may purchase at each auction.
Requires the proceeds from the auctions to be placed in the Reserve. Requires the EPA Administrator to:
(1) use the proceeds to purchase international offset credits issued for reduced deforestation activities;
(2) retire those credits and establish a number of emission allowances equal to 80% of the number of international offset credits retired; and
(3) deposit such allowances in the Reserve. Authorizes the EPA Administrator to sell such international offsets at the auction under certain conditions.
Sets forth the obligations of stationary sources under the CAA's Title V operating permit program under the new global warming and pollution reduction requirements. Requires stationary sources subject to the CAA to have permits that require the covered entity to hold a number of emission allowances at least equal to the total annual amount of carbon dioxide equivalents for its combined emissions and attributable GHG emissions.
Authorizes the EPA Administrator, in consultation with the Secretary of State, to designate an international climate change program as a qualifying international program if:
(1) it is run by a national or supranational foreign government and imposes a mandatory absolute tonnage limit on GHG emissions from at least one or more foreign countries or from one or more economic sectors in such countries; and
(2) it is at least as stringent as the program established by this Act. Requires an owner or operator of an entity that holds such an allowance to certify to the EPA Administrator that the allowance has not previously been used to comply with any foreign, international, or domestic GHG regulatory program.
Authorizes the EPA Administrator to limit the amount of international allowances a covered entity may use for compliance purposes.
Requires the EPA Administrator to establish an Independent Offsets Integrity Advisory Board to make recommendations to the EPA Administrator for use in promulgating and revising regulations on the types of offset that should be eligible for compliance purposes and on methodologies for evaluating offset projects. Requires the Board to report to the EPA Administrator on the offset program and make recommendations on such program by January 1, 2017, and every five years thereafter.
Requires the EPA Administrator to promulgate regulations establishing a program for the issuance of offset credits that:
(1) ensure that such offset credits represent verifiable and additional GHG emission reductions or avoidance, or increases in sequestration;
(2) ensure that offset credits issued for sequestration offset projects are only issued for GHG reductions that are permanent; and
(3) include as reductions in GHGs reductions achieved through the destruction of methane and chlorofluorocarbons (CFCs) or other ozone depleting substances.
Requires the EPA Administrator to: (1) establish within the allowance tracking system an Offset Registry for qualifying offset projects and credits; and (2) assess fees payable by offset project developers to cover administrative costs; and (3) establish a list of types of projects eligible to generate offset credits, including international offset credits. Authorizes any person to petition the EPA Administrator to modify such list.
Requires the EPA Administrator to issue an offset credit to an offset project developer only if:
(1) the EPA Administrator has approved the project; and
(2) the relevant emissions reduction, avoidance, or sequestration has already occurred during the offset project's crediting period.
Requires the EPA Administrator to:
(1) assign a unique serial number to and register each offset credit issued;
(2) conduct audits of offset projects, offset credits, and practices of third-party verifiers; and
(3) review, at least once every five years, the list of eligible project types and requirements to ensure the environmental integrity and effective operation of the offset program.
Directs the EPA Administrator to issue offset credits, if specific conditions are met, for offsets issued under other regulatory or voluntary offset programs.
Authorizes the EPA Administrator to issue international offset credits based on activities that reduce or avoid GHG emissions, or increase sequestration of GHGs, in a developing country if:
(1) the United States is a party to a bilateral or multilateral agreement that includes the nation hosting the offset project; and
(2) the host nation is a developing country.
Establishes a process through which EPA can issue international offset credits on a sectoral basis in developing nations in exchange for other international instruments.
Authorizes the EPA Administrator to issue international offset credits that originate from international bodies established by the United Nations Framework Convention on Climate Change (UNFCCC), a UNFCCC protocol, or a treaty that succeeds the UNFCCC.
Establishes procedures and requirements regarding the issuance of international offset credits for activities that reduce deforestation.
Requires the EPA Administrator to promulgate regulations establishing a program to use emission allowances set aside to reduce GHG emissions from deforestation in developing countries, with the objectives to:
(1) achieve 720 million tons of reductions in 2020 and a cumulative emission reduction of 6 billion tons by 2025,
(2) build institutional capacities in developing nations; and
(3) preserve intact, native forests.
Prohibits the EPA Administrator from distributing emission allowances under this program unless the Secretary of State has concurred with such distribution.
Authorizes the EPA Administrator to support activities only in a developing country that: (1) is experiencing deforestation or forest degradation or has standing forest carbon stocks that may be at risk of deforestation or degradation; and (2) has entered a bilateral or multilateral agreement with the United States establishing the conditions of its participation.
Requires the EPA Administrator, in consultation with the Administrator of USAID, to promulgate regulations establishing:
(1) standards to ensure that supplemental emissions reductions from reduced deforestation are additional, measurable, verifiable, permanent, and monitored and account for leakage and uncertainty; and
(2) a national deforestation baseline for each country with national deforestation reduction activities.
Requires the EPA Administrator to establish a publicly accessible registry of the supplemental emissions.
Prohibits the EPA Administrator from providing further compensation through emission allowances for any subnational deforestation reduction activities after five years, unless certain conditions are met.
Requires the EPA Administrator to report to Congress by January 1, 2014, about the quantity of emission reductions under the program, a breakdown of allowances provided, and the activities supported by the supplemental reduction program.
Requires the EPA Administrator and USAID to conduct a review every five years of the supplemental reduction program.