[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4067 Introduced in House (IH)]







108th CONGRESS
  2d Session
                                H. R. 4067

   To provide for a program of scientific research on abrupt climate 
change, to accelerate the reduction of greenhouse gas emissions in the 
United States by establishing a market-driven system of greenhouse gas 
 tradeable allowances that will limit greenhouse gas emissions in the 
United States, reduce dependence upon foreign oil, and ensure benefits 
    to consumers from the trading in such allowances, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 30, 2004

 Mr. Gilchrest (for himself, Mr. Olver, Mr. Shays, Mr. Van Hollen, Mr. 
 Boehlert, Mr. Inslee, Mrs. Johnson of Connecticut, Mr. Menendez, Mr. 
  Simmons, Mr. Waxman, Mr. Greenwood, Ms. DeGette, Mr. Houghton, Ms. 
 Lofgren, Mr. Ehlers, Mr. Ford, Mr. Walsh, Mr. Udall of Colorado, Mrs. 
Kelly, and Ms. Solis) introduced the following bill; which was referred 
to the Committee on Science, and in addition to the Committee on Energy 
    and Commerce, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
   To provide for a program of scientific research on abrupt climate 
change, to accelerate the reduction of greenhouse gas emissions in the 
United States by establishing a market-driven system of greenhouse gas 
 tradeable allowances that will limit greenhouse gas emissions in the 
United States, reduce dependence upon foreign oil, and ensure benefits 
    to consumers from the trading in such allowances, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Climate Stewardship Act of 2004''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents for this Act is as follows:

        Sec. 1. Short title.
        Sec. 2. Table of contents.
        Sec. 3. Definitions.
    TITLE I--FEDERAL CLIMATE CHANGE RESEARCH AND RELATED ACTIVITIES

        Sec. 101. National Science Foundation fellowships.
        Sec. 102. Research grants.
        Sec. 103. Abrupt climate change research.
        Sec. 104. NIST greenhouse gas functions.
        Sec. 105. Development of new measurement technologies.
        Sec. 106. Enhanced environmental measurements and standards.
        Sec. 107. Technology development and diffusion.
        Sec. 108. Agricultural outreach program.
        Sec. 109. NOAA Report on climate change effects; preparation 
                            assistance.
               TITLE II--NATIONAL GREENHOUSE GAS DATABASE

        Sec. 201. National greenhouse gas database and registry 
                            established.
        Sec. 202. Inventory of greenhouse gas emissions for covered 
                            entities.
        Sec. 203. Greenhouse gas reduction reporting.
        Sec. 204. Measurement and verification.
           TITLE III--MARKET-DRIVEN GREENHOUSE GAS REDUCTIONS

     Subtitle A--Emission Reduction Requirements; Use of Tradeable 
                               Allowances

        Sec. 301. Covered entities must submit allowances for 
                            emissions.
        Sec. 302. Compliance.
        Sec. 303. Borrowing against future reductions.
        Sec. 304. Other uses of tradeable allowances.
        Sec. 305. Exemption of source categories.
    Subtitle B--Establishment and Allocation of Tradeable Allowances

        Sec. 331. Establishment of tradeable allowances.
        Sec. 332. Determination of tradeable allowance allocations.
        Sec. 333. Allocation of tradeable allowances.
        Sec. 334. Ensuring target adequacy.
        Sec. 335. Initial allocations for early participation and 
                            accelerated participation.
        Sec. 336. Bonus for accelerated participation.
             Subtitle C--Climate Change Credit Corporation

        Sec. 351. Establishment.
        Sec. 352. Purposes and functions.
            Subtitle D--Sequestration Accounting; Penalties

        Sec. 371. Sequestration accounting.
        Sec. 372. Penalties.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Environmental Protection Agency.
            (2) Baseline.--The term ``baseline'' means the historic 
        greenhouse gas emission levels of an entity, as adjusted upward 
        by the Administrator to reflect actual reductions that are 
        verified in accordance with--
                    (A) regulations promulgated under section 
                201(c)(1); and
                    (B) relevant standards and methods developed under 
                this title.
            (3) Carbon dioxide equivalents.--The term ``carbon dioxide 
        equivalents'' means, for each greenhouse gas, the amount of 
        each such greenhouse gas that makes the same contribution to 
        global warming as one metric ton of carbon dioxide, as 
        determined by the Administrator.
            (4) Covered sectors.--The term ``covered sectors'' means 
        the electricity, transportation, industry, and commercial 
        sectors, as such terms are used in the Inventory.
            (5) Covered entity.--The term ``covered entity'' means an 
        entity (including a branch, department, agency, or 
        instrumentality of Federal, State, or local government) that--
                    (A) owns or controls a source of greenhouse gas 
                emissions in the electric power, industrial, or 
                commercial sector of the United States economy (as 
                defined in the Inventory), refines or imports petroleum 
                products for use in transportation, or produces or 
                imports hydrofluorocarbons, perfluorocarbons, or sulfur 
                hexafluoride; and
                    (B) emits, from any single facility owned by the 
                entity, over 10,000 metric tons of greenhouse gas per 
                year, measured in units of carbon dioxide equivalents, 
                or produces or imports--
                            (i) petroleum products that, when 
                        combusted, will emit,
                            (ii) hydrofluorocarbons, perfluorocarbons, 
                        or sulfur hexafluoride that, when used, will 
                        emit, or
                            (iii) other greenhouse gases that, when 
                        used, will emit,
                over 10,000 metric tons of greenhouse gas per year, 
                measured in units of carbon dioxide equivalents.
            (6) Database.--The term ``database'' means the national 
        greenhouse gas database established under section 201.
            (7) Direct emissions.--The term ``direct emissions'' means 
        greenhouse gas emissions by an entity from a facility that is 
        owned or controlled by that entity.
            (8) Facility.--The term ``facility'' means a building, 
        structure, or installation located on any 1 or more contiguous 
        or adjacent properties of an entity in the United States.
            (9) Greenhouse gas.--The term ``greenhouse gas'' means--
                    (A) carbon dioxide;
                    (B) methane;
                    (C) nitrous oxide;
                    (D) hydrofluorocarbons;
                    (E) perfluorocarbons; or
                    (F) sulfur hexafluoride.
            (10) Indirect emissions.--The term ``indirect emissions'' 
        means greenhouse gas emissions that are--
                    (A) a result of the activities of an entity; but
                    (B) emitted from a facility owned or controlled by 
                another entity.
            (11) Inventory.--The term ``Inventory'' means the Inventory 
        of U.S. Greenhouse Gas Emissions and Sinks, prepared in 
        compliance with the United Nations Framework Convention on 
        Climate Change Decision 3/CP.5.
            (12) Leakage.--The term ``leakage'' means--
                    (A) an increase in greenhouse gas emissions by one 
                facility or entity caused by a reduction in greenhouse 
                gas emissions by another facility or entity; or
                    (B) a decrease in sequestration that is caused by 
                an increase in sequestration at another location.
            (13) Permanence.--The term ``permanence'' means the extent 
        to which greenhouse gases that are sequestered will not later 
        be returned to the atmosphere.
            (14) Registry.--The term ``registry'' means the registry of 
        greenhouse gas emission reductions established under section 
        201(b)(2).
            (15) Secretary.--The term ``Secretary'' means the Secretary 
        of Commerce.
            (16) Sequestration.--
                    (A) In general.--The term ``sequestration'' means 
                the capture, long-term separation, isolation, or 
                removal of greenhouse gases from the atmosphere.
                    (B) Inclusions.--The term ``sequestration'' 
                includes--
                            (i) agricultural and conservation 
                        practices;
                            (ii) reforestation;
                            (iii) forest preservation; and
                            (iv) any other appropriate method of 
                        capture, long-term separation, isolation, or 
                        removal of greenhouse gases from the 
                        atmosphere, as determined by the Administrator.
                    (C) Exclusions.--The term ``sequestration'' does 
                not include--
                            (i) any conversion of, or negative impact 
                        on, a native ecosystem; or
                            (ii) any introduction of non-native 
                        species.
            (17) Source category.--The term ``source category'' means a 
        process or activity that leads to direct emissions of 
        greenhouse gases, as listed in the Inventory.
            (18) Stationary source.--The term ``stationary source'' 
        means generally any source of greenhouse gases except those 
        emissions resulting directly from an engine for transportation 
        purposes.

    TITLE I--FEDERAL CLIMATE CHANGE RESEARCH AND RELATED ACTIVITIES

SEC. 101. NATIONAL SCIENCE FOUNDATION FELLOWSHIPS.

    The Director of the National Science Foundation shall establish a 
fellowship program for students pursuing graduate studies in global 
climate change, including capability in observation, analysis, 
modeling, paleoclimatology, consequences, and adaptation.

SEC. 102. RESEARCH GRANTS.

    Section 105 of the Global Change Research Act of 1990 (15 U.S.C. 
2935) is amended--
            (1) by redesignating subsection (c) as subsection (d); and
            (2) by inserting after subsection (b) the following:
    ``(c) Research Grants.--
            ``(1) Committee to develop list of priority research 
        areas.--The Committee shall develop a list of priority areas 
        for research and development on climate change that are not 
        being addressed by Federal agencies.
            ``(2) Director of ostp to transmit list to nsf.--The 
        Director of the Office of Science and Technology Policy shall 
        transmit the list to the National Science Foundation.
            ``(3) Funding through nsf.--
                    ``(A) Budget request.--The National Science 
                Foundation shall include, as part of the annual request 
                for appropriations for the Science and Technology 
                Policy Institute, a request for appropriations to fund 
                research in the priority areas on the list developed 
                under paragraph (1).
                    ``(B) Authorization.--For fiscal year 2005 and each 
                fiscal year thereafter, there are authorized to be 
                appropriated to the National Science Foundation not 
                less than $25,000,000, to be made available through the 
                Science and Technology Policy Institute, for research 
                in those priority areas.''.

SEC. 103. ABRUPT CLIMATE CHANGE RESEARCH.

    (a) In General.--The Secretary, through the National Oceanic and 
Atmospheric Administration, shall carry out a program of scientific 
research on potential abrupt climate change designed--
            (1) to develop a global array of terrestrial and 
        oceanographic indicators of paleoclimate in order sufficiently 
        to identify and describe past instances of abrupt climate 
        change;
            (2) to improve understanding of thresholds and 
        nonlinearities in geophysical systems related to the mechanisms 
        of abrupt climate change;
            (3) to incorporate these mechanisms into advanced 
        geophysical models of climate change; and
            (4) to test the output of these models against an improved 
        global array of records of past abrupt climate changes.
    (b) Abrupt Climate Change Defined.--In this section, the term 
``abrupt climate change'' means a change in climate that occurs so 
rapidly or unexpectedly that human or natural systems may have 
difficulty adapting to it.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary for fiscal year 2005 $60,000,000 to carry 
out this section, such sum to remain available until expended.

SEC. 104. NIST GREENHOUSE GAS FUNCTIONS.

    Section 2(c) of the National Institute of Standards and Technology 
Act (15 U.S.C. 272(c)) is amended--
            (1) by striking ``and'' after the semicolon in paragraph 
        (21);
            (2) by redesignating paragraph (22) as paragraph (23); and
            (3) by inserting after paragraph (21) the following:
            ``(22) perform research to develop enhanced measurements, 
        calibrations, standards, and technologies which will facilitate 
        activities that reduce emissions of greenhouse gases or 
        increase sequestration of greenhouse gases, including carbon 
        dioxide, methane, nitrous oxide, ozone, perfluorocarbons, 
        hydrofluorocarbons, and sulfur hexafluoride; and''.

SEC. 105. DEVELOPMENT OF NEW MEASUREMENT TECHNOLOGIES.

    To facilitate implementation of section 204, the Secretary shall 
initiate a program to develop, with technical assistance from 
appropriate Federal agencies, innovative standards and measurement 
technologies to calculate greenhouse gas emissions or reductions for 
which no accurate or reliable measurement technology exists. The 
program shall include--
            (1) technologies (including remote sensing technologies) to 
        measure carbon changes and other greenhouse gas emissions and 
        reductions from agriculture, forestry, and other land use 
        practices; and
            (2) technologies to calculate non-carbon dioxide greenhouse 
        gas emissions from transportation.

SEC. 106. ENHANCED ENVIRONMENTAL MEASUREMENTS AND STANDARDS.

    The National Institute of Standards and Technology Act (15 U.S.C. 
271 et seq.) is amended--
            (1) by redesignating sections 17 through 32 as sections 18 
        through 33, respectively; and
            (2) by inserting after section 16 the following:

``SEC. 17. CLIMATE CHANGE STANDARDS AND PROCESSES.

    ``(a) In General.--The Director shall establish within the 
Institute a program to perform and support research on global climate 
change standards and processes, with the goal of providing scientific 
and technical knowledge applicable to the reduction of greenhouse gases 
(as defined in section 3 of the Climate Stewardship Act of 2004) and of 
facilitating implementation of section 204 of that Act.
    ``(b) Research Program.--
            ``(1) In general.--The Director is authorized to conduct, 
        directly or through contracts or grants, a global climate 
        change standards and processes research program.
            ``(2) Research projects.--The specific contents and 
        priorities of the research program shall be determined in 
        consultation with appropriate Federal agencies, including the 
        Environmental Protection Agency, the National Oceanic and 
        Atmospheric Administration, and the National Aeronautics and 
        Space Administration. The program generally shall include basic 
        and applied research--
                    ``(A) to develop and provide the enhanced 
                measurements, calibrations, data, models, and reference 
                material standards which will enable the monitoring of 
                greenhouse gases;
                    ``(B) to assist in establishing a baseline 
                reference point for future trading in greenhouse gases 
                and the measurement of progress in emissions reduction;
                    ``(C) that will be exchanged internationally as 
                scientific or technical information which has the 
                stated purpose of developing mutually recognized 
                measurements, standards, and procedures for reducing 
                greenhouse gases; and
                    ``(D) to assist in developing improved industrial 
                processes designed to reduce or eliminate greenhouse 
                gases.
    ``(c) National Measurement Laboratories.--
            ``(1) In general.--In carrying out this section, the 
        Director shall utilize the collective skills of the National 
        Measurement Laboratories of the National Institute of Standards 
        and Technology to improve the accuracy of measurements that 
        will permit better understanding and control of industrial 
        chemical processes and result in the reduction or elimination 
        of greenhouse gases.
            ``(2) Material, process, and building research.--The 
        National Measurement Laboratories shall conduct research under 
        this subsection that includes--
                    ``(A) developing material and manufacturing 
                processes which are designed for energy efficiency and 
                reduced greenhouse gas emissions into the environment;
                    ``(B) developing chemical processes to be used by 
                industry that, compared to similar processes in 
                commercial use, result in reduced emissions of 
                greenhouse gases or increased sequestration of 
                greenhouse gases; and
                    ``(C) enhancing building performance with a focus 
                in developing standards or tools which will help 
                incorporate low- or no-emission technologies into 
                building designs.
            ``(3) Standards and tools.--The National Measurement 
        Laboratories shall develop standards and tools under this 
        subsection that include software to assist designers in 
        selecting alternate building materials, performance data on 
        materials, artificial intelligence-aided design procedures for 
        building subsystems and `smart buildings', and improved test 
        methods and rating procedures for evaluating the energy 
        performance of residential and commercial appliances and 
        products.
    ``(d) National Voluntary Laboratory Accreditation Program.--The 
Director shall utilize the National Voluntary Laboratory Accreditation 
Program under this section to establish a program to include specific 
calibration or test standards and related methods and protocols 
assembled to satisfy the unique needs for accreditation in measuring 
the production of greenhouse gases. In carrying out this subsection the 
Director may cooperate with other departments and agencies of the 
Federal Government, State and local governments, and private 
organizations.''.

SEC. 107. TECHNOLOGY DEVELOPMENT AND DIFFUSION.

    The Director of the National Institute of Standards and Technology, 
through the Manufacturing Extension Partnership Program, may develop a 
program to promote the use, by the more than 380,000 small 
manufacturers, of technologies and techniques that result in reduced 
emissions of greenhouse gases or increased sequestration of greenhouse 
gases.

SEC. 108. AGRICULTURAL OUTREACH PROGRAM.

    (a) In General.--The Secretary of Agriculture, acting through the 
Global Change Program Office and in consultation with the heads of 
other appropriate departments and agencies, shall establish the Climate 
Change Education and Outreach Initiative Program to educate, and reach 
out to, agricultural organizations and individual farmers on global 
climate change.
    (b) Program Components.--The program--
            (1) shall be designed to ensure that agricultural 
        organizations and individual farmers receive detailed 
        information about--
                    (A) the potential impact of climate change on their 
                operations and well-being;
                    (B) market-driven economic opportunities that may 
                come from storing carbon in soils and vegetation, 
                including emerging private sector markets for carbon 
                storage; and
                    (C) techniques for measuring, monitoring, 
                verifying, and inventorying such carbon capture 
                efforts;
            (2) may incorporate existing efforts in any area of 
        activity referenced in paragraph (1) or in related areas of 
        activity;
            (3) shall provide--
                    (A) outreach materials to interested parties;
                    (B) workshops; and
                    (C) technical assistance; and
            (4) may include the creation and development of regional 
        centers on climate change or coordination with existing centers 
        (including such centers within NRCS and the Cooperative State 
        Research Education and Extension Service).

SEC. 109. NOAA REPORT ON CLIMATE CHANGE EFFECTS; PREPARATION 
              ASSISTANCE.

    The Coastal Zone Management Act of 1972 (16 U.S.C. 1451 et seq.) is 
amended by adding at the end the following:

                 ``report on effects of climate change

    ``Sec. 320. (a) In General.--The Secretary shall report to the 
Congress not later than 2 years after the date of enactment of this 
section, and every 5 years thereafter, on the possible and projected 
impacts of climate change on--
            ``(1) oceanic and coastal ecosystems, including marine fish 
        and wildlife and their habitat, and the commercial and 
        recreational fisheries and tourism industries associated with 
        them; and
            ``(2) coastal communities, including private residential 
        and commercial development and public infrastructure in the 
        coastal zone.
    ``(b) Contents.--Each report under this section shall include 
information regarding--
            ``(1) the impacts that may be due to climate change that 
        have occurred as of the date of the submission of the report; 
        and
            ``(2) the projected future impacts of climate change.
    ``(c) Impacts.--The impacts reported on under subsection (b) shall 
include any--
            ``(1) increases in sea level;
            ``(2) increases in storm activity and intensity;
            ``(3) increases in floods, droughts, and other extremes of 
        weather;
            ``(4) increases in the temperature of the air and the water 
        on oceanic and coastal ecosystems, with a particular focus on 
        vulnerable fisheries and ecosystems; and
            ``(5) changes in the acidity of the ocean surface 
        associated with an increase in concentration of carbon dioxide 
        in the atmosphere.

                ``climate change preparation assistance

    ``Sec. 321. (a) In General.--The Secretary shall provide technical 
assistance to each coastal state that has an approved coastal zone 
management plan under this title, to assist such States in preparing 
persons living within their coastal zones to adapt to climate change.
    ``(b) Identification of Affected Areas and Adaptations.--In 
carrying out this section, the Secretary shall--
            ``(1) identify the projected impacts of climate change to 
        which persons located in coastal zones may need to adapt, 
        including--
                    ``(A) increases in sea level;
                    ``(B) increases in storm activity and intensity; 
                and
                    ``(C) increases in floods, droughts, and other 
                extremes of weather;
            ``(2) identify the specific coastal areas of the United 
        States, and the public and private development in coastal 
        communities and the natural resources of the coastal zone, that 
        are vulnerable to the impacts identified under paragraph (1);
            ``(3) identify the various adaptation measures that may be 
        used to protect the areas and resources identified under 
        paragraph (2) from the impacts identified under paragraph (1); 
        and
            ``(4) estimate the costs of the adaptation measures 
        identified under paragraph (3).''.

               TITLE II--NATIONAL GREENHOUSE GAS DATABASE

SEC. 201. NATIONAL GREENHOUSE GAS DATABASE AND REGISTRY ESTABLISHED.

    (a) Establishment.--As soon as practicable after the date of 
enactment of this Act, the Administrator, in coordination with the 
Secretary, the Secretary of Energy, the Secretary of Agriculture, and 
private sector and nongovernmental organizations, shall establish, 
operate, and maintain a database, to be known as the ``National 
Greenhouse Gas Database'', to collect, verify, and analyze information 
on greenhouse gas emissions by entities.
    (b) National Greenhouse Gas Database Components.--The database 
shall consist of--
            (1) an inventory of greenhouse gas emissions; and
            (2) a registry of greenhouse gas emission reductions and 
        increases in greenhouse gas sequestrations.
    (c) Comprehensive System.--
            (1) In general.--Not later than 2 years after the date of 
        enactment of this Act, the Administrator shall promulgate 
        regulations to implement a comprehensive system for greenhouse 
        gas emissions reporting, inventorying, and reductions 
        registration.
            (2) Requirements.--The Administrator shall ensure, to the 
        maximum extent practicable, that--
                    (A) the comprehensive system described in paragraph 
                (1) is designed to--
                            (i) maximize completeness, transparency, 
                        and accuracy of information reported; and
                            (ii) minimize costs incurred by entities in 
                        measuring and reporting greenhouse gas 
                        emissions; and
                    (B) the regulations promulgated under paragraph (1) 
                establish procedures and protocols necessary--
                            (i) to prevent the double-counting of 
                        greenhouse gas emissions or emission reductions 
                        reported by more than 1 reporting entity;
                            (ii) to provide for corrections to errors 
                        in data submitted to the database;
                            (iii) to provide for adjustment to data by 
                        reporting entities that have had a significant 
                        organizational change (including mergers, 
                        acquisitions, and divestiture), in order to 
                        maintain comparability among data in the 
                        database over time;
                            (iv) to provide for adjustments to reflect 
                        new technologies or methods for measuring or 
                        calculating greenhouse gas emissions;
                            (v) to account for changes in registration 
                        of ownership of emission reductions resulting 
                        from a voluntary private transaction between 
                        reporting entities; and
                            (vi) to clarify the responsibility for 
                        reporting in the case of any facility owned or 
                        controlled by more than 1 entity.
            (3) Serial numbers.--Through regulations promulgated under 
        paragraph (1), the Administrator shall develop and implement a 
        system that provides--
                    (A) for the verification of submitted emissions 
                reductions registered under section 203;
                    (B) for the provision of unique serial numbers to 
                identify the registered emission reductions made by an 
                entity relative to the baseline of the entity;
                    (C) for the tracking of the registered reductions 
                associated with the serial numbers; and
                    (D) for such action as may be necessary to prevent 
                counterfeiting of the registered reductions.

SEC. 202. INVENTORY OF GREENHOUSE GAS EMISSIONS FOR COVERED ENTITIES.

    (a) In General.--Not later than July 1st of each calendar year 
after 2008, each covered entity shall submit to the Administrator a 
report that states, for the preceding calendar year, the entity-wide 
greenhouse gas emissions (as reported at the facility level), 
including--
            (1) the total quantity of direct greenhouse gas emissions 
        from stationary sources, expressed in units of carbon dioxide 
        equivalents, except those reported under paragraph (3);
            (2) the amount of petroleum products sold or imported by 
        the entity and the amount of greenhouse gases, expressed in 
        units of carbon dioxide equivalents, that would be emitted when 
        these products are used for transportation in the United 
        States, as determined by the Administrator under section 
        301(b);
            (3) the amount of hydrofluorocarbons, perfluorocarbons, or 
        sulfur hexafluoride, expressed in units of carbon dioxide 
        equivalents, that are sold or imported by the entity and will 
        ultimately be emitted in the United States, as determined by 
        the Administrator under section 301(d); and
            (4) such other categories of emissions as the Administrator 
        determines in the regulations promulgated under section 
        201(c)(1) may be practicable and useful for the purposes of 
        this Act, such as--
                    (A) indirect emissions from imported electricity, 
                heat, and steam;
                    (B) process and fugitive emissions; and
                    (C) production or importation of greenhouse gases.
    (b) Collection and Analysis of Data.--The Administrator shall 
collect and analyze information reported under subsection (a) for use 
under title III.

SEC. 203. GREENHOUSE GAS REDUCTION REPORTING.

    (a) In General.--Subject to the requirements described in 
subsection (b)--
            (1) a covered entity may register greenhouse gas emission 
        reductions achieved after 1990 and before 2010 under this 
        section; and
            (2) an entity that is not a covered entity may register 
        greenhouse gas emission reductions achieved at any time since 
        1990 under this section.
    (b) Requirements.--
            (1) In general.--The requirements referred to in subsection 
        (a) are that an entity (other than an entity described in 
        paragraph (2)) shall--
                    (A) establish a baseline; and
                    (B) submit the report described in subsection 
                (c)(1).
            (2) Requirements applicable to entities entering into 
        certain agreements.--An entity that enters into an agreement 
        with a participant in the registry for the purpose of a carbon 
        sequestration project shall not be required to comply with the 
        requirements specified in paragraph (1) unless that entity is 
        required to comply with the requirements by reason of an 
        activity other than the agreement.
    (c) Reports.--
            (1) Required report.--Not later than July 1st of each 
        calendar year beginning more than 2 years after the date of 
        enactment of this Act, but subject to paragraph (3), an entity 
        described in subsection (a) shall submit to the Administrator a 
        report that states, for the preceding calendar year, the 
        entity-wide greenhouse gas emissions (as reported at the 
        facility level), including--
                    (A) the total quantity of direct greenhouse gas 
                emissions from stationary sources, expressed in units 
                of carbon dioxide equivalents;
                    (B) the amount of petroleum products sold or 
                imported by the entity and the amount of greenhouse 
                gases, expressed in units of carbon dioxide 
                equivalents, that would be emitted when these products 
                are used for transportation in the United States, as 
                determined by the Administrator under section 301(b);
                    (C) the amount of hydrofluorocarbons, 
                perfluorocarbons, or sulfur hexafluoride, expressed in 
                units of carbon dioxide equivalents, that are sold or 
                imported by the entity and will ultimately be emitted 
                in the United States, as determined by the 
                Administrator under section 301(d); and
                    (D) such other categories of emissions as the 
                Administrator determines in the regulations promulgated 
                under section 201(c)(1) may be practicable and useful 
                for the purposes of this Act, such as--
                            (i) indirect emissions from imported 
                        electricity, heat, and steam;
                            (ii) process and fugitive emissions; and
                            (iii) production or importation of 
                        greenhouse gases.
            (2) Voluntary reporting.--An entity described in subsection 
        (a) may (along with establishing a baseline and reporting 
        emissions under this section)--
                    (A) submit a report described in paragraph (1) 
                before the date specified in that paragraph for the 
                purposes of achieving and commoditizing greenhouse gas 
                reductions through use of the registry and for other 
                purposes; and
                    (B) submit to the Administrator, for inclusion in 
                the registry, information that has been verified in 
                accordance with regulations promulgated under section 
                201(c)(1) and that relates to--
                            (i) any activity that resulted in the net 
                        reduction of the greenhouse gas emissions of 
                        the entity or a net increase in sequestration 
                        by the entity that were carried out during or 
                        after 1990 and before the establishment of the 
                        database, verified in accordance with 
                        regulations promulgated under section 
                        201(c)(1), and submitted to the Administrator 
                        before the date that is 4 years after the date 
                        of enactment of this Act; and
                            (ii) with respect to the calendar year 
                        preceding the calendar year in which the 
                        information is submitted, any project or 
                        activity that resulted in the net reduction of 
                        the greenhouse gas emissions of the entity or a 
                        net increase in net sequestration by the 
                        entity.
            (3) Provision of verification information by reporting 
        entities.--Each entity that submits a report under this 
        subsection shall provide information sufficient for the 
        Administrator to verify, in accordance with measurement and 
        verification methods and standards developed under section 204, 
        that the greenhouse gas report of the reporting entity--
                    (A) has been accurately reported; and
                    (B) in the case of each voluntary report under 
                paragraph (2), represents--
                            (i) actual reductions in direct greenhouse 
                        gas emissions--
                                    (I) relative to historic emission 
                                levels of the entity; and
                                    (II) after accounting for any 
                                increases in indirect emissions 
                                described in paragraph (1)(D)(i); or
                            (ii) actual increases in net sequestration.
            (4) Failure to submit report.--An entity that participates 
        or has participated in the registry and that fails to submit a 
        report required under this subsection shall be prohibited from 
        using, or allowing another entity to use, its registered 
        emissions reductions or increases in sequestration to satisfy 
        the requirements of section 301.
            (5) Independent third-party verification.--To meet the 
        requirements of this section and section 204, an entity that is 
        required to submit a report under this section may--
                    (A) obtain independent third-party verification; 
                and
                    (B) present the results of the third-party 
                verification to the Administrator.
            (6) Availability of data.--
                    (A) In general.--The Administrator shall ensure 
                that information in the database is--
                            (i) published; and
                            (ii) accessible to the public, including in 
                        electronic format on the Internet.
                    (B) Exception.--Subparagraph (A) shall not apply in 
                any case in which the Administrator determines that 
                publishing or otherwise making available information 
                described in that subparagraph poses a risk to national 
                security or discloses confidential business information 
                that cannot be derived from information that is 
                otherwise publicly available and that would cause 
                competitive harm if published.
            (7) Data infrastructure.--The Administrator shall ensure, 
        to the maximum extent practicable, that the database uses, and 
        is integrated with, Federal, State, and regional greenhouse 
gas data collection and reporting systems in effect as of the date of 
enactment of this Act.
            (8) Additional issues to be considered.--In promulgating 
        the regulations under section 201(c)(1) and implementing the 
        database, the Administrator shall take into consideration a 
        broad range of issues involved in establishing an effective 
        database, including--
                    (A) the data and information systems and measures 
                necessary to identify, track, and verify greenhouse gas 
                emissions in a manner that will encourage private 
                sector trading and exchanges;
                    (B) the greenhouse gas reduction and sequestration 
                measurement and estimation methods and standards 
                applied in other countries, as applicable or relevant;
                    (C) the extent to which available fossil fuels, 
                greenhouse gas emissions, and greenhouse gas production 
                and importation data are adequate to implement the 
                database; and
                    (D) the differences in, and potential uniqueness 
                of, the facilities, operations, and business and other 
                relevant practices of persons and entities in the 
                private and public sectors that may be expected to 
                participate in the database.
    (d) Annual Report.--The Administrator shall publish an annual 
report that--
            (1) describes the total greenhouse gas emissions and 
        emission reductions reported to the database during the year 
        covered by the report;
            (2) provides entity-by-entity and sector-by-sector analyses 
        of the emissions and emission reductions reported;
            (3) describes the atmospheric concentrations of greenhouse 
        gases;
            (4) provides a comparison of current and past atmospheric 
        concentrations of greenhouse gases; and
            (5) describes the activity during the year covered by the 
        period in the trading of greenhouse gas emission allowances.

SEC. 204. MEASUREMENT AND VERIFICATION.

    (a) Standards.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, the Secretary shall establish by rule, 
        in coordination with the Administrator, the Secretary of 
        Energy, and the Secretary of Agriculture, comprehensive 
        measurement and verification methods and standards to ensure a 
        consistent and technically accurate record of greenhouse gas 
        emissions, emission reductions, sequestration, and atmospheric 
        concentrations for use in the registry.
            (2) Requirements.--The methods and standards established 
        under paragraph (1) shall include--
                    (A) a requirement that a covered entity use a 
                continuous emissions monitoring system, or another 
                system of measuring or estimating emissions that is 
                determined by the Secretary to provide information with 
                precision, reliability, accessibility, and timeliness 
                similar to that provided by a continuous emissions 
                monitoring system where technologically feasible;
                    (B) establishment of standardized measurement and 
                verification practices for reports made by all entities 
                participating in the registry, taking into account--
                            (i) protocols and standards in use by 
                        entities requiring or desiring to participate 
                        in the registry as of the date of development 
                        of the methods and standards under paragraph 
                        (1);
                            (ii) boundary issues, such as leakage;
                            (iii) avoidance of double counting of 
                        greenhouse gas emissions and emission 
                        reductions;
                            (iv) protocols to prevent a covered entity 
                        from avoiding the requirements of this Act by 
                        reorganization into multiple entities that are 
                        under common control; and
                            (v) such other factors as the Secretary, in 
                        consultation with the Administrator, determines 
                        to be appropriate;
                    (C) establishment of methods of--
                            (i) estimating greenhouse gas emissions, 
                        for those cases in which the Secretary 
                        determines that methods of monitoring, 
                        measuring or estimating such emissions with 
                        precision, reliability, accessibility, and 
                        timeliness similar to that provided by a 
                        continuous emissions monitoring system are not 
                        technologically feasible at present; and
                            (ii) reporting the accuracy of such 
                        estimations;
                    (D) establishment of measurement and verification 
                standards applicable to actions taken to reduce, avoid, 
or sequester greenhouse gas emissions;
                    (E) in coordination with the Secretary of 
                Agriculture, standards to measure the results of the 
                use of carbon sequestration and carbon recapture 
                technologies, including--
                            (i) soil carbon sequestration practices; 
                        and
                            (ii) forest preservation and reforestation 
                        activities that adequately address the issues 
                        of permanence, leakage, and verification;
                    (F) establishment of such other measurement and 
                verification standards as the Secretary, in 
                consultation with the Secretary of Agriculture, the 
                Administrator, and the Secretary of Energy, determines 
                to be appropriate;
                    (G) establishment of standards for obtaining the 
                Secretary's approval of the suitability of geological 
                storage sites that include evaluation of both the 
                geology of the site and the entity's capacity to manage 
                the site; and
                    (H) establishment of other features that, as 
                determined by the Secretary, will allow entities to 
                adequately establish a fair and reliable measurement 
                and reporting system.
    (b) Review and Revision.--The Secretary shall periodically review, 
and revise as necessary, the methods and standards developed under 
subsection (a).
    (c) Public Participation.--The Secretary shall--
            (1) make available to the public for comment, in draft form 
        and for a period of at least 90 days, the methods and standards 
        developed under subsection (a); and
            (2) after the 90-day period referred to in paragraph (1), 
        in coordination with the Secretary of Energy, the Secretary of 
        Agriculture, and the Administrator, adopt the methods and 
        standards developed under subsection (a) for use in 
        implementing the database.
    (d) Experts and Consultants.--
            (1) In general.--The Secretary may obtain the services of 
        experts and consultants in the private and nonprofit sectors in 
        accordance with section 3109 of title 5, United States Code, in 
        the areas of greenhouse gas measurement, certification, and 
        emission trading.
            (2) Available arrangements.--In obtaining any service 
        described in paragraph (1), the Secretary may use any available 
        grant, contract, cooperative agreement, or other arrangement 
        authorized by law.

           TITLE III--MARKET-DRIVEN GREENHOUSE GAS REDUCTIONS

     Subtitle A--Emission Reduction Requirements; Use of Tradeable 
                               Allowances

SEC. 301. COVERED ENTITIES MUST SUBMIT ALLOWANCES FOR EMISSIONS.

    (a) In General.--Beginning with calendar year 2010--
            (1) each covered entity in the electric generation, 
        industrial, and commercial sectors shall submit to the 
        Administrator one tradeable allowance for every metric ton of 
        greenhouse gases, measured in units of carbon dioxide 
        equivalents, that it emits from stationary sources, except 
        those described in paragraph (2);
            (2) each producer or importer of hydrofluorocarbons, 
        perfluorocarbons, or sulfur hexafluoride that is a covered 
        entity shall submit to the Administrator one tradeable 
        allowance for every metric ton of hydrofluorocarbons, 
        perfluorocarbons, or sulfur hexafluoride, measured in units of 
        carbon dioxide equivalents, that it produces or imports and 
        that will ultimately be emitted in the United States, as 
        determined by the Administrator under subsection (d) and
            (3) each petroleum refiner or importer that is a covered 
        entity shall submit one tradeable allowance for every unit of 
        petroleum product it sells that will produce one metric ton of 
        greenhouse gases, measured in units of carbon dioxide 
        equivalents, as determined by the Administrator under 
        subsection (b), when used for transportation.
    (b) Determination of Transportation Sector Amount.--For the 
transportation sector, the Administrator shall determine the amount of 
greenhouse gases, measured in units of carbon dioxide equivalents, that 
will be emitted when petroleum products are used for transportation.
    (c) Exception for Certain Deposited Emissions.--Notwithstanding 
subsection (a), a covered entity is not required to submit a tradeable 
allowance for any amount of greenhouse gas that would otherwise have 
been emitted from a facility under the ownership or control of that 
entity if--
            (1) the emission is deposited in a geological storage 
        facility approved by the Administrator described in section 
        204(a)(2)(G); and
            (2) the entity agrees to submit tradeable allowances for 
        any portion of the deposited emission that is subsequently 
        emitted from that facility.
    (d) Determination of Hydroflurocarbon, Perfluorocarbon, and Sulfur 
Hexafluoride Amount.--The Administrator shall determine the amounts of 
hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride, measured 
in units of carbon dioxide equivalents, that will be deemed to be 
emitted for purposes of this Act.

SEC. 302. COMPLIANCE.

    (a) In General.--
            (1) Source of tradeable allowances used.--A covered entity 
        may use a tradeable allowance to meet the requirements of this 
        section without regard to whether the tradeable allowance was 
        allocated to it under subtitle B or acquired from another 
        entity or the Climate Change Credit Corporation established 
        under section 351.
            (2) Verification by administrator.--At various times during 
        each year, the Administrator shall determine whether each 
        covered entity has met the requirements of this section. In 
        making that determination, the Administrator shall--
                    (A) take into account the tradeable allowances 
                submitted by the covered entity to the Administrator; 
                and
                    (B) retire the serial number assigned to each such 
                tradeable allowance.
    (b) Alternative Means of Compliance.--For the years after 2010, a 
covered entity may satisfy up to 15 percent of its total allowance 
submission requirement under this section by--
            (1) submitting tradeable allowances from another nation's 
        market in greenhouse gas emissions if--
                    (A) the Secretary determines that the other 
                nation's system for trading in greenhouse gas emissions 
                is complete, accurate, and transparent and reviews that 
                determination at least once every 5 years;
                    (B) the other nation has adopted enforceable limits 
                on its greenhouse gas emissions which the tradeable 
                allowances were issued to implement; and
                    (C) the covered entity certifies that the tradeable 
                allowance has been retired unused in the other nation's 
                market;
            (2) submitting a registered net increase in sequestration, 
        as registered in the database, adjusted, if necessary, to 
        comply with the accounting standards and methods established 
        under section 371;
            (3) submitting a greenhouse gas emissions reduction (other 
        than a registered net increase in sequestration) that was 
        registered in the database by a person that is not a covered 
        entity; or
            (4) submitting credits obtained from the Administrator 
        under section 303.
    (c) Dedicated Program for Sequestration in Agricultural Soils.--If 
a covered entity chooses to satisfy 15 percent of its total allowance 
submission requirements under the provisions of subsection (b), it 
shall satisfy up to 1.5 percent of its total allowance submission 
requirement by submitting registered net increases in sequestration in 
agricultural soils, as registered in the database, adjusted, if 
necessary, to comply with the accounting standards and methods 
established under section 371.

SEC. 303. BORROWING AGAINST FUTURE REDUCTIONS.

    (a) In General.--The Administrator shall establish a program under 
which a covered entity may--
            (1) receive a credit in the current calendar year for 
        anticipated reductions in emissions in a future calendar year; 
        and
            (2) use the credit in lieu of a tradeable allowance to meet 
        the requirements of this Act for the current calendar year, 
        subject to the limitation imposed by section 302(b).
    (b) Determination of Tradeable Allowance Credits.--The 
Administrator may make credits available under subsection (a) only for 
anticipated reductions in emissions that--
            (1) are attributable to the realization of capital 
        investments in equipment, the construction, reconstruction, or 
        acquisition of facilities, or the deployment of new 
        technologies--
                    (A) for which the covered entity has executed a 
                binding contract and secured, or applied for, all 
                necessary permits and operating or implementation 
                authority;
                    (B) that will not become operational within the 
                current calendar year; and
                    (C) that will become operational and begin to 
                reduce emissions from the covered entity within 5 years 
                after the year in which the credit is used; and
            (2) will be realized within 5 years after the year in which 
        the credit is used.
    (c) Carrying Cost.--If a covered entity uses a credit under this 
section to meet the requirements of this Act for a calendar year 
(referred to as the use year), the tradeable allowance requirement for 
the year from which the credit was taken (referred to as the source 
year) shall be increased by an amount equal to--
            (1) 10 percent for each credit borrowed from the source 
        year; multiplied by
            (2) the number of years beginning after the use year and 
        before the source year.
    (d) Maximum Borrowing Period.--A credit from a year beginning more 
than 5 years after the current year may not be used to meet the 
requirements of this Act for the current year.
    (e) Failure To Achieve Reductions Generating Credit.--If a covered 
entity that uses a credit under this section fails to achieve the 
anticipated reduction for which the credit was granted for the year 
from which the credit was taken, then--
            (1) the covered entity's requirements under this Act for 
        that year shall be increased by the amount of the credit, plus 
        the amount determined under subsection (c);
            (2) any tradeable allowances submitted by the covered 
        entity for that year shall be counted first against the 
        increase in those requirements; and
            (3) the covered entity may not use credits under this 
        section to meet the increased requirements.

SEC. 304. OTHER USES OF TRADEABLE ALLOWANCES.

    (a) In General.--Tradeable allowances may be sold, exchanged, 
purchased, retired, or used as provided in this section.
    (b) Intersector Trading.--Covered entities may purchase or 
otherwise acquire tradeable allowances from other covered sectors to 
satisfy the requirements of section 301.
    (c) Climate Change Credit Organization.--The Climate Change Credit 
Corporation established under section 351 may sell tradeable allowances 
allocated to it under section 332(a)(2) to any covered entity or to any 
investor, broker, or dealer in such tradeable allowances. The Climate 
Change Credit Corporation shall use all proceeds from such sales in 
accordance with the provisions of section 352.
    (d) Banking of Tradeable Allowances.--Notwithstanding the 
requirements of section 301, a covered entity that has more than a 
sufficient amount of tradeable allowances to satisfy the requirements 
of section 301, may refrain from submitting a tradeable allowance to 
satisfy the requirements in order to sell, exchange, or use the 
tradeable allowance in the future.

SEC. 305. EXEMPTION OF SOURCE CATEGORIES.

    (a) In General.--The Administrator may grant an exemption from the 
requirements of this Act to a source category if the Administrator 
determines, after public notice and comment, that it is not feasible to 
measure or estimate emissions from that source category, until such 
time as measurement or estimation becomes feasible.
    (b) Reduction of Limitations.--If the Administrator exempts a 
source category under subsection (a), the Administrator shall also 
reduce the total tradeable allowances under section 331(a)(1) by the 
amount of greenhouse gas emissions that the exempted source category 
emitted in calendar year 2000, as identified in the 2000 Inventory.
    (c) Limitation on Exemption.--The Administrator may not grant an 
exemption under subsection (a) to carbon dioxide produced from fossil 
fuel.

    Subtitle B--Establishment and Allocation of Tradeable Allowances

SEC. 331. ESTABLISHMENT OF TRADEABLE ALLOWANCES.

    (a) In General.--The Administrator shall promulgate regulations to 
establish tradeable allowances, denominated in units of carbon dioxide 
equivalents, for calendar years beginning after 2009, equal to--
            (1) 5896 million metric tons, measured in units of carbon 
        dioxide equivalents, reduced by
            (2) the amount of emissions of greenhouse gases in calendar 
        year 2000 from non-covered entities.
    (b) Serial Numbers.--The Administrator shall assign a unique serial 
number to each tradeable allowance established under subsection (a), 
and shall take such action as may be necessary to prevent 
counterfeiting of tradeable allowances.
    (c) Nature of Tradeable Allowances.--A tradeable allowance is not a 
property right, and nothing in this title or any other provision of law 
limits the authority of the United States to terminate or limit a 
tradeable allowance.
    (d) Non-Covered Entity.--In this section:
            (1) In general.--The term `non-covered entity' means an 
        entity that--
                    (A) owns or controls a source of greenhouse gas 
                emissions in the electric power, industrial, or 
                commercial sector of the United States economy (as 
                defined in the Inventory), refines or imports petroleum 
                products for use in transportation, or produces or 
                imports hydrofluorocarbons, perfluorocarbons, or sulfur 
                hexafluoride; and
                    (B) is not a covered entity.
            (2) Exception.--Notwithstanding paragraph (1), an entity 
        that is a covered entity for any calendar year beginning after 
        2009 shall not be considered to be a non-covered entity for 
        purposes of subsection (a) only because it emitted, or its 
        products would have emitted, 10,000 metric tons or less of 
        greenhouse gas, measured in units of carbon dioxide 
        equivalents, in the year 2000.

SEC. 332. DETERMINATION OF TRADEABLE ALLOWANCE ALLOCATIONS.

    (a) In General.--The Secretary shall determine--
            (1) the amount of tradeable allowances to be allocated to 
        each covered sector of that sector's allotments; and
            (2) the amount of tradeable allowances to be allocated to 
        the Climate Change Credit Corporation established under section 
        351.
    (b) Allocation Factors.--In making the determination required by 
subsection (a), the Secretary shall consider--
            (1) the distributive effect of the allocations on household 
        income and net worth of individuals;
            (2) the impact of the allocations on corporate income, 
        taxes, and asset value;
            (3) the impact of the allocations on income levels of 
        consumers and on their energy consumption;
            (4) the effects of the allocations in terms of economic 
        efficiency;
            (5) the ability of covered entities to pass through 
        compliance costs to their customers;
            (6) the degree to which the amount of allocations to the 
        covered sectors should decrease over time; and
            (7) the need to maintain the international competitiveness 
        of United States manufacturing and avoid the additional loss of 
        United States manufacturing jobs.
    (c) Allocation Recommendations and Implementation.--Before 
allocating or providing tradeable allowances under subsection (a) and 
within 24 months after the date of enactment of this Act, the Secretary 
shall submit the determinations under subsection (a) to the Senate 
Committee on Commerce, Science, and Transportation, the Senate 
Committee on Environment and Public Works, the House of Representatives 
Committee on Science, and the House of Representatives Committee on 
Energy and Commerce. The Secretary's determinations under subsection 
(a)(1), including the allocations and provision of tradeable allowances 
pursuant to that determination, are deemed to be a major rule (as 
defined in section 804(2) of title 5, United States Code), and subject 
to the provisions of chapter 8 of that title.

SEC. 333. ALLOCATION OF TRADEABLE ALLOWANCES.

    (a) In General.--Beginning with calendar year 2010 and after taking 
into account any initial allocations under section 334, the 
Administrator shall--
            (1) allocate to each covered sector that sector's 
        allotments determined by the Administrator under section 332 
        (adjusted for any such initial allocations and the allocation 
        to the Climate Change Credit Corporation established under 
        section 351); and
            (2) allocate to the Climate Change Credit Corporation 
        established under section 351 the tradeable allowances 
        allocable to that Corporation.
    (b) Intrasectorial Allotments.--The Administrator shall, by 
regulation, establish a process for the allocation of tradeable 
allowances under this section, without cost to covered entities, that 
will--
            (1) encourage investments that increase the efficiency of 
        the processes that produce greenhouse gas emissions;
            (2) minimize the costs to the Government of allocating the 
        tradeable allowances;
            (3) not penalize a covered entity for emissions reductions 
        made before 2010 and registered with the database; and
            (4) provide sufficient allocation for new entrants into the 
        sector.
    (c) Point Source Allocation.--The Administrator shall allocate the 
tradeable allowances for the electricity generation, industrial, and 
commercial sectors to the entities owning or controlling the point 
sources of greenhouse gas emissions within that sector.
    (d) Hydrofluorocarbons, Perfluorocarbons, and Sulfur 
Hexafluoride.--The Administrator shall allocate the tradeable 
allowances for producers or importers of hydrofluorocarbons, 
perfluorocarbons, or sulfur hexafluoride to such producers or 
importers.
    (e) Special Rule for Allocation Within the Transportation Sector.--
The Administrator shall allocate the tradeable allowances for the 
transportation sector to petroleum refiners or importers that produce 
or import petroleum products that will be used as fuel for 
transportation.
    (f) Allocations to Rural Electric Cooperatives.--
            (1) In general.--The Administrator shall make the 
        allocations described in paragraph (2) each year at no cost. 
        The allocations shall be offset from the allowances allocated 
        to the Climate Change Credit Corporation.
            (2) Rural electric cooperatives.--For each electric 
        generating unit that is owned or operated by a rural electric 
        cooperative, the Administrator shall allocate allowances in an 
        amount equal to the greenhouse gas emissions of each such unit 
        in 2000, plus an amount equal to the average emissions growth 
        expected for all such units.

SEC. 334. ENSURING TARGET ADEQUACY.

    (a) In General.--Beginning 2 years after the date of enactment of 
this Act, the Under Secretary of Commerce for Oceans and Atmosphere 
shall review the allowances established by section 331 no less 
frequently than biennially--
            (1) to re-evaluate the levels established by that section, 
        after taking into account the best available science and the 
        most currently available data, and
            (2) to re-evaluate the environmental and public health 
        impacts of specific concentration levels of greenhouse gases,
to determine whether the allowances established by subsection (a) 
continue to be consistent with the objective of the United Nations' 
Framework Convention on Climate Change of stabilizing levels of 
greenhouse gas emissions at a level that will prevent dangerous 
anthropogenic interference with the climate system.
    (b) Review of 2010 Levels.--The Under Secretary shall specifically 
review in 2008 the level established under section 331(a)(1), and 
transmit a report on his reviews, together with any recommendations, 
including legislative recommendations, for modification of the levels, 
to the Senate Committee on Commerce, Science, and Transportation, the 
Senate Committee on Environment and Public Works, the House of 
Representatives Committee on Science, and the House of Representatives 
Committee on Energy and Commerce.

SEC. 335. INITIAL ALLOCATIONS FOR EARLY PARTICIPATION AND ACCELERATED 
              PARTICIPATION.

    Before making any allocations under section 333, the Administrator 
shall allocate--
            (1) to any covered entity an amount of tradeable allowances 
        equivalent to the amount of greenhouse gas emissions reductions 
        registered by that covered entity in the national greenhouse 
        gas database if--
                    (A) the covered entity has requested to use the 
                registered reduction in the year of allocation;
                    (B) the reduction was registered prior to 2010; and
                    (C) the Administrator retires the unique serial 
                number assigned to the reduction under section 
                201(c)(3); and
            (2) to any covered entity that has entered into an 
        accelerated participation agreement under section 336, such 
        tradeable allowances as the Administrator has determined to be 
        appropriate under that section.

SEC. 336. BONUS FOR ACCELERATED PARTICIPATION.

    (a) In General.--If a covered entity executes an agreement with the 
Administrator under which it agrees to reduce its level of greenhouse 
gas emissions to a level no greater than the level of its greenhouse 
gas emissions for calendar year 1990 by the year 2010, then, for the 6-
year period beginning with calendar year 2010, the Administrator 
shall--
            (1) provide additional tradeable allowances to that entity 
        when allocating allowances under section 334 in order to 
        recognize the additional emissions reductions that will be 
        required of the covered entity;
            (2) allow that entity to satisfy 20 percent of its 
        requirements under section 301 by--
                    (A) submitting tradeable allowances from another 
                nation's market in greenhouse gas emissions under the 
                conditions described in section 302(b)(1);
                    (B) submitting a registered net increase in 
                sequestration, as registered in the National Greenhouse 
                Gas Database established under section 201, and as 
                adjusted by the appropriate sequestration discount rate 
                established under section 371; or
                    (C) submitting a greenhouse gas emission reduction 
                (other than a registered net increase in sequestration) 
                that was registered in the National Greenhouse Gas 
                Database by a person that is not a covered entity.
    (b) Termination.--An entity that executes an agreement described in 
subsection (a) may terminate the agreement at any time.
    (c) Failure To Meet Commitment.--If an entity that executes an 
agreement described in subsection (a) fails to achieve the level of 
emissions to which it committed by calendar year 2010--
            (1) its requirements under section 301 shall be increased 
        by the amount of any tradeable allowances provided to it under 
        subsection (a)(1); and
            (2) any tradeable allowances submitted thereafter shall be 
        counted first against the increase in those requirements.

             Subtitle C--Climate Change Credit Corporation

SEC. 351. ESTABLISHMENT.

    (a) In General.--The Climate Change Credit Corporation is 
established as a nonprofit corporation without stock. The Corporation 
shall not be considered to be an agency or establishment of the United 
States Government.
    (b) Applicable Laws.--The Corporation shall be subject to the 
provisions of this title and, to the extent consistent with this title, 
to the District of Columbia Business Corporation Act.
    (c) Board of Directors.--The Corporation shall have a board of 
directors of 5 individuals who are citizens of the United States, of 
whom 1 shall be elected annually by the board to serve as chairman. No 
more than 3 members of the board serving at any time may be affiliated 
with the same political party. The members of the board shall be 
appointed by the President of the United States, by and with the advice 
and consent of the Senate and shall serve for terms of 5 years.

SEC. 352. PURPOSES AND FUNCTIONS.

    (a) Trading.--The Corporation--
            (1) shall receive and manage tradeable allowances allocated 
        to it under section 333(a)(2); and
            (2) shall buy and sell tradeable allowances, whether 
        allocated to it under that section or obtained by purchase, 
        trade, or donation from other entities; but
            (3) may not retire tradeable allowances unused.
    (b) Use of Tradeable Allowances and Proceeds.--
            (1) In general.--The Corporation shall use the tradeable 
        allowances, and proceeds derived from its trading activities in 
        tradeable allowances, to reduce costs borne by consumers as a 
        result of the greenhouse gas reduction requirements of this 
        Act. The reductions--
                    (A) may be obtained by buy-down, subsidy, 
                negotiation of discounts, consumer rebates, or 
                otherwise;
                    (B) shall be, as nearly as possible, equitably 
                distributed across all regions of the United States; 
                and
                    (C) may include arrangements for preferential 
                treatment to consumers who can least afford any such 
                increased costs.
            (2) Transition assistance to dislocated workers and 
        communities.--The Corporation shall allocate a percentage of 
        the proceeds derived from its trading activities in tradeable 
        allowances to provide transition assistance to dislocated 
        workers and communities. Transition assistance may take the 
        form of--
                    (A) grants to employers, employer associations, and 
                representatives of employees--
                            (i) to provide training, adjustment 
                        assistance, and employment services to 
                        dislocated workers; and
                            (ii) to make income-maintenance and needs-
                        related payments to dislocated workers; and
                    (B) grants to State and local governments to assist 
                communities in attracting new employers or providing 
                essential local government services.
            (3) Phase-out of transition assistance.--The percentage 
        allocated by the Corporation under paragraph (2)--
                    (A) shall be 20 percent for 2010;
                    (B) shall be reduced by 2 percentage points each 
                year thereafter; and
                    (C) may not be reduced below zero.
            (4) Technology deployment programs.--The Corporation shall 
        establish and carry out a program, through direct grants, 
        revolving loan programs, or other financial measures, to 
        provide support for the deployment of technology to assist in 
        compliance with this Act by distributing the proceeds from no 
        less than 10 percent of the total allowances allocated to it. 
        The support shall include the following:
                    (A) Coal gasification combined-cycle and geological 
                carbon storage program.--The Corporation shall 
                establish and carry out a program, through direct 
                grants, to provide incentives for the repowering of 
                existing facilities or construction of new facilities 
                producing electricity or other products from coal 
                gasification combined-cycle plants that capture and 
                geologically store at least 90 percent of the carbon 
                dioxide produced at the facility in accordance with 
                requirements established by the Administrator to ensure 
                the permanence of the storage and that such storage 
                will not cause or contribute to significant adverse 
                effects on public health or the environment. The 
                Corporation shall ensure that no less than 20 percent 
                of the funding under this program is distributed to 
                rural electric cooperatives.
                    (B) Agricultural programs.--The Corporation shall 
                establish and carry out a program, through direct 
                grants, revolving loan programs, or other financial 
                measures, to provide incentives for greenhouse gas 
                emissions reductions or net increases in greenhouse gas 
                sequestration on agricultural lands. The program shall 
                include incentives for--
                            (i) production of wind energy on 
                        agricultural lands;
                            (ii) agricultural management practices that 
                        achieve verified, incremental increases in net 
                        carbon sequestration, in accordance with the 
                        requirements established by the Administrator 
                        under section 371; and
                            (iii) production of renewable fuels that, 
                        after consideration of the energy needed to 
                        produce such fuels, result in a net reduction 
                        in greenhouse gas emissions.

            Subtitle D--Sequestration Accounting; Penalties

SEC. 371. SEQUESTRATION ACCOUNTING.

    (a) Sequestration Accounting.--If a covered entity uses a 
registered net increase in sequestration to satisfy the requirements of 
section 301 for any year, that covered entity shall submit information 
to the Administrator every 5 years thereafter sufficient to allow the 
Administrator to determine, using the methods and standards created 
under section 204, whether that net increase in sequestration still 
exists. Unless the Administrator determines that the net increase in 
sequestration continues to exist, the covered entity shall offset any 
loss of sequestration by submitting additional tradeable allowances of 
equivalent amount in the calender year following that determination.
    (b) Regulations Required.--The Secretary, acting through the Under 
Secretary of Commerce for Science and Technology, in coordination with 
the Secretary of Agriculture, the Secretary of Energy, and the 
Administrator, shall issue regulations establishing the sequestration 
accounting rules for all classes of sequestration projects.
    (c) Criteria for Regulations.--In issuing regulations under this 
section, the Secretary shall use the following criteria:
            (1) If the range of possible amounts of net increase in 
        sequestration for a particular class of sequestration project 
        is not more than 10 percent of the median of that range, the 
        amount of sequestration awarded shall be equal to the median 
        value of that range.
            (2) If the range of possible amounts of net increase in 
        sequestration for a particular class of sequestration project 
        is more than 10 percent of the median of that range, the amount 
        of sequestration awarded shall be equal to the fifth percentile 
        of that range.
            (3) The regulations shall include procedures for accounting 
        for potential leakage from sequestration projects and for 
        ensuring that any registered increase in sequestration is in 
        addition to that which would have occurred if this Act had not 
        been enacted.
    (d) Updates.--The Secretary shall update the sequestration 
accounting rules for every class of sequestration project at least once 
every 5 years.

SEC. 372. PENALTIES.

    Any covered entity that fails to meet the requirements of section 
301 for a year shall be liable for a civil penalty, payable to the 
Administrator, equal to thrice the market value (determined as of the 
last day of the year at issue) of the tradeable allowances that would 
be necessary for that covered entity to meet those requirements on the 
date of the emission that resulted in the violation.
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