[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1151 Introduced in Senate (IS)]

  1st Session
                                S. 1151

To provide for a program to accelerate the reduction of greenhouse gas 
 emissions in the United States by establishing a market-driven system 
    of greenhouse gas tradeable allowances, to limit greenhouse gas 
emissions in the United States and reduce dependence upon foreign oil, 
 to support the deployment of new climate change-related technologies, 
 and ensure benefits to consumers from the trading in such allowances, 
                        and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 26, 2005

  Mr. McCain (for himself and Mr. Lieberman) introduced the following 
bill; which was read twice and referred to the Committee on Environment 
                            and Public Works

_______________________________________________________________________

                                 A BILL


 
To provide for a program to accelerate the reduction of greenhouse gas 
 emissions in the United States by establishing a market-driven system 
    of greenhouse gas tradeable allowances, to limit greenhouse gas 
emissions in the United States and reduce dependence upon foreign oil, 
 to support the deployment of new climate change-related technologies, 
 and ensure benefits to consumers from the trading in such allowances, 
                        and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Climate Stewardship and Innovation 
Act of 2005''.

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. Report on United States impact of Kyoto protocol.
Sec. 103. Research grants.
Sec. 104. Abrupt climate change research.
Sec. 105. Impact on low-income populations research.
Sec. 106. NIST greenhouse gas functions.
Sec. 107. Development of new measurement technologies.
Sec. 108. Enhanced environmental measurements and standards.
Sec. 109. Technology development and diffusion.
Sec. 110. Agricultural outreach program.
               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.
                Title IV--Innovation and Competitiveness

Sec. 401. Findings.
                 Subtitle A--Innovation Infrastructure

Sec. 421. The Innovation Administration.
Sec. 422. Technology transfer opportunities.
Sec. 423. Government-sponsored technology investment program.
Sec. 424. Federal technology innovation personnel incentives.
Sec. 425. Interdisciplinary research and commercialization.
Sec. 426. Climate innovation partnerships.
Sec. 427. National medal of climate stewardship innovation.
Sec. 428. Math and science teachers' enhancement program.
Sec. 429. Patent study.
Sec. 430. Lessons-learned program.
                Subtitle B--Specific Program Initiatives

Sec. 451. Transportation.
Sec. 452. Agricultural sequestration.
Sec. 453. Geological storage of sequestered greenhouse gases.
Sec. 454. Energy efficiency audits.
Sec. 455. Adaptation technologies.
Sec. 456. Advanced research and development for safety and 
                            nonproliferation.
           Subtitle C--Climate Technology Deployment Program

                       part i--program authority

Sec. 471. Government-industry partnerships for first-of-a-kind 
                            engineering design.
Sec. 472. Demonstration programs.
                           part ii--financing

Sec. 481. Climate Technology Financing Board.
Sec. 482. Responsibilities of the Secretary.
Sec. 483. Limitations.
Sec. 484. Source of funding for programs.
                         part iii--definitions

Sec. 486. Definitions.
        Subtitle D--Reverse Auction for Technology Dissemination

Sec. 491. Climate technology challenge program.

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 sectors 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; and
                    (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. REPORT ON UNITED STATES IMPACT OF KYOTO PROTOCOL.

    Within 6 months after the date of enactment of this Act, the 
Secretary shall execute a contract with the National Academy of Science 
for a report to the Senate Committee on Commerce, Science, and 
Transportation and the House of Representatives Committee on Science on 
the effects that the entry into force of the Kyoto Protocol without 
United States participation will have on--
            (1) United States industry and its ability to compete 
        globally;
            (2) international cooperation on scientific research and 
        development; and
            (3) United States participation in international 
        environmental climate change mitigation efforts and technology 
        deployment.

SEC. 103. 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. 104. 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. 105. IMPACT ON LOW-INCOME POPULATIONS RESEARCH.

    (a) In General.--The Secretary shall conduct research on the impact 
of climate change on low-income populations everywhere in the world. 
The research shall--
            (1) include an assessment of the adverse impact of climate 
        change on developing countries and on low-income populations in 
        the United States;
            (2) identify appropriate climate change adaptation measures 
        and programs for developing countries and low-income 
        populations and assess the impact of those measures and 
        programs on low-income populations;
            (3) identify appropriate climate change mitigation 
        strategies and programs for developing countries and low-income 
        populations and assess the impact of those strategies and 
        programs on developing countries and on low-income populations 
        in the United States; and
            (4) include an estimate of the costs of developing and 
        implementing those climate change adaptation and mitigation 
        programs.
    (b) Report.--Within 1 year after the date of enactment of this Act, 
the Secretary shall transmit a report on the research conducted 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.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary $2,000,000 to carry out the research 
required by subsection (a).

SEC. 106. 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. 107. 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. 108. 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(8) of the Climate Stewardship and Innovation 
Act of 2005) 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 these 
        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. 109. 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. 110. 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).

               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 204;
                    (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 the 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)(C)(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 203, 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 can not 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;
                    (E) 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;
                    (F) 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
                    (G) 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 under section 
        204(a)(2)(F); 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 2010 and after, 
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 372;
            (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 at least 01.5 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.--
            (1) In general.--In this section 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 sectors 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 paragraph 
(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 335, 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.--For each electric 
generating unit that is owned or operated by a rural electric 
cooperative, the Administrator shall allocate each year, at no cost, 
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. The allocations shall be offset from the 
allowances allocated to the Climate Change Credit Corporation.
    (g) Early Auction for Technology Deployment and Dissemination.--
            (1) In general.--Within 1 year after the date of enactment 
        of this Act, the Administrator, in consultation with the 
        Secretary of Energy and the Secretary of Commerce, shall 
        allocate tradeable allowances by the Climate Change Credit 
        Corporation for auction before 2010. The Climate Change Credit 
        Corporation shall use the proceeds of the auction, together 
        with any funds received as reimbursements under subtitle C of 
        title IV of this Act, to support the programs established by 
        that subtitle until the secretary of Energy and the Corporation 
        jointly determine that the purposes of those programs have been 
        accomplished. The Corporation shall also use the proceeds of 
        the auction to support the programs established by subtitle D 
        of title IV of this Act until 2010.
            (2) Determination of allocation.--In determining the amount 
        of tradeable allowances to be allocated to the Climate Change 
        Credit Corporation under this subsection, the Administrator 
        shall consider--
                    (A) the expected market value of tradeable 
                allowances for auction;
                    (B) the annual funding required for the programs 
                established by subtitle C of title IV;
                    (C) the repayment provisions of those programs; and
                    (D) the allocation factors in section 332(b).
            (3) Limitation.--In allocating tradeable allowances under 
        paragraph (1) the Administrator shall take into account the 
        purposes of section 331 and the impact, if any, the allocation 
        under paragraph (1) may have on achieving those purposes.
    (h) Allocation to Covered Entities in States Adopting Mandatory 
Greenhouse Gas Emissions Reduction Programs.--For a covered entity 
operating in any State that has adopted a legally binding and 
enforceable program to achieve and maintain reductions that are 
consistent with, or more stringent than, reductions mandated by this 
Act, and which requirements are effective prior to 2010, the 
Administrator shall consider such binding state actions in making the 
final determination of allocation to such covered entities.

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 
        subsection, 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.

    (a) 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.
    (b) Any covered entity that is subject to a State mandatory 
greenhouse gas emissions reduction program that meets the requirements 
of subsection (h) of section 333 shall be eligible for the allocation 
of allowances under this section and section 336 if the requirements of 
the State mandatory greenhouse gas emission reduction program are 
consistent with, or more stringent than, the emission targets 
established by this Act.

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 312(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) Adaptation and mitigation assistance for low-income 
        persons and communities.--The Corporation shall allocate at 
        least 10 percent of the proceeds derived from its trading 
        activities to funding climate change adaptation and mitigation 
        programs to assist low-income populations identified in the 
        report submitted under section 106(b) as having particular 
        needs in addressing the impact of climate change.
            (5) Adaptation assistance for fish and wildlife habitat.--
        The Corporation shall fund efforts to strengthen and restore 
        habitat that improves the ability of fish and wildlife to adapt 
        successfully to climate change. The Corporation shall deposit 
        the proceeds from no less than 10 percent of the total 
        allowances allocated to it in the wildlife restoration fund 
        subaccount known as the Wildlife Conservation and Restoration 
        Account established under section 3 of the Pittman-Robertson 
        Wildlife Restoration Act (16 U.S.C. 669b). Amounts deposited in 
        the subaccount under this paragraph shall be available without 
        further appropriation for obligation and expenditure under that 
        Act.
            (6) 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 50 percent of the total allowances allocated in 
        support of the program established under section 491.

            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 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.

                TITLE IV--INNOVATION AND COMPETITIVENESS

SEC. 401. FINDINGS.

    The Congress finds the following:
            (1) Innovation, the process that ultimately provides new 
        and improved products, manufacturing processes, and services, 
        is the basis for technological progress. This technological 
        advancement is a key element of sustained economic growth.
            (2) The innovation economy is fundamentally different from 
        the industrial or even the information economy. It requires a 
        new vision and new approaches.
            (D23/3) Changing innovation processes and the evolution of 
        the relative contribution made by the private and public 
        sectors have emphasized the need for strong industry-science 
        linkages.
            (4) Patent regimes play an increasingly complex role in 
        encouraging innovation, disseminating scientific and technical 
        knowledge, and enhancing market entry and firm creation.
            (5) Increasing participation and maintaining quality 
        standards in tertiary education in science and technology are 
        imperative to meet growing demand for workers with scientific 
        and technological knowledge and skills.
            (6) Research, innovation, and human capital are our 
        principal strengths. By sustaining United States investments in 
        research and finding collaborative arrangements to leverage 
        existing resources and funds in a scarce budget environment, we 
        ensure that America remains at the forefront of scientific and 
        technological capability.
            (7) Technology transfer of publicly funded research is a 
        critical mechanism for optimizing the return on taxpayer 
        investment, particularly where other benefits are not 
        measurable at all or are very long-term.
            (8) Identifying metrics to quantify program effectiveness 
        is of increasing importance because the entire innovation 
        process is continuing to evolve in an arena of increasing 
        global competition. Metrics need to take into account a wide 
        range of steps in a highly complex process, as well as the 
        ultimate product or service, but should not constrain the 
        continued evolution or development of new technology transfer 
        approaches.
            (9) The United States lacks a national innovation strategy 
        and agenda, including an aggressive public policy strategy that 
        energizes the environment for national innovation, and no 
        Federal agency is responsible for developing national 
        innovation policy.

                 Subtitle A--Innovation Infrastructure

SEC. 421. THE INNOVATION ADMINISTRATION.

    (a) In General.--Section 5 of the Stevenson-Wydler Technology 
Innovation Act of 1990 (15 U.S.C. 3704) is amended--
            (1) by striking ``a Technology'' in subsection (a) and 
        inserting ``an Innovation'';
            (2) by striking ``The Technology'' in subsection (a) and 
        inserting ``The Innovation'';
            (3) by striking ``of Technology'' in subsection (a)(3) and 
        inserting ``of Innovation'';
            (4) by striking ``Technology'' each place it appears in 
        subsection (b) and in subsection (c)(1) and inserting 
        ``Innovation'';
            (5) by inserting ``(1) In general.--'' before ``The 
        Secretary'' in subsection (c) and redesignating paragraphs (1) 
        through (15) as subparagraphs (A) through (O); and
            (6) by adding at the end of subsection (c) the following:
            ``(2) Specific innovation-related duties.--
                    ``(A) In general.--The Secretary, through the Under 
                Secretary, shall--
                            ``(i) provide advice to the President with 
                        respect to the policies and conduct of the 
                        Innovation Administration, including ways to 
                        improve research and development concerning 
                        climate change innovation and the methods of 
                        collecting and disseminating findings of such 
                        research;
                            ``(ii) provide advice to the President and 
                        the Congress on the development of climate 
                        change innovation research programs;
                            ``(iii) develop and monitor metrics to be 
                        used by the Federal government in managing the 
                        innovation process;
                            ``(iv) develop and establish government 
                        wide climate change innovation policy and 
                        strategic plans, consistent with the strategic 
                        plans of the United States Climate Change 
                        Science Program and the United States Climate 
                        Technology Challenge Program, including an 
                        implementation plan, developed in consultation 
                        with the Secretary of Energy and the Climate 
                        Change Credit Corporation, for the Climate 
                        Technology Challenge Program under section 491, 
                        addressing technology priorities, total 
                        funding, opportunities for Federal procurement, 
                        and other issues;
                            ``(v) review and evaluate on a continuing 
                        basis--
                                    ``(I) technologies available for 
                                transfer and deployment to the 
                                commercial sector;
                                    ``(II) all statutes and regulations 
                                pertaining to Federal programs which 
                                assist in the transfer and deployment 
                                of technologies, both domestically and 
                                internationally; and
                                    ``(III) new and emerging innovation 
                                policy issues affecting the deployment 
                                of new technologies, including 
                                identification of barriers to 
                                commercialization and recommendations 
                                for removal of those barriers;
                            ``(vi) assess the extent to which such 
                        policies, programs, practices, and procedures 
                        facilitate or impede the promotion of the 
                        policies set forth in subsection (b);
                            ``(vii) gather information about the 
                        implementation, effectiveness, and impact of 
                        the deployed climate change related 
                        technologies based on metrics developed under 
                        clause (iii);
                            ``(viii) make recommendations to the 
                        President and the Congress and other officials 
                        of Federal agencies or other Federal entities, 
                        regarding ways to better promote the policies 
                        developed under paragraph (1)(B);
                            ``(ix) provide advice, recommendations, 
                        legislative proposals to the Congress on a 
                        continuing basis, and any additional 
                        information the Agency or the Congress deems 
                        appropriate;
                            ``(x) make recommendations to the 
                        President, the Congress, and Federal agencies 
                        or entities regarding policy on Federal 
                        purchasing behavior that would provide 
                        incentives to industry to bring new products to 
                        market faster;
                            ``(xi) conduct economic analysis in support 
                        of climate change technology development and 
                        deployment;
                            ``(xii) work with academia to develop 
                        education programs to support the multi-
                        disciplinary nature of innovation;
                            ``(xiii) establish partnerships with 
                        industry to determine the needs for the future 
                        workforce to support deployed technologies;
                            ``(xiv) assist in the search for partners 
                        to establish public-private partnerships, and 
                        in searching for capital funds from the 
                        investment community for new businesses in the 
                        climate change technology sector; and
                            ``(xv) identify opportunities to promote 
                        cooperation on research, development, and 
                        commercialization with other countries and make 
                        recommendations, based on the opportunities so 
                        identified to the Secretary of State.
                    ``(B) Annual report.--
                            ``(i) In general.--The Administrator shall 
                        prepare and submit to the President and the 
                        appropriate committees of the Congress a report 
                        entitled `Climate Change Innovation: A Progress 
                        Report' within 6 months after the date of 
                        enactment of the Climate Stewardship and 
                        Innovation Act of 2005 and annually thereafter.
                            ``(ii) Contents.--The report shall assess 
                        the status of the Nation in achieving the 
                        purposes set forth in subsection (b), with 
                        particular focus on the new and emerging issues 
                        impacting the deployment of new climate change 
                        technologies. The report shall present, as 
                        appropriate, available data on research, 
                        education, workforce, financing, and market 
                        opportunities. The report shall include 
                        recommendations for policy change.
                            ``(iii) Consultation required.--In 
                        determining the findings, conclusions, and 
                        recommendations of the report, the Agency shall 
                        seek input from industry, academia, and other 
                        interested parties.''.
    (b) References.--Any reference to the Technology Administration in 
any other Federal law, Executive order, rule, regulation, or delegation 
of authority, or any document or pertaining to the Technology 
Administration or an officer or employee of the Technology 
Administration, is deemed to refer to the Innovation Administration or 
an officer or employee of the Innovation Administration, as 
appropriate.

SEC. 422. TECHNOLOGY TRANSFER OPPORTUNITIES.

    (a) In General.--The Secretary of Commerce shall conduct a study of 
technology transfer barriers, best practices, and outcomes of 
technology transfer activities at Federal laboratories related to the 
licensing and commercialization of energy efficient technologies, and 
other technologies that, compared to similar technology in commercial 
use, result in reduced emissions of greenhouse gases, increased ability 
to adapt to climate change impacts, or increased sequestration of 
greenhouse gases. The Secretary shall submit a report setting forth the 
findings and conclusions of the study to the Senate Committee on 
Commerce, Science, and Transportation and the House of Representatives 
Committee on Science within 6 months after the date of enactment of 
this Act. The Secretary shall work with the existing interagency 
working group to address identified barriers to technology transfer.
    (b) Business Opportunities Study.--The Secretary of Commerce shall 
perform an analysis of business opportunities, both domestically and 
internationally, available for climate change technologies. The 
Secretary shall transmit the Secretary's findings and recommendations 
from the first such analysis to the Senate Committee on Commerce, 
Science, and Transportation and the House of Representatives Committee 
on Science within 6 months after the date of enactment of this Act, and 
shall transmit a revised report of such findings and recommendations to 
those Committees annually thereafter.
    (c) Agency Report To Include Information on Technology Transfer 
Income and Royalties.--Paragraph (2)(B) of section 11(f) of the 
Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C. 3710(f)) 
is amended--
            (1) by striking ``and'' after the semicolon in clause (vi);
            (2) by redesignating clause (vii) as clause (ix); and
            (3) by inserting after clause (vi) the following:
                            ``(vii) the number of fully-executed 
                        licenses which received royalty income in the 
                        preceding fiscal year for climate-change or 
                        energy-efficient technology;
                            ``(viii) the total earned royalty income 
                        for climate-change or energy-efficient 
                        technology; and''.
    (d) Increased Incentives for Development of Climate-change or 
Energy-efficient Technology.--Section 14(a) of the Stevenson-Wydler 
Technology Innovation Act of 1980 (15 U.S.C. 3710c(a)) is amended--
            (1) by striking ``15 percent,'' in paragraph (1)(A) and 
        inserting ``15 percent (25 percent for climate change-related 
        technologies),''; and
            (2) by inserting ``($250,000 for climate change-related 
        technologies)'' after ``$150,000'' each place it appears in 
        paragraph (3).

SEC. 423. GOVERNMENT-SPONSORED TECHNOLOGY INVESTMENT PROGRAM.

    (a) Purpose.--It is the purpose of this section to provide 
financial support for the development, through private enterprise, of 
technology that has potential application to climate change adaptation 
and mitigation.
    (b) Financial Support.--The Secretary of Commerce may establish a 
nonprofit government sponsored enterprise for the purpose of providing 
investment in private sector technologies that show promise for climate 
change adaptation and mitigation applications.
    (c) Terms; Conditions; Transparency.--The Secretary shall report 
within 30 days after the end of each calendar quarter to the Senate 
Committee on Commerce, Science, and Transportation and the House of 
Representatives Committee on Science on its operations during that 
preceding calendar quarter.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Commerce for the use of the enterprise 
established under subsection (b) such sums as may be necessary to carry 
out the purpose of this section.

SEC. 424. FEDERAL TECHNOLOGY INNOVATION PERSONNEL INCENTIVES.

    The Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C. 
3701 et seq.) is amended by adding at the end the following:

``SEC. 24. FEDERAL TECHNOLOGY INNOVATION PERSONNEL INCENTIVES.

    ``(a) In General.--The head of a Federal laboratory may authorize 
the participation by any employee of the laboratory in an activity 
described in subsection (b) in order to achieve the purposes of this 
Act.
    ``(b) Authorized Activities.--
            ``(1) Commercial development participation arrangements.--
                    ``(A) In general.--The head of a Federal laboratory 
                may, under the authority provided by section 12(b)(5) 
                of this Act, authorize an employee to participate, as 
                an officer or employee, in the creation of an 
                enterprise established to commercially exploit research 
                work realized in carrying out that employee's 
                responsibilities as an employee of that laboratory for 
                a period of up to 24 months. The authority may be 
                renewed for an additional 12-month period.
                    ``(B) Limitations.--In addition to the requirements 
                set forth in section 12, an employee may not be 
                authorized under subparagraph (A) to participate in 
                such an enterprise if--
                            ``(i) it would be prejudicial to the normal 
                        functioning of the laboratory;
                            ``(ii) by its nature, terms and conditions, 
                        or the manner in which the authority would be 
                        exercised, participation by that employ would 
                        reflect adversely on the functions exercised by 
                        that employee as an employee of the laboratory, 
                        or risk compromising or calling in question the 
                        independence or neutrality of the laboratory; 
                        or
                            ``(iii) the interests of the enterprise are 
                        of such a nature as to be prejudicial to the 
                        mission or integrity of the laboratory or 
                        employee.
                    ``(C) Relationship to laboratory employment.--
                            ``(i) Representation.--The employee may not 
                        represent the employee's official position or 
                        the laboratory while participating in the 
                        creation of the enterprise.
                            ``(ii) Federal employment status.--
                        Beginning with the effective date of the 
                        authorization under subsection (a), an employee 
                        shall be placed in a temporary status without 
                        duties or pay and shall cease all duties in 
                        connection with the laboratory.
                            ``(iii) Return to service.--At the end of 
                        the authorization period, the employee may be 
                        restored to his former position in the 
                        laboratory upon termination of any employment 
                        or professional relationship with the 
                        enterprise.
            ``(2) Service in private sector advisory capacity.--
                    ``(A) In general.--The head of a Federal laboratory 
                may, under the authority provided by section 12(b)(5) 
                of this Act, authorize an employee to serve, as a 
                member of the board of directors of, as a member of an 
                advisory committee to, or in any similar capacity with 
                a corporation, partnership, joint venture, or other 
                business enterprise for a period of not more than 5 
                years in order to provide advice and counsel on ways to 
                improve the diffusion and use of an invention or other 
                intellectual property of a Federal laboratory.
                    ``(B) Qualifying investment.--Under the 
                authorization, an employee authorized to serve on the 
                board of directors of a corporation may purchase and 
                hold the number of qualifying shares of stock needed to 
                serve as a member of that board.
                    ``(C) Participation in certain proceedings.--An 
                employee authorized under subparagraph (A) may not 
                participate in any grant evaluation, contract 
                negotiation, or other proceeding in which the 
                corporation, partnership, joint venture, or other 
                business enterprise has an interest during the 
                authorization period.''.

SEC. 425. INTERDISCIPLINARY RESEARCH AND COMMERCIALIZATION.

    (a) In General.--The Director of the National Science Foundation 
shall develop and implement a plan to increase and establish priorities 
for funding for multidisciplinary and interdisciplinary research at 
universities in support of the adaptation to and mitigation of climate 
change. The plan shall--
            (1) address the cross-fertilization and fusion of research 
        within and across the biological and physical sciences, the 
        spectrum of engineering disciplines, and entirely new fields of 
        scientific exploration; and
            (2) include the area of emerging service sciences.
    (b) Report to Congress.--The Director shall transmit a copy of the 
plan to the Senate Committee on Commerce, Science, and Transportation 
and the House of Representatives Committee on Science within 6 months 
after the date of enactment of this Act.
    (c) Service Science Defined.--In this section, the term ``service 
science'' means the melding together of the fields of computer science, 
operations research, industrial engineering, mathematics, management 
science, decision sciences, social sciences, and legal sciences in a 
manner that may transform entire enterprises and drive innovation at 
the intersection of business and technology expertise.

SEC. 426. CLIMATE INNOVATION PARTNERSHIPS.

    (a) In General.--The Secretary of Commerce, in consultation with 
the Director of the National Science Foundation, shall create a program 
of public-private partnerships that--
            (1) focus on supporting climate change related regional 
        innovation;
            (2) bridge the gap between the long-term research and 
        commercialization;
            (3) focus on deployment of technologies needed by a 
        particular region in adapting or mitigating the impacts of 
        climate change; and
            (4) support activities that are selected from proposals 
        submitted in merit-based competitions.
    (b) Institutional Diversity.--In creating the program, the 
Secretary and the Administrator shall--
            (1) encourage institutional diversity; and
            (2) provide that universities, research centers, national 
        laboratories, and other non-profit organizations are allowed to 
        partner with private industry in submitting applications.
    (c) Grants.--The Secretary may make grants under the program to the 
partnerships, but the Federal share of funding for any project may not 
exceed 50 percent of the total investment in any fiscal year.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary such sums as may be necessary to carry 
out this section.

SEC. 427. NATIONAL MEDAL OF CLIMATE STEWARDSHIP INNOVATION.

    (a) In General.--There is established a National Medal of Climate 
Stewardship Innovation, which shall be of such design and materials, 
and bear such inscription, as the President may prescribe. The 
President shall award the medal on the basis of recommendations 
submitted by the National Science Foundation and the Secretary of 
Commerce to individuals who, in the judgment of the President, are 
deserving of special recognition by reason of their outstanding 
contributions to knowledge in the field of climate change innovation.
    (b) Criteria.--The medal shall be awarded in accordance with the 
following criteria:
            (1) Annual limit.--No more than 20 individuals may be 
        awarded the medal in any calendar year.
            (2) Citizenship.--No individual may be awarded the medal 
        unless, at the time the award is made, the individual is--
                    (A) a citizen or other national of the United 
                States; or
                    (B) an alien lawfully admitted to the United States 
                for permanent residence who--
                            (i) has filed a petition for naturalization 
                        in the manner prescribed by section 334 of the 
                        Immigration and Nationality Act (8 U.S.C. 
                        1445); and
                            (ii) is not permanently ineligible to 
                        become a citizen of the United States.
            (3) Posthumous award.--
                    (A) In general.--Notwithstanding paragraph (2), the 
                medal may be awarded posthumously to an individual who, 
                at the time of death, met the conditions set forth in 
                paragraph (2).
                    (B) 5-year limitation.--Notwithstanding 
                subparagraph (A), the medal may not be awarded 
                posthumously to an individual after the fifth 
                anniversary of that individual's death.
    (c) Inscription and Certificate.--Each medal shall be suitably 
inscribed. Each individual awarded the medal shall also receive a 
citation descriptive of the award.
    (d) Presentation.--The presentation of the medal shall be made by 
the President with such ceremonies as the President deems proper, 
including attendance by appropriate Members of Congress.

SEC. 428. MATH AND SCIENCE TEACHERS' ENHANCEMENT PROGRAM.

    (a) In General.--The Director of the National Science Foundation 
shall establish within the Foundation a climate change science and 
technology enhancement program for teachers.
    (b) Purpose.--The purpose of the program is to provide for 
professional development of mathematics and science teachers at 
elementary, middle, and secondary schools (as defined by the Director), 
including improving the education and skills of those teachers with 
respect to--
            (1) teaching strategies;
            (2) subject-area expertise; and
            (3) the understanding of climate change science and 
        technology and the environmental, economic, and social impacts 
        of climate change on commerce.
    (c) Program Areas.--In carrying out the program under this section, 
the Director shall focus on the areas of--
            (1) scientific measurements;
            (2) tests and standards development;
            (3) industrial competitiveness and quality;
            (4) manufacturing;
            (5) technology transfer; and
            (6) any other area of expertise that the Director 
        determines to be appropriate.
    (d) Application Procedure.--The Director shall prescribe procedures 
and selection criteria for participants in the program.
    (e) Awards.--The Director shall issue awards under the program to 
participants. In issuing the awards, the Director shall ensure that the 
maximum number of participants practicable participate in the program. 
In order to ensure a maximum level of participation of participants, 
the program under this section shall be conducted on an annual basis 
during the summer months, when a majority of elementary, middle, and 
secondary schools are not in classes.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated to the Director for carrying out this section--
            (1) $2,500,000 for fiscal year 2006; and
            (2) $2,500,000 for fiscal year 2007.

SEC. 429. PATENT STUDY.

    (a) In General.--The Director of the Patent and Trademark Office, 
in consultation with representatives of interested parties in the 
private sector, shall conduct a study to determine the extent to which 
changes to the United States patent system are necessary to increase 
the flow of climate change-related technologies. The study shall 
address--
            (1) the balance between the protection of the inventor and 
        the disclosure of information;
            (2) the role of patents in innovation within the covered 
        sectors;
            (3) the extent to which patents facilitate increased 
        investments in climate change research and development;
            (4) the international deployment of United States developed 
        climate change related technologies on the United States patent 
        system;
            (5) ways to leverage databases as innovation tools;
            (6) best practices for collaborative standard setting; and
            (7) any other issues the Director deems appropriate.
    (b) Report.--Within 6 months after the date of enactment of this 
Act, the Director shall transmit a report setting forth the findings 
and conclusions of the study to the Congress.

SEC. 430. LESSONS-LEARNED PROGRAM.

    (a) In General.--Within 180 days after the date of enactment of 
this Act, the Secretary of Energy shall establish a national lessons-
learned and best practices program to ensure that lessons learned and 
best practices concerning energy efficiency and greenhouse gas emission 
reductions are available to the public. The program shall contain 
consumer awareness initiatives including product labeling and campaigns 
to raise public awareness. The Secretary shall determine the process 
and frequency by which the information is provided.
            (b) Program Content.--The program--
            (1) may include experiences realized outside of the Federal 
        government;
            (2) shall include criteria by which entries in the program 
        are determined;
            (3) shall use a standardized, user-friendly format for data 
        reports; and
            (4) may include any other matters the Secretary deems 
        appropriate.

                Subtitle B--Specific Program Initiatives

SEC. 451. TRANSPORTATION.

    (a) In General.--The Secretary of Energy, the Administrator of the 
Environmental Protection Agency, and the Secretary of Transportation 
shall establish jointly a competitive, merit-based research program to 
fund proposals that--
            (1) develop technologies that aid in reducing fuel use or 
        reduce greenhouse gas emissions associated with any fuel;
            (2) further develop existing or new technologies to create 
        renewable fuels created from less carbon or energy-intensive 
        practices than current renewable fuel production; or
            (3) remove existing barriers for deployment of existing 
        fuels that dramatically reduce greenhouse gas emissions;
            (4) support low-carbon transportation fuels, including 
        renewable hydrogen, advanced cellulosic ethanol, and biomass-
        based diesel substitutes, and the technical hurdles to market 
        entry;
            (5) support short-term and long-term technology 
        improvements for United States cars and light trucks that 
        reduce greenhouse gas emissions, including advanced, high-power 
        hybrid vehicle batteries, advanced gasoline engine designs, 
        fuel cells, hydrogen storage, power electronics, and 
        lightweight materials;
            (6) support advanced heavy-duty truck technologies to 
        reduce greenhouse gas emissions from the existing and new 
        fleets, including aerodynamics, weight reduction, improved 
        tires, anti-idling technology, high-efficiency engines, and 
        hybrid systems; or
            (7) expand research into the climatological impacts of air 
        travel and support advanced technologies to reduce greenhouse 
        gas emissions from aircraft including advanced turbines, 
        aerodynamics, and logistics technology that reduces delays, 
        increases load factors and cuts in-air emissions.
    (b) Real-world Test Procedures.--The Administrator of the 
Environmental Protection Agency, in consultation with the Secretary of 
Transportation, shall--
            (1) conduct research and establish a Federal test procedure 
        for certifying fuel economy of heavy duty vehicles; and
            (2) update Federal test procedures for certifying fuel 
        economy of automobiles and light duty trucks so the results 
        better reflect real-world operating conditions.
    (c) Incorporation into Program.--The Secretaries shall ensure that 
the program established under subsection (a) is incorporated into the 
United States Climate Technology Challenge Program.
    (d) Marketing Study.--The Secretary of Transportation, in 
coordination with the Secretary of Commerce, shall conduct a study on 
how the government can accelerate the market for low-carbon vehicles. 
The results of the study shall be submitted to the Congress within 6 
months after the date of enactment of this Act.

SEC. 452. AGRICULTURAL SEQUESTRATION.

    (a) In General.--The Director of the Office of Science and 
Technology Policy shall establish an interagency panel of 
representatives from the United States Forest Service, Agriculture 
Research Service, Agricultural Experiment Stations and Extension 
Service, Economic Research Service Natural Resource Conservation 
Service, Environmental Protection Agency, the U.S. Geological Survey, 
and the National Institute of Standards and Technology to establish 
standards for measurement (and re-measurement) of sequestered carbon, 
including lab procedures, field sampling methods, and accuracy of 
sampling statistics.
    (b) Duties.--The interagency panel shall--
            (1) develop discounted default values for the amount of 
        greenhouse gas emission reductions due to carbon sequestration 
        or emissions reductions from improved practices and 
        technologies;
            (2) develop technologies for low-cost laboratory and field 
        measurement;
            (3) develop procedures to improve the accuracy of equations 
        used to estimate greenhouse gas emissions reductions produced 
        by adoption of improved land management technologies and 
        practices;
            (4) develop local and regional databases on carbon 
        sequestration in soils and biomass, greenhouse gas emissions, 
        and adopted land management technologies and practices;
            (5) develop computation methods for additionality discounts 
        for prospective greenhouse gas offsets;
            (6) develop entitywide reporting requirements to evaluate 
        project-level leakage;
            (7) develop commodity-specific greenhouse gas offset 
        discount factors for market-level leakage, and update those 
        factors periodically;
            (8) develop guidelines and standards for greenhouse gas 
        offset and reduction project monitoring and verification and 
        uniform qualifications for third party verifiers, including 
        specification of conflict of interest conditions;
            (9) increase landowner accessibility to technologies and 
        practices by--
                    (A) improving and expanding availability and 
                adoption of best management practices for soils, crop 
                residues, and forests to achieve additional carbon 
                sequestration that meets standards as bona fide 
                greenhouse gas offsets;
                    (B) improving and expanding availability and 
                adoption of best management practices for soils, crop 
                residues, and forests to achieve reductions in 
                emissions of carbon dioxide, methane, and nitrous 
                oxides that meet standards as bona fide greenhouse gas 
                emissions reductions; and
                    (C) establishing incentives for land managers to 
                help finance investments in facilities that produce 
                bona fide greenhouse gas offsets or reductions through 
                carbon sequestration or direct greenhouse gas emissions 
                reductions; and
            (10) establish best practices to address non-permanence and 
        risk of release of sequestered greenhouse gases by--
                    (A) assessing and quantifying risks, both advertent 
                and inadvertent, of release of greenhouse gases 
                sequestered in soils and biomass; and
                    (B) establishing insurance instruments concerning 
                the release, both advertent and inadvertent, of 
                sequestered greenhouse gases.
    (c) Additionality Defined.--In this section the term 
``additionality'' means emissions reduction and sequestration 
activities that result in atmospheric benefits that would not otherwise 
have occurred.

SEC. 453. GEOLOGICAL STORAGE OF SEQUESTERED GREENHOUSE GASES.

    (a) In General.--The Secretary of Energy, in consultation with the 
Secretary of Agriculture and the Administrator of the Environmental 
Protection Agency, shall establish guidelines for setting individual 
project baselines for reductions of greenhouse gas emissions and 
greenhouse gas storage in various types of geological formations to 
serve as the basis for determining the amount of greenhouse gas 
reductions produced by the project.
    (b) Specific Activities.--The Secretary of Energy, in consultation 
with the Director of the U.S. Geological Survey, shall--
            (1) develop local and regional databases on existing 
        practices and technologies for greenhouse gas injection in 
        underground aquifers;
            (2) develop methods for computation of additionality 
        discounts for prospective greenhouse gas reductions or offsets 
        due to carbon dioxide injection and storage in underground 
        aquifers;
            (3) develop accepted standards for monitoring of carbon 
        dioxide stored in geological subsurface reservoirs by--
                    (A) developing minimum suitability standards for 
                identifying and monitoring of geological storage sites 
                including oil, gas, and coal bed methane reservoir and 
                deep saline aquifers; and
                    (B) testing monitoring standards using sites with 
                long term (multi-decade) large injections of carbon 
                dioxide into oil field enhanced recovery projects; and
            (4) address non-permanence and risk of release of 
        sequestered greenhouse gas by--
                    (A) establishing guidelines for risk assessment of 
                inadvertent greenhouse gas release, both long-term and 
                short-term, associated with geological sequestration 
                sites; and
                    (B) developing insurance instruments to address 
                greenhouse gas release liability in geological 
                sequestration.
    (c) National Geological Carbon Sequestration Assessment.--
            (1) Findings.--The Congress finds the following:
                    (A) One of the most promising options for avoiding 
                emissions of carbon dioxide is through long-term 
                storage by geological sequestration in stable 
                geological formations, which involves--
                            (i) capturing carbon dioxide from 
                        industrial sources; and
                            (ii) injecting the captured carbon dioxide 
                        into geological storage sites, such as deep 
                        saline formations, unmineable coal seams, and 
                        depleted gas and oil fields.
                    (B) As of the date of introduction of this Act, 
                there are only very broad estimates of national 
                geological storage capacity.
                    (C) The potential to recover additional oil and gas 
                resources through enhanced oil and gas recovery using 
                captured carbon dioxide emissions is an option that 
                could add the equivalent of tens-of-billions of barrels 
                of oil to the national resource base.
                    (D) An initial geological survey of storage 
                capacity in the subsurface of sedimentary basins in the 
                United States would--
                            (i) provide estimates of storage capacity 
                        based on clearly defined geological parameters 
                        with stated ranges of uncertainty;
                            (ii) allow for an initial determination of 
                        whether a basin or 1 or more portions of the 
                        basin may be developed into a storage site; and
                            (iii) provide information on--
                                    (I) a baseline for monitoring 
                                injections and post injection phases of 
                                storage; and
                                    (II) early opportunities for 
                                matching carbon dioxide sources and 
                                sinks for early deployment of zero-
                                emissions fossil fuel plants using 
                                capture and storage technologies.
            (2) National Geological Carbon Sequestration Assessment.--
                    (A) Development and testing of assessment 
                methodology.--
                            (i) In general.--Not later than 1 year 
                        after the date of enactment of this Act, the 
                        Director of the United States Geological Survey 
                        shall develop and test methods for the conduct 
                        of a national assessment of geological storage 
                        capacity for carbon dioxide.
                            (ii) Opportunity for review and comment.--
                        During the period beginning on the date that is 
                        180 days after the date of enactment of this 
                        Act and ending on the date of completion of the 
                        development and testing of the methodologies 
                        under clause (i), the Director shall provide 
                        the Under Secretary for Oceans and Atmosphere 
                        of the Department of Commerce, the Secretary of 
                        Energy, the Administrator of the Environmental 
                        Protection Agency, the Director of the Minerals 
                        Management Service, the Director of the Bureau 
                        of Land Management, the heads of other Federal 
                        land management agencies, the heads of State 
                        land management agencies, industry 
                        stakeholders, and other interested parties with 
                        an opportunity to review and comment on the 
                        proposed methodologies.
                    (B) Assessment.--
                            (i) In general.--The Director shall conduct 
                        the assessment during the period beginning on 
                        the date on which the development and testing 
                        of the methodologies is completed under 
                        subparagraph (A) and ending 4 years after the 
                        date of enactment of this Act.
                            (ii) Availability of information.--The 
                        Director shall establish an Internet database 
                        accessible to the public that provides the 
                        results of the assessment, including a detailed 
                        description of the data collected under the 
                        assessment.
                            (iii) Report.--Not later than 1 year after 
                        the date on which the assessment is completed 
                        under clause (i), the Director shall submit to 
                        the appropriate committees of Congress and the 
                        President a report that describes the findings 
                        of the assessment.
            (3) Authorization of Appropriations.--There are authorized 
        to be appropriated $15,000,000 to carry out this section for 
        fiscal years 2006 through 2009.

SEC. 454. ENERGY EFFICIENCY AUDITS.

    (a) In General.--The Secretary of Energy shall establish a program 
to reduce greenhouse gas emissions through the deployment of energy 
efficiency measures, including appropriate technologies, by large 
commercial customers by providing for energy audits. The program shall 
provide incentives for large users of electricity or natural gas to 
obtain an energy audit.
    (b) Components.--The energy audit shall provide users with an 
inventory of potential energy efficiency measures, including 
appropriate technologies, and their cost savings over time, along with 
financing options to initiate the project.
    (c) Reimbursement of Audit Costs.--If any of the recommendations of 
an energy audit implemented by a facility owner result in cost savings 
greater than 5 times the cost of the original audit, then the facility 
owner shall reimburse the Secretary for the cost of the audit.

SEC. 455. ADAPTATION TECHNOLOGIES.

    (a) In General.--The Director of the Office of Science and 
Technology Policy shall establish a program on adaptation technologies 
as part of the Climate Technology Challenge Program. The Director shall 
perform an assessment of the climate change technological needs of 
various regions of the country. This assessment shall be provided to 
the Senate Committee on Commerce, Science, and Transportation and the 
House of Representatives Committee on Science within 6 months after the 
date of enactment of this Act.
    (b) Regional Estimates.--The Director of the Office of Science and 
Technology Policy, in consultation with the Secretaries of 
Transportation, Homeland Security, Agriculture, Housing and Urban 
Development, Health and Human Services, Defense, Interior, Energy, and 
Commerce, the Administrator of the Environmental Protection Agency , 
the Director of U.S. Geologic Survey, and other such Federal offices as 
the Director deems necessary, along with relevant State agencies, shall 
perform 6 regional infrastructure cost assessments covering the United 
States, and a national cost assessment, to provide estimates of the 
range of costs that should be anticipated for adaptation to the impacts 
of climate change. The Director shall develop those estimates for low, 
medium, and high probabilities of climate change and its potential 
impacts. The assessments shall be provided to the Senate Committee on 
Commerce, Science, and Transportation and the House of Representatives 
Committee on Science within 1 year after the date of enactment of this 
Act.

SEC. 456. ADVANCED RESEARCH AND DEVELOPMENT FOR SAFETY AND 
              NONPROLIFERATION.

    The Secretary of Energy shall establish, operate, and report 
biannually to Congress the results of--
            (1) a program of research and development focused on 
        advanced once-through fuel cycles;
            (2) a Nuclear System Modeling project to carry out the 
        analysis, research, simulation, and collection of engineering 
        data needed to evaluate all fuel cycles with respect to cost, 
        inherent safety, waste management and proliferation-avoidance 
        and -resistance; and
            (3) an Advanced Diversified Waste-Disposal Research 
        Program, to complement the current repository authorized under 
        the Nuclear Waste Policy Act, for deep-bore hole disposal 
        options, alternative geological environments, and improved 
        engineered barriers.

           Subtitle C--Climate Technology Deployment Program

                       part i--program authority

SEC. 471. GOVERNMENT-INDUSTRY PARTNERSHIPS FOR FIRST-OF-A-KIND 
              ENGINEERING DESIGN.

    (a) In General.--The Corporation may provide funding for a cost-
sharing program to address first-of-a-kind engineering costs inherent 
in building the first facility of a substantially new design that 
generates electricity with low or no net greenhouse gas emissions or 
produces transportation fuels that result in low or no net greenhouse 
gas emissions, including Integrated Gasification Combined Cycle 
Advanced Coal power generating facilities using carbon capture 
technology with geological storage of greenhouse gases, advanced 
reactor designs, large scale biofuels facilities that maximize the use 
of cellulosic biomass, and large scale solar concentrating power 
facilities.
    (b) Project Selection.--The Secretary of Energy in coordination 
with the Corporation shall select the final designs to be supported, in 
terms of reducing greenhouse gas emissions, demonstrating a new 
technology, meeting other clean air attainment goals, generating 
economic benefits, contributing to energy security, contributing to 
fuel and technology diversity, maintaining price stability, and 
attaining cost effectiveness and economic competitiveness.
    (c) Cost-sharing limitations.--
            (1) Corporation's share of costs.--Costs for the program 
        shall be shared equally between the Corporation and the builder 
        of such first facilities.
            (2) Nuclear reactors.--Funding under this section for any 
        nuclear facility--
                    (A) may not exceed $200,000,000 for an individual 
                project; and
                    (B) shall be available for no more than 1 of each 
                of the 3 designs certified by the Nuclear Regulatory 
                Commission.
    (d) Reimbursement of Costs.--For any subsequently-built facility 
that uses a design supported by the cost-sharing program under this 
section, the Secretary of Energy and the Corporation shall specify an 
amount to be paid to the Corporation in order for the Corporation to 
receive full reimbursement for costs the Corporation incurred in 
connection with the design, considering the program's objectives, 
including the costs of promoting the deployment of cost-effective, 
economically competitive technologies with no or low net greenhouse gas 
emissions.
    (e) Reimbursement for Delay.--If the construction of such a first 
facility of a substantially new design is not started within 10 years 
after the date on which a commitment under the cost-sharing program is 
made by the Secretary, then the industry partner shall reimburse the 
Corporation for any costs incurred by the Corporation under the 
program.
    (f) Jurisdiction.--
            (1) Nuclear Regulatory Commission.--Nothing in this Act 
        shall affect the jurisdiction of the Nuclear Regulatory 
        Commission over nuclear power plant design approvals or 
        combined construction and operating licenses pursuant to the 
        Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.).
            (2) Regulatory agencies.--Nothing in this Act affects the 
        jurisdiction of any Federal, State, or local government 
        regulatory agency.

SEC. 472. DEMONSTRATION PROGRAMS.

    (a) Nuclear Regulatory Commission Licensing Process.--
            (1) Demonstration program.--Within 24 months after the date 
        of enactment of this Act, the Secretary of Energy shall 
        establish a demonstration program to reduce the first-time 
        regulatory costs of the current Nuclear Regulatory Commission 
        licensing process incurred by the first applicant using an 
        advanced reactor design.
            (2) Permits; licenses; cost-sharing.--
                    (A) The demonstration program shall--
                            (i) address the Early Site Permit 
                        applications and the combined construction and 
                        operating license applications; and
                            (ii) be jointly funded by the Department of 
                        Energy and the applicant.
                    (B) The Secretary shall work with the applicant to 
                determine the appropriate percentage of costs that the 
                Department and the applicant shall each provide.
            (3) Reimbursement for license transfer.--If an applicant 
        decides to transfer a permit granted by the Commission under 
        the program to another entity, the applicant shall reimburse 
        the Department for its costs in obtaining the permit.
    (b) Retooling of Advanced Vehicle Manufacturing.--
            (1) In general.--Within 24 months after the date of 
        enactment of this Act, the Secretary of Energy shall establish 
        a program to demonstrate the effectiveness of retooling an 
        existing vehicle or vehicle component manufacturing facility to 
        reduce reduced greenhouse gas emissions from vehicles and 
        increasing competitiveness of advanced technology vehicle 
        production facilities.
            (2) Program elements.--
                    (A) Activities supported.--The demonstration 
                program shall be designed--
                            (i) to re-equip an existing manufacturing 
                        facility to produce advanced technology 
                        vehicles or components that will result in 
                        reduced greenhouse gas emissions; and
                            (ii) to conduct engineering integration 
                        activities of advanced technological vehicles 
                        and components.
                    (B) Funding.--The program shall be jointly funded 
                by the private sector and the Department of Energy. 
                Secretary of Energy shall work with participating 
                entities to determine the appropriate percentage of 
                costs that each shall provide.
                    (C) Eligible components and activities.--The 
                Secretary, in coordination with the Administrator of 
                the Environmental Protection Agency and the Secretary 
                of Transportation, shall determine what advanced 
                technology components and engineering integration 
                activities will qualify for support under the program.
                    (D) Eligible costs.--Costs eligible to be shared 
                under this subsection include the cost of engineering 
                tasks related to--
                            (i) incorporating qualifying components 
                        into the design of advanced technology 
                        vehicles; and
                            (ii) designing new tooling and equipment 
                        for production facilities that produce 
                        qualifying components or advanced technology 
                        vehicles.
            (3) Limitation.--No more than 2 facilities may receive 
        financial assistance under the program for re-equipment and 
        expansion or for engineering integration.
            (4) Advanced technology vehicle defined.--In this 
        subsection, the term ``advanced technology vehicle'' means a 
        light duty motor vehicle that is either a hybrid or advanced 
        lean burn technology motor vehicle, and that meets the 
        following additional performance criteria:
                    (A) The vehicle shall meet the Tier II Bin 5 
                emission standard established in regulations prescribed 
                by the Administrator under that Act.
                    (B) The vehicle shall meet any new emission 
                standard for fine particulate matter prescribed by the 
                Administrator under that Act.
                    (C) The vehicle shall achieve at least 125 percent 
                of the base year city fuel economy for its weight 
                class.

                           part ii--financing

SEC. 481. CLIMATE TECHNOLOGY FINANCING BOARD.

    (a) Purpose.--The Climate Technology Financing Board shall work 
with the Sedretary of Energy to make financial assistance available to 
joint venture partnerships and promote private sector participation in 
financing eligible projects under this subtitle.
    (b) Establishment.--
            (1) In general.--Not later than 90 days after the date of 
        enactment of this Act, the Secretary of Energy shall establish 
        within the Department of Energy a Climate Technology Financing 
        Board, which shall be responsible for assisting the Secretary 
        in carrying out this subtitle.
            (2) Membership.--The Climate Technology Financing Board 
        shall be comprised of--
                    (A) the Secretary of Energy, who shall serve as 
                chair; and
                    (B) 6 additional members appointed by the 
                Secretary, including--
                            (i) the Chief Financial Officer of the 
                        Department of Energy;
                            (ii) at least 1 representative of the 
                        Corporation; and
                            (iii) other members with experience in 
                        corporate and project finance in the energy 
                        sector as deemed necessary by the Secretary to 
                        carry out the functions of the Board.
            (3) Representation of federal interest.--The Climate 
        Technology Financing Board shall represent the Federal 
        government's interest in all negotiations with project 
        developers interested in forming joint venture partnerships and 
        obtaining secured loans or loan guarantees under this subtitle.
    (c) Regulations.--
            (1) In general.--Not later than 12 months after the date of 
        enactment of this Act, the Climate Technology Financing Board, 
        through the Secretary of Energy, shall publish in the Federal 
        Register such final regulations as may be necessary to 
        implement section 482 of this title.
            (2) Project selection criteria.--In selecting eligible 
        projects for financial assistance under this subtitle, the 
        Board shall consider, among other relevant criteria--
                    (A) the extent to which the project reduces 
                greenhouse gases, demonstrates new technologies, meets 
                other clean air attainment goals, generates economic 
                benefits, contributes to energy security, contributes 
                to fuel and technology diversity, and maintains price 
                stability, cost effectiveness, and economic 
                competitiveness;
                    (B) the extent to which assistance under this 
                subtitle would foster innovative public-private 
                partnerships and attract private equity investment;
                    (C) the likelihood that assistance under this 
                subtitle would enable the project to proceed at an 
                earlier date than the project would otherwise be able 
                to proceed without such assistance;
                    (D) the extent to which the project represents the 
                construction of the first generation of facilities that 
                use substantially new technology; and
                    (E) any other criteria deemed necessary by the 
                Secretary for the promotion of long-term cost effective 
                climate change-related technologies.
            (3) Mandatory regulatory provisions.--The regulations 
        required by paragraph (1) shall include the following:
                    (A) The general terms and conditions under which 
                non-recourse financial assistance will be provided. 
                Those terms shall include--
                            (i) a debt-to-equity ratio of up to 80 
                        percent debt from the Corporation, approved by 
                        the Secretary, and no less than 20 percent 
                        equity from the project developer;
                            (ii) a pledge of the eligible project's 
                        assets to the Secretary and the project 
                        developer to secure their respective loan and 
                        equity contributions; and
                            (iii) loan repayment terms generally 
                        consistent with financial terms available to 
                        project developers in the United States power 
                        generation industry.
                    (B) The general terms and conditions under which 
                loan guarantees will be provided, which shall be 
                consistent with section 483(c).
                    (C) The procedures by which project owners and 
                project developers may request such financial 
                assistance.
                    (D) A process under which the Climate Technology 
                Financing Board, the joint venture partnership, and the 
                project developer shall negotiate commercially 
                reasonable terms consistent with terms generally 
                available in the United States power generation 
                industry regarding cost, construction schedule, and 
                other conditions under which the project developer 
                shall acquire the loan from the joint venture 
                partnership and repay the secured loan and acquire an 
                undivided interest in the eligible project when the 
                project achieves commercial operation. Terms prescribed 
                under this subparagraph shall include--
                            (i) a defined right of the joint venture 
                        partnership to terminate the loan agreement 
                        upon a date certain for project delays that are 
                        not the fault of the project developer; and
                            (ii) may not refer to the Federal 
                        Acquisition Regulations.
                    (E) Provisions to retain independent third-party 
                engineering assistance, satisfactory to the Climate 
                Technology Financing Board, the project developer, and 
                the joint venture partnership, to verify and validate 
                construction costs and construction schedules, to 
                monitor construction, and authorize draws on financing 
                during construction to ensure that construction is 
                consistent with generally accepted utility practice, 
                and to make recommendations as to the cause of delay or 
                cost increases should such delays or cost increases 
                occur.
                    (F) Provisions to ensure--
                            (i) continued project development and 
                        construction in the event of a delay to 
                        achieving commercial operation caused by an 
                        event outside the control of the joint 
                        development partners and the project developer; 
                        and
                            (ii) continued project operations in the 
                        event the sale of the eligible project to the 
                        project developer is not executed due to an 
                        event outside the control of the project 
                        developer.
                    (G) Any other information necessary for the 
                Secretary of Energy to discharge fully the obligation 
                conferred under this subtitle, including a process for 
                negotiating the terms and conditions of such financial 
                assistance.
    (d) Comprehensive Implementation Plan.--Not later than 12 months 
after the date of enactment of this Act, the Climate Technology 
Financing Board shall prepare and transmit to the President and 
Congress a comprehensive plan for implementation of this subtitle.
    (e) Progress Reports.--Not later than 12 months after the 
comprehensive plan required by subsection (d) and annually thereafter 
the Secretary shall prepare and transmit to the President and the 
Congress a report summarizing progress in satisfying the requirements 
established by the subtitle.

SEC. 482. RESPONSIBILITIES OF THE SECRETARY.

    (a) Financial Assistance.--Subject to the requirements of the 
Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.), the 
Secretary, in coordination with the Corporation, may make available to 
joint venture partnerships for eligible project costs such Federal 
financial assistance as the Climate Technology Financing Board 
determines is necessary to enable access to, or to supplement, private 
sector financing for projects if the Board determines that such 
projects are needed to reduce greenhouse gas emissions, contribute to 
energy security, fuel or technology diversity, or clean air attainment 
goals. The Secretary, in coordination with the Corporation, shall 
prescribe such terms and conditions for financial assistance as the 
Secretary deems necessary or appropriate to protect the financial 
interests of the United States.
    (b) Requirements.--Approval criteria for financial assistance under 
subsection (a) shall include--
            (1) the creditworthiness of the project;
            (2) the extent to which Federal financial assistance would 
        encourage public-private partnerships, attract private-sector 
        investment, and demonstrate safe and secure electric generation 
        or fuel production technology;
            (3) the likelihood that Federal financial assistance would 
        hasten commencement of the project;
            (4) in the case of a nuclear power plant, whether the 
        project developer provides reasonable assurance to the 
        Secretary that the project developer can successfully manage 
        nuclear power plant operations;
            (5) the extent to which the project will demonstrate safe 
        and secure reduced or zero greenhouse gas emitting electric 
        generating or fuel production technology; and
            (6) any other criteria the Secretary deems necessary or 
        appropriate.
    (c) Reserve Amount.--Before entering into any agreements under this 
subtitle, the Secretary, in consultation with the Director of the 
Office of Management and Budget, shall determine an appropriate capital 
reserve subsidy amount for any loan or loan guarantee provided by the 
agreement. The Secretary, in consultation with the project developer, 
shall determine the appropriate type of Federal financial assistance to 
be provided for eligible projects.
    (d) Confidentiality.--The Secretary and the Corporation shall 
protect the confidentiality of any information that is certified by a 
project developer to be commercially sensitive.
    (e) Full Faith and Credit.--All loans or loan guarantees provided 
by the Secretary under this subtitle shall be general obligations of 
the United States backed by the full faith and credit of the United 
States.

SEC. 483. LIMITATIONS.

    (a) Secured Loans.--
            (1) In general.--The financial assistance provided by this 
        subtitle for secured loans or loan guarantees--
                    (A) shall be available for new low or zero 
                greenhouse gas emitting energy generating or fuel 
                production facilities, including--
                            (i) no more than 3 integrated gasification 
                        combined cycle coal power plants with carbon 
                        capture and geological storage of greenhouse 
                        gases;
                            (ii) no more than the first of each of the 
                        3 advanced reactor design projects for which 
                        applications for combined construction and 
                        operating licenses have been filed on or before 
                        December 31, 2015;
                            (iii) no more than 3 large scale biofuels 
                        production facilities that encourage a 
                        diversity of pioneer projects relying on 
                        different feedstocks in different regions of 
                        the country and maximizing the use of 
                        cellulosic biomass; and
                            (iv) no more than 3 large scale solar 
                        facilities of greater than 5 megawatts capacity 
                        which begin operation after December 31, 2005, 
                        and before January 1, 2011; and
                    (B) may not exceed 80 percent of eligible project 
                costs for each project.
            (2) Government-caused delays.--Paragraph (1)(B) of this 
        subsection does not apply if--
                    (A) with respect to a nuclear power plant--
                            (i) the conditions specified in the 
                        construction and operation license issued by 
                        the Nuclear Regulatory Commission change; and
                            (ii) the changed conditions result in 
                        project delays or changes in project scope 
                        after the start of construction that are not 
                        attributable to private sector project 
                        management, construction, or variances from the 
                        Nuclear Regulatory Commission's approved design 
                        criteria or safety requirements; or
                    (B) with respect to an advanced coal power plant, 
                biofuels production facility, solar power facility, or 
                other eligible facility--
                            (i) the conditions specified in the 
                        construction permit change; and
                            (ii) the changed conditions result in 
                        project delays or changes in project scope 
                        after the start of construction that are not 
                        attributable to private sector project 
                        management, construction, or variances from the 
                        approved design criteria or safety 
                        requirements.
            (3) Additional assistance.--If paragraph (1)(B) of this 
        subsection does not apply for reasons described in paragraph 
        (2), then the financial assistance payable to the project 
        developer shall include additional capital costs, costs of 
        project oversight, lost replacement power, and calculated 
        interest, as determined appropriate by the Secretary of Energy.
    (b) Loan Repayment Terms.--
            (1) The repayment terms for non-recourse secured loans made 
        under this subtitle shall be negotiated among the Climate 
        Technology Financing Board, the joint venture partnership, and 
        the project developer prior to issuance of the loan and 
        commencement of construction.
            (2) The project developer shall purchase the joint venture 
        partnership's interest in the project after the start of the 
        eligible project's commercial operation pursuant to the 
        conditions of the loan with the proceeds of refinancing from 
        non-Federal funding sources.
            (3) The value of the joint venture partnership's interest 
        in the eligible project shall be determined in negotiations 
        prior to issuance of a secured loan under the subtitle.
            (4) The interest rate on loans made under this subtitle 
        shall not be less than the yield on United States Treasury 
        securities of a similar maturity to the maturity of the loan on 
        the date of execution of the loan agreement.
            (5) A secured loan for an eligible project under this 
        subtitle shall be non-recourse to the joint venture partnership 
        in the event of bankruptcy, insolvency, liquidation, or failure 
        of the project to start commercial operation when the project 
        is ready for commercial operation.
    (c) Loan Guarantees.--
            (1) In general.--A loan guarantee shall apply only when a 
        project developer defaults on a loan solely as a result of the 
        regulatory actions, directly applied to the project, of a 
        State, Federal or local government.
            (2) Limitation.--Nothing in this subsection shall obligate 
        the Corporation or Secretary to provide payments in the event 
        of a default that results from a project developer's 
        malfeasance, misfeasance, or mismanagement of the construction 
        or operation of the project, or from conduct or circumstances 
        unrelated to the regulatory actions of any governmental entity.

SEC. 484. SOURCE OF FUNDING FOR PROGRAMS.

    Notwithstanding any other provision of law, or any other provision 
of this Act, authorizing or appropriating funds to carry out the 
provisions of this Act, no funds may be made available to carry out any 
activity under this subtitle except proceeds from the auction 
authorized by section 333(g) of this Act, subject to the limitation in 
section 333(g)(3).

                         part iii--definitions

SEC. 486. DEFINITIONS.

    In this subtitle:
            (1) Advanced reactor design.--The term ``advanced reactor 
        design'' means any reactor design approved and certified by the 
        Nuclear Regulatory Commission.
            (2) Cellulosic ethanol.--The term ``cellulosic ethanol'' 
        means ethanol produced from fibrous or woody plant materials.
            (3) Commercial operation.--
                    (A) Nuclear power facility.--With respect to a 
                nuclear power plant, the term ``commercial operation'' 
                means the date--
                            (i) on which a new nuclear power plant has 
                        received a full power 40-year operating license 
                        from the Nuclear Regulatory Commission; and
                            (ii) by which all Federal, State, and local 
                        appeals and legal challenges to such operating 
                        license have become final.
                    (B) Advanced coal power plants.--With respect to an 
                advanced coal power plant, the term ``commercial 
                operation'' means the date--
                            (i) on which a new power plant has received 
                        a full power rating; and
                            (ii) by which all Federal, State, and local 
                        appeals and legal challenges to the operating 
                        license for the power plant have become final.
            (4) Corporation.--The term ``Corporation'' means the 
        Climate Change Credit Corporation.
            (5) Eligible project.--The term ``eligible project'' 
        means--
                    (A) any commercial nuclear power facility for the 
                production of electricity that uses one or more 
                advanced reactor designs;
                    (B) any advanced coal power plant utilizing the 
                integrated gasification combined cycle technology with 
                carbon capture and geological storage of greenhouse 
                gases;
                    (C) any biofuels production facility which uses 
                cellulosic feedstock; or
                    (D) any power facility which uses solar energy for 
                the production of more than 75 percent of its annual 
                output, which output capacity shall not be less than 10 
                megawatts as determined by common engineering practice.
            (6) Eligible project costs.--The term ``eligible project 
        costs'' means all costs related to the development and 
        construction of an eligible project under this subtitle, 
        including, without limitation, the cost of--
                    (A) development phase activities, including site 
                acquisition and related real property agreements, 
                environmental reviews, licensing and permitting, 
                engineering and design work, off-taker agreements and 
                arrangements, and other preconstruction activities;
                    (B) fabrication and acquisition of equipment, 
                project construction activities and construction 
                contingencies, project overheads, project management 
                costs, and labor and engineering costs incurred during 
                construction;
                    (C) capitalized interest necessary to meet market 
                requirements, reasonably required reserve funds, 
                capital issuance expenses, and other carrying costs 
                during construction; and
                    (D) any other costs that the Climate Technology 
                Financing Board deems reasonable and appropriate as 
                eligible project costs.
            (7) Federal financial assistance.--The term ``Federal 
        financial assistance'' means project construction financing of 
        up to 80 percent of a project's eligible project costs in the 
        form of a non-recourse secured loan or loan guarantee.
            (8) First-of-a-kind Engineering Costs.--The term ``first-
        of-a-kind engineering costs'' means the extra costs associated 
        with the first units of a design category for engineering work 
        that develops the design details that finish plant 
        standardization up to a complete plant design and that can be 
        reused for building subsequent units.
            (9) Joint venture partnership.--The term ``joint venture 
        partnership'' means a special purpose entity, including 
        corporations, partnerships, or other legal entities established 
        to develop, construct, and finance an eligible project and to 
        receive financing proceeds in the form of non-recourse secured 
        loans provided by the Secretary and private equity provided by 
        project developers.
            (10) Loan.--The term ``loan'' means a direct non-recourse 
        loan issued to a joint venture partnership engaged in 
        developing an eligible project and funded by the Secretary 
        under this subtitle, which is subject to repayment by the joint 
        venture partnership under terms and conditions to be negotiated 
        among the project developer, joint venture partnership, and the 
        Secretary before the start of construction on the project.
            (11) Loan guarantee.--The term ``loan guarantee'' means any 
        guarantee or other pledge by the Secretary to pay all or part 
        of the principle and interest on a loan or other debt 
        obligation issued by a project developer related to its equity 
        investment and funded by a lender.
            (12) Project developer.--The term ``project developer'' 
        means a corporation, partnership, or limited liability company 
        that--
                    (A) provides reasonable assurance to the Secretary 
                that the project developer can successfully manage 
                plant operations;
                    (B) has the financial capability to contribute 20 
                percent equity to the development of the project; and
                    (C) upon commercial operation, will purchase the 
                project from the joint venture partnership.
            (13) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.
            (14) Subsidy amount.--The term ``subsidy amount'' means the 
        amount of budget authority sufficient to cover the estimated 
        long-term cost to the Federal government of a loan, calculated 
        on a net present value basis, excluding administrative costs 
        and any incidental effects on governmental receipts or outlays, 
        in accordance with the provisions of the Federal Credit Reform 
        Act of 1990 (2 U.S.C. 661 et seq.).

        Subtitle D--Reverse Auction for Technology Dissemination

SEC. 491. CLIMATE TECHNOLOGY CHALLENGE PROGRAM.

    (a) In General.--The Secretary of Energy, in coordination with the 
Climate Change Credit Corporation, shall develop and carry out a 
program in fiscal years 2006 through 2009, to be known as the ``Climate 
Technology Challenge Program''. The Secretary shall award funding 
through the program to stimulate innovation in development, 
demonstration, and deployment of technologies that have the greatest 
potential for reducing greenhouse gas emissions. The program shall be 
conducted as follows:
            (1) The Secretary shall post a request for zero or low 
        greenhouse gas energy services or products along with a 
        suggested level of funding for each competition.
            (2) The Secretary shall award the funding to the lowest 
        bidder in each competition who meets all other qualifications 
        in a form of a production incentive to supply--
                    (A) the requested services for a specified period 
                of time; or
                    (B) the requested product within a specified period 
                of time.
    (b) Funding.--
            (1) Source.--Notwithstanding any other provision of law, or 
        any other provision of this Act, authorizing or appropriating 
        funds to carry out the provisions of this Act, no funds may be 
        made available to carry out any activity under this subtitle 
        except proceeds from the auction authorized by section 333(g) 
        of this Act, subject to the limitation in section 333(g)(3).
            (2) Operating funds.--Beginning with fiscal year 2010, the 
        Climate Change Credit Corporation shall administer the Climate 
        Technology Challenge Program using funds generated under 
        section 352 of this Act.
    (c) Program Requirements.--
            (1) Competitive process.--Recipients of awards under the 
        program shall be selected through competitions conducted by the 
        Secretary.
            (2) Advertisement of competitions.--The Secretary shall 
        widely advertise any competitions conducted under the program.
            (3) Categories of competitions.--The Secretary shall 
        conduct separate competitions in the following areas of energy 
        and fuel production and services:
                    (A) Advanced coal (including integrated 
                gasification combined cycle) with carbon capture and 
                storage.
                    (B) Renewable electricity.
                    (C) Energy efficiency (including transportation).
                    (D) Advanced technology vehicles.
                    (E) Transportation fuels.
                    (F) Carbon sequestration and storage.
                    (G) Zero and low emissions technologies.
                    (H) Adaptation technologies.
                    (I) The Secretary may also conduct competition for 
                a general category to stimulate additional, 
                unanticipated advances in technology.
            (4) Evaluations and criteria for competitions.--
                    (A) Panel of experts.--The Secretary shall 
                establish a separate panel of experts to evaluate 
                proposals submitted under each competition.
                    (B) Competition criteria.--The Secretary, in 
                consultation with other relevant Federal agency heads, 
                shall set minimum criteria, including performance and 
                safety criteria, for each competition. Proposals shall 
                be evaluated on their ability to reduce, avoid, or 
                sequester greenhouse gas emissions at a given price.
                    (C) Full life cycle.--All proposals within a 
                competition shall compete on full life cycle avoided 
                greenhouse gas emissions (as weighted by global warming 
                potential) per dollar of incentive.
            (5) Report of awards.--In 2009 and every 5 years thereafter 
        the Secretary shall issue a report on the awards granted by the 
        program, funding provided, and greenhouse gas emissions avoided 
        or sequestered.
            (6) Program evaluation.--The Secretary, in coordination 
        with the National Academies of Science, shall evaluate the 
        continued necessity of the program and future funding needs 
        after fiscal year 2009. The evaluation shall be submitted 3 
        months before the end of fiscal year 2009 to the Congress and 
        the Climate Change Credit Corporation.
            (7) Review and revision by corporation.--The Climate Change 
        Credit Corporation shall review and revise the awards program 
        every 5 years starting in 2009, issuing new guidelines for the 
        next 5 years of Climate Technology Challenge Program by the end 
        of the fiscal year in which the evaluation in paragraph (6) is 
        reported. The Climate Change Credit Corporation shall assess 
        and adjust the categories of competitions as described in 
        paragraph (3) to ensure new developing technologies that 
        reduce, avoid, or sequester greenhouse gases and are in need of 
        financial assistance for further development and deployment are 
        the focus of the awards program.
    (d) Budgeting and Awarding of Funds.--
            (1) Availability of funds.--Any funds appropriated to carry 
        out this section shall remain available until expended, but for 
        not more than 4 fiscal years.
            (2) Deposit and withdrawal of funds.--When an award is 
        offered, the Secretary shall deposit the total amount of 
        funding made available for that award in the Climate Technology 
        Challenge Trust Fund. If funding expires before an award is 
        granted, the Secretary shall deposit additional funds in the 
        account to ensure the availability of funding for all awards. 
        If an award competition expires before its goals are met, the 
        Secretary may redesignate those funds for a new challenge, but 
        any redesignated funds will be considered as newly deposited 
        for the purposes of paragraph (3). All cash awards made under 
        this section shall be paid from that account.
            (3) Maximum award.--No competition under the program may 
        result in the award of more than $100,000,000 without the 
        approval of the Secretary.
            (4) Post-2010 funding.--Funding for the competitions after 
        fiscal year 2010 shall be taken from the Climate Change Credit 
        Corporation.
    (e) Registration; Assumption of Risk.--
            (1) Registration.--Each potential recipient of an award in 
        a competition under the program under this section shall 
        register for the competition.
            (2) Assumption of risk.--In registering for a competition 
        under paragraph (1), a potential recipient of a prize shall 
        assume any and all risks, and waive claims against the United 
        States Government and its related entities (including 
        contractors and subcontractors at any tier, suppliers, users, 
        customers, cooperating parties, grantees, investigators, and 
        detailees), for any injury, death, damage, or loss of property, 
        revenue, or profits, whether direct, indirect, or 
        consequential, arising from participation in the competition, 
        whether such injury, death, damage, or loss arises through 
        negligence or otherwise, except in the case of willful 
        misconduct.
    (f) Relationship to Other Authority.--The Secretary may exercise 
the authority in this section in conjunction with or in addition to any 
other authority of the Secretary to acquire, support, or stimulate 
basic and applied research, technology development, or prototype 
demonstration projects that promote reduced greenhouse gas emissions.
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