1.This Act may be cited as the
Safe Markets Development Act of
2009
.
2.The Congress finds—
(1)a
market-based, national emissions cap and trade program for greenhouse gases
shall help meet national mitigation goals with a high degree of certainty while
creating a new market for emissions allowances;
(2)ensuring a smooth
startup of the program is critical for meeting short- and long-term emissions
goals and maintaining public and political support for the program;
(3)the economy-wide
scale of the new allowance market and participation in the market of many
regulated entities with little or no experience with cap and trade programs
call for a careful startup phase for the program;
(4)stable and
predictable prices for allowances shall support development of cost-effective
mitigation technologies and ease the transition for businesses and consumers
making long-term investment decisions;
(5)recent experiences
in the oil, housing, electricity and financial markets suggest that many
markets are subject to boom and bust cycles and can be vulnerable to market
manipulation or speculative excesses and that lessons from these experiences
should guide the design of the new cap and trade program; and
(6)the risks of
speculative excess and market manipulation are highest in the initial period of
a cap and trade program while the regulatory systems to monitor allowance
markets are under development and regulated sources are less experienced in
market participation.
3.The purposes of this Act are to—
(1)establish an
auction mechanism for the collection of revenue that ensures a smooth price
path while achieving the emissions reductions necessary to stop climate change;
and
(2)direct the revenue
raised from the auction to a trust fund to be used for important public
purposes.
4.Issuing,
auctioning, and administering emissions allowances and collection of
revenue
(a)The Internal Revenue
Code of 1986 is amended by adding at the end the following new subtitle:
LAuction Based
Carbon Market
101
Subchapter A. Allowance auctions and
compliance obligations.
Subchapter B. Climate Oversight and
Coordination Board.
Subchapter C. Auction Revenue Trust
Fund.
Subchapter D. Assurance of cumulation
emissions.
Subchapter E.
Definitions.
AAllowance Auctions
and Compliance Obligations
Sec. 9901. Allowance auctions.
Sec. 9902. Allowance transfer system.
Sec. 9903. Compliance obligation.
Sec. 9904. Excess Emissions Penalty.
Sec. 9905. Allowance banking.
9901.
(a)The Secretary shall conduct auctions of
allowances in accordance with procedures established by the Board established
under subchapter B to meet the target allowance price for the year determined
by the Board. The auction schedule is as follows:
(1)Four auctions
shall be undertaken during each trading year.
(2)The first auction
of each trading year shall occur between April and June and at least three
weeks after the Board announces a target price for the trading year.
(3)The fourth auction
for each trading year shall be in the last month (March) of the trading
year.
(b)All revenue from the auctions under this section shall be
deposited in the Auction Revenue Trust Fund established under subchapter C.
Amounts deposited in such trust fund may be used, subject to annual
appropriation, only for the purposes specified in other provisions of
law.
9902.Allowance
transfer system
(a)The
Secretary shall establish a system for issuing, recording, and tracking
emission allowances, and shall maintain a registry of allowances for each
recorded holder of allowances.
(b)The Secretary shall establish, by rule, a mechanism
for the recording of emission allowances.
(c)The privilege of purchasing, holding, and transferring
emission allowances shall not be restricted to the owners and operators of
covered facilities.
9903.
(a)Not later than 90 days after the end of a calendar
year, the owner or operator of a covered facility shall submit to the Secretary
an emission allowance for each carbon dioxide equivalent attributable to such
facility as calculated by the Administrator under the Emissions
Registry.
(b)Upon receipt of an emission allowance under subsection
(a), the Secretary shall retire the allowance, and shall reduce that covered
entity’s registry account by a corresponding amount. The Secretary may also
retire other allowances as specified in section 9905.
9904.
(a)The owner or operator
of any covered facility that fails for any year to submit to the Secretary, by
the deadline described in section 9903(a), 1 or more of the emission allowances
due pursuant to that section shall be liable for the payment to the Secretary
of an excess emissions penalty on the date of such failure.
(b)The
amount of an excess emissions penalty required to be paid under paragraph (1)
shall be an amount equal to the product obtained by multiplying—
(1)the number of
excess emission allowances that the owner or operator failed to submit;
and
(2)the greater
of—
(A)$200; or
(B)3 times the mean
market value (as determined by the Secretary) of an emission allowance during
the calendar year for which the emission allowance were due.
(c)Deficiency
Procedures not To applySubchapter B of chapter 63 (relating to
deficiency procedure for income, estate, gift, and certain excise taxes) shall
not apply in respect of the assessment or collection of any penalty imposed by
subsection (a).
(d)Coordination
with other penaltiesThe penalty imposed by this section shall be
in addition to any other penalty imposed under any other provision of
law.
9905.In Phase I of the
program, the Secretary shall allow a covered entity to retain, after the
retirement of allowances equal to its emissions in the previous calendar year,
a sum of allowances equal to 5 percent of its emissions in the previous
calendar year. The Secretary shall retire from a covered entity’s account any
remaining allowances in excess of 5 percent of the entity’s emissions during
the previous calendar year. The Secretary shall also retire all allowances in
the registry accounts of non-covered entities at the end of each trading year
in Phase I of the program.
BClimate Oversight
and Coordination Board
Sec. 9911. Establishment of a Climate Program Oversight and
Coordination Board.
Sec. 9912. Initial expectations for annual
emissions.
9911.Establishment
of a Climate Program Oversight and Coordination Board
(a)There
is established a Climate Program Oversight and Coordination Board (hereafter in
this Act referred to as the Board
).
(b)The purposes of the Board are to—
(1)coordinate and
review the work of the Secretary, the Administrator, and other agencies in
implementing this Act;
(2)make forecasts and
to set targets for green house gas allowance prices;
(3)review the
functioning of carbon markets, including allowance auctions, secondary markets
in allowances and associated financial instruments (including futures,
forwards, options, swaps, and other derivative contracts);
(4)review the
regulation and oversight of carbon markets; and
(5)provide reports
and testimony to Congress in April or May of each year beginning in
2012.
(c)(1)The Board shall include 6 members who shall
be appointed by the President by and with the advice and consent of the Senate.
In appointing members of the Board, the President shall select individuals with
recognized expertise in relevant areas, including climate science and
economics, and energy and financial markets. Such persons shall have no other
employment. At least one member shall be a scientist with expertise in climate
change and the effects of climate change on the environment. In addition, Board
shall include the following three voting, ex-officio members: The Secretaries
of the Treasury and Energy and the Administrator of the Environmental
Protection Agency.
(2)The ex-officio members of the Board
shall serve without additional compensation and may not serve as Chairman or
Vice Chairman. The ex-officio members of the Board may, from time to time,
designate other officers or employees of their respective organizations to
carry out their duties on the Board.
(d)
(1)A member of the Board shall be compensated at the annual
rate of basic pay prescribed for level II of the Executive Schedule under
section 5313 of title 5, United States Code.
(2)The
Chairperson of the Board shall be compensated at the annual rate of basic pay
prescribed for level I of the Executive Schedule under section 5312 of title 5,
United States Code.
(e)
(1)The term of a member of the Board shall be
10 years, except that the members first appointed to the Board shall be
appointed for terms in a manner that ensures that the term of not more than 1
member shall expire during any 2-year period, and no member serves a term of
more than 10 years.
(2)A member shall take the oath of office of the Board by not
later than 15 days after the date on which the member is appointed.
(3)A
member may be removed from the Board on determination of the President for
cause. The President shall submit to Congress a notification of any
determination by the President to remove a member of the Board for
cause.
(4)A member of the Board the term of whom has
expired or otherwise been terminated shall continue to serve until the date on
which a replacement is appointed under subparagraph (A)(ii), if the President
determines that service to be appropriate. A vacancy on the Board shall not
affect the powers of the Board and shall be filled in the same manner as the
original appointment was made.
(5)Chairperson and
Vice-chairpersonFrom among members of the Board, the President
shall appoint 1 member to serve as Chairperson of the Board for a term of 4
years and member to serve as Vice-Chairperson of the Board for a term of 4
years.
(6)Ex-officio
members not coveredThe provisions of this subsection apply only
to Board members who are not ex-officio members.
(f)
(1)The President shall not appoint to the Board an
individual employed by, or holding any official relationship (including any
shareholder) with, any entity engaged in the generation, transmission,
distribution, or sale of energy, an individual who has any pecuniary interest
in the generation, transmission, distribution, or sale of energy, or an
individual who has a pecuniary interest in the implementation of this
Act.
(2)A member of the Board (other than an ex-officio
member) shall not hold any other employment during the term of service of the
member.
(g)The
Board may obtain the services of such experts and consultants as are necessary
to carry out the provisions of this Act. The administrative costs of the Board
shall be paid out of the revenue from auctions of greenhouse gas
allowances.
(h)Powers and duties
of the Board
(1)Forecast
emissions and allowance pricesBefore April 30, 2012, and before
April 30 of each successive year through 2019, the Board shall publish a
forecast of gradually rising allowance prices for the trading years through
2020 that the Board expects shall be associated with a gradual reduction in
emissions of greenhouse gases of covered entities until reaching the level of
4,911 million tons in 2020. In deciding upon a forecast of allowance prices the
Board shall—
(A)review forecasts
made by the Secretary of Energy (acting through the Energy Information Agency)
and the Administrator of the Environmental Protection Agency, as well as those
of private sector forecasters; and
(B)in the years 2013
through 2019, review and update its allowance price forecast as part of the
assessment under paragraph (4) of this subsection.
(2)Select annual
price targetsBefore April 30, 2012, and before April 30 of each
successive year through 2019, the Board shall select a target allowance price
for the trading year that begins on April 1 of that calendar year, as
follows:
(A)In 2012, the
target price shall be set at the price the Board determines will achieve the
annual emission expectation for the year as set forth in section 9912.
(B)In 2013 through
2019, the target price shall be the same as its forecast price for that year,
which may have been revised according to paragraph (4).
(3)The Board shall
establish procedures for auctions of allowances that would achieve the target
price on average over all trading of allowances during the year, including the
sales of allowances in auctions as well as in secondary market trading. To
achieve the target price, the total number of emission allowances issued in
auctions in any particular year may be more or less than the expected emissions
for that year as set forth in section 9912.
(4)Conduct an
annual assessmentOn or before April 30 of each year beginning in
2013, in consultation with the Secretary, the Secretary of Energy, and the
Administrator, the Board shall prepare an assessment of the program. In Phase I
of the program, the assessment shall include each of the following:
(A)Actual emissions of covered entities in
the previous calendar year.
(B)The progress in achieving the
environmental goals of the program.
(C)The effectiveness of the monitoring of
emissions, the registration of allowances, and the enforcement of compliance
requirements for covered entities.
(D)An analysis of the behavior of greenhouse
gases markets.
(E)The effectiveness of the price
target.
(F)The reasons for the difference between
actual emissions and the expected levels given in section 9912. In considering
the difference between actual and expected emissions, the Board shall
estimate—
(i)the amount of the difference that was
attributable to influences that pertain only to the given calendar year,
including but not limited to unusual weather or other transitory changes in
economic activity and energy use; and
(ii)the amount of the difference
attributable to influences that shall likely persist for multiple calendar
years and the likely duration of each such influence.
(G)A revision in its forecast of allowance
prices through 2020 in response to the persistent influences identified in
clause (ii) of subparagraph (F), but not in response to the transitory
influences identified in clause (i) of subparagraph (F).
(5)Make annual
reports to congressThe Chairman of the Board shall present the
assessment in a written report and in testimony before each house of Congress
in April or May of each year.
(6)Conduct a program
review in 2017The Board
shall present a report containing a thorough review of the program to the
Congress by October 1, 2017, and include in this report its recommendations for
any adjustments in the design features for Phase II of the program.
(i)Review by
government accountability officeNot later than January 1, 2015,
and every three years thereafter, the Comptroller General of the United States
shall conduct a review of the efficacy of the Board in fulfilling the purposes
and duties of the Board under this Act.
9912.Initial
expectations for annual emissionsThe initial expectation of the greenhouse
gas emissions of covered facilities in the cap and trade program are the
amounts for each of the calendar years 2012 through 2050 set forth in the
following table:
Calendar YearInitial Expectation of Emissions
(millions of tons of greenhouse gases)
20126,153
2013
5,998
20145,843
20155,687
20165,532
20175,377
20185,222
20195,066
20204,911
20214,756
20224,600
20234,445
20244,290
20254,135
20263,979
20273,824
20283,669
20293,514
20303,358
20313,203
20323,048
20332,892
20342,737
20352,582
20362,427
20372,271
20382,116
20391,961
20401,806
20411,650
20421,495
20431,340
20441,184
20451,029
2046874
2047719
2048563
2049408
2050253
CAuction Revenue
Trust Fund
Sec. 9921. Trust Fund.
9921.
(a)Creation of
Auction Revenue Trust FundThere is established in the Treasury of the
United States, the Auction Revenue Trust Fund.
(b)An
amount equivalent to all revenues received from the auction in subchapter A
shall be credited to the Trust Fund.
DAssurance of
Cumulation Emissions
Sec. 9931. Assurance of cumulative emissions
reductions.
9931.Assurance of
cumulative emissions reductions
(a)Excess emissions
2012–2019If the cumulative emissions of covered entities over
the years 2012 through 2019 exceed 1.1 times the sum of the expected emissions
over those years shown in the table in section 9912 (1.1 times 44,878 million
tons = 49,366 million tons), the excess over 49,366 million tons shall be made
up through a reduction in the target for emissions in the year 2020 by an
equivalent amount of tons.
(b)Excess emissions
2012–2020If the cumulative emissions of covered entities over
the years 2012 through 2020 exceed the sum of the expected emissions over those
years shown in section 9912 (49,789 million tons), the difference shall be made
up through reductions in the expected emissions for the years 2021 through
2030. Equal percentage reductions shall be made in expected emissions for the
years 2021 through 2030 so that the sum of those reductions equals the excess
of actual emissions over the expected cumulative emissions for the years 2012
through 2020.
(c)If the cumulative emissions of covered entities over
the years 2012 to 2020 are less than the sum of the expected emissions over
those years shown in the above table (49,789 million tons), no adjustment shall
be made in expected emissions in the years 2021 through 2030.
E
Sec. 9941. Definitions.
9941.For purposes of this subtitle:
(1)The term
Administrator means the Administrator of the Environmental
Protection Agency.
(2)The term
carbon dioxide equivalent means, for each greenhouse gas, the
quantity of greenhouse gas that the Administrator determines makes the same
contribution to global warming as 1 metric ton of carbon dioxide.
(3)The term covered facility
means, for each calendar year, a facility that emits greenhouse gases in that
year and that has an obligation to submit emission allowances for such
greenhouse gas emissions under any cap-and-trade program.
(4)The term emission
allowance
means an authorization, under any cap-and-trade
program, to emit 1 carbon dioxide equivalent of greenhouse gas.
(5)The term
Emissions Registry
means a greenhouse gases
emissions registry for all United States emissions of greenhouse gases
developed by the Administrator.
(6)The term
program or cap and trade program means an
economy-wide program enacted by Congress that auctions emission allowances for
the control of greenhouse gases.
(7)The term
Phase I of the program
means the years 2012 through
2019.
(8)The term
Phase II of the program
means the years 2020
through 2050.
(9)The term
price path is the forecast of emission allowance prices by the
Climate Program Oversight and Coordination Board.
(10)The term
Secretary means the Secretary of the Treasury.
(11)The term
trading year means the period from April 1 of the concurrent
calendar year through March 31 of the following calendar year (or the first
subsequent business day if those dates fall on a weekend or holiday).
(12)The term
Auction Revenue Trust Fund means the trust fund established in the
Treasury under section
9921.
.
(b)The table of subtitles for the Internal Revenue Code of
1986 is amended by adding at the end the following new item:
Subtitle L. Auction based carbon
market.
.