[Congressional Record Volume 154, Number 91 (Wednesday, June 4, 2008)]
[Extensions of Remarks]
[Pages E1136-E1137]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 INTRODUCTION OF THE INVESTING IN CLIMATE ACTION AND PROTECTION (iCAP) 
                                  ACT

                                 ______
                                 

                         HON. EDWARD J. MARKEY

                            of massachusetts

                    in the house of representatives

                        Wednesday, June 4, 2008

  Mr. MARKEY. Madam Speaker, I rise today to introduce the ``Investing 
in Climate Action and Protection Act''--or ``iCAP Act''--a bill to 
reduce global warming pollution to levels sufficient to avoid 
catastrophic climate change and to invest in America's transition to a 
secure and prosperous low-carbon future.
  The iCAP Act is founded on three fundamental principles:
  First, science solves problems. The scientific consensus is now 
unequivocal that global warming is happening, that manmade greenhouse 
gas emissions are largely responsible, and that we must reduce those 
emissions substantially over the coming decades if we are to avert a 
climate catastrophe. We have a moral obligation to listen to that 
scientific consensus and act upon it, by starting today to reduce 
global warming pollution to levels that will keep our planet safe for 
generations to come.
  Second, investing solves problems. We must invest in the American 
economy and in American workers, and launch an energy technology 
renaissance that will rival the information technology revolution of 
the past decade. We all benefited from the Industrial Age, and we have 
watched the dawn of the Information Age. Today, we must start the Clean 
Energy Age. This bill will provide a market-based push that will 
trigger an explosion of energy technology development that will give us 
the same ``Wow'' feeling that we get from our information technology--
bringing robust economic growth while meeting our climate goals.
  Third, American leadership solves problems. We must ensure America is 
the world leader in confronting our climate crisis, giving us the 
credibility and the technology to bring China, India, and the rest of 
the developing world under one large, climate-saving tent. In so doing, 
America will help protect vulnerable communities around the world from 
the dangers of global warming, including drought, famine, and flood. We 
will meet our international responsibilities while at the same time 
gaining global good will and protecting our national security 
interests.
  The iCAP bill implements these principles by establishing a ``cap-
and-invest'' system, which caps pollution, requires polluters to buy 
100 percent of the tradable pollution allowances at auction, and 
invests the auction proceeds in American consumers and in technologies 
and practices that save the climate while also saving costs.
  The core title of the bill amends the Clean Air Act to establish an 
EPA- administered cap-auction-and-trade program that covers 87 percent 
of U.S. greenhouse gas emissions. This program will begin to cut these 
emissions immediately and will reduce them to 85 percent below 2005 
levels by 2050--the U.S. contribution necessary to protect the global 
climate against dangerous warming.
  The cap covers all the major sources of greenhouse gases. These 
include the nearly 10,000 power plants and large industrial facilities 
that produce the majority of global warming pollution--facilities that 
are already regulated for other pollutants. Other covered entities 
include companies that produce or import petroleum- or coal-based 
liquid or gaseous fuels (like gasoline), companies that produce 
fluorinated gases (found) in everything from air conditioners and 
refrigerators to the electronics industry), and companies that 
distribute natural gas to consumers.
  The iCAP bill creates the market-based incentive to reduce global 
warming pollution by establishing a gradually declining budget of 
tradable pollution allowances for each year from 2012 through 2050, and 
by requiring polluters to surrender a sufficient number of allowances 
to cover their heat trapping emissions each year. Under iCAP, EPA will 
auction virtually all of these allowances, instead of giving them away 
for free to polluters. This approach reflects what we have learned over 
the past two decades.
  For many years, our environmental laws were based on performance 
standards. Every polluter was told how much or how little they could 
pollute. Everyone was given a standard and they all had to meet it. 
That approach can work for some pollutants, but it also can be very 
expensive.
  In 1990, Congress came up with a novel approach to address the acid 
rain problem caused by sulfur dioxide and nitrogen oxide emissions. 
This idea, sometimes called ``cap and trade,'' embraces the notion that 
all reductions are helpful but that some parties can achieve those 
reductions for much less. So if one party can reduce pollution 
relatively cheaply, then another party that finds it more expensive can 
trade money for the extra pollution reduction achieved by the more 
efficient party.

[[Page E1137]]

  The European Union adopted this approach in enacting their carbon 
dioxide emission reduction program, but it made some mistakes along the 
way from which the world has learned. One of those mistakes was to give 
the pollution allowances away to polluters for free. Economic theory 
and the EU experience have shown that only by implementing full 100 
percent auctions can we ensure that polluters do not receive windfall 
profits and that all energy sources are competing on a level playing 
field.

  The iCAP bill begins by auctioning 94 percent of the emission 
allowances from 2012 to 2019, and transitions to 100 percent auctions 
in 2020. Recognizing that some American industries--such as iron and 
steel, aluminum, cement, glass, and paper--face intense international 
trade competition, the bill provides transitional assistance to these 
industries. U.S. manufacturers in these industries will receive six 
percent of emission allowances from 2012 to 2019 before they, too, have 
to hid at auction for allowances. But note that, in order to stay 
competitive, these industries will need to begin innovating on day one.
  To reduce program costs, the iCAP bill permits unlimited trading of 
pollution allowances and banking of allowances for future use. It also 
allows a regulated party to satisfy up to 15 percent of its yearly 
compliance obligation with allowances ``borrowed'' from future years, 
provided the loan is repaid with interest within 5 years. A regulated 
entity can meet up to 15 percent of its yearly obligations using EPA-
approved domestic offset credits, based on greenhouse gas reductions 
achieved outside the cap. A regulated entity also may satisfy up to 15 
percent of its yearly obligations using foreign allowances or offset 
credits that meet rigorous EPA standards.
  The cap-auction-and-trade system established by the bill will give 
rise to a large and vigorous new ``carbon market,'' on which pollution 
allowances, offset credits, and derivatives such as futures and option 
contracts are traded. To ensure fairness, transparency, and stability 
in this new market, the bill establishes an Office of Carbon Market 
oversight within the Federal Energy Regulatory Commission, which is 
charged with prevention of fraud or market manipulation.
  Alongside the cap-auction-and-trade system, the iCAP bill adopts 
mandatory performance standards for certain other sources that cannot 
easily be included in the cap--such as coal mines, landfills, 
wastewater treatments, and large animal feeding operations. It also 
provides financial incentives to farmers and forest managers to 
adoption of practices that will further reduce global warming pollution 
and sequester carbon. Together with the cap, these measures will cover 
over 94 percent of U.S. greenhouse gas emissions--as much of the 
economy as is practicable to reach.
  The bill also establishes measures to encourage the coal industry to 
invest in new technology to adapt to the new low-carbon future. The 
International Energy Agency recently warned that, for the coal 
industry, ``a huge amount of investment and unprecedented technological 
breakthroughs such as in carbon capture and storage'' will be needed to 
meet the greenhouse gas reduction targets that scientists believe we 
most achieve by 2050. The iCAP bill will help us meet this challenge by 
requiring that any new coal-fired power plant use carbon capture and 
sequestration technology, and we give companies assistance to use this 
technology until 2020. To the extent that the coal industry, with 
plenty of support from the Federal Government, can make carbon capture 
and sequestration work, then it will be part of the energy portfolio in 
the future.
  Pollution allowance auctions under iCAP will generate a substantial 
amount of money. How should it be invested?
  The first investment is back into the pockets of working- and middle-
class Americans. Under this hill, half of the proceeds from polluter 
auctions flow directly back to consumers in the form of refundable tax 
credits and rebates, protecting 80 percent of America's families from 
increased energy costs while our economy transitions. In fact, over 60 
percent of U.S. households--those earning under $70,000--will be fully 
compensated, while benefits will be extended up to those making 
$110,000. In addition, substantial funds will go to job training for 
the hundreds of thousands of green collar jobs that our country will 
need filled, and to adjustment assistance to any workers who need help 
transitioning from carbon-intensive industries to the new low-carbon 
economy.
  The iCAP bill also invests heavily in technologies that will drive 
that low-carbon economy. The best, brightest, and cheapest source of 
clean energy is efficiency. That is why the iCAP bill devotes tens of 
billions of dollars each year--in partnership with State and local 
governments--to making our homes, buildings, and transportation systems 
more efficient. The bill invests tens of billions more in research, 
development, and deployment of the cutting-edge low-carbon energy 
technologies that will power America's future--including renewable 
energy, cellulosic ethanol, advanced hybrid vehicles, and carbon 
capture and sequestration.
  Unfortunately, even if we act now to avert catastrophic global 
warming, some climate change is already inevitable. Accordingly, the 
iCAP bill devotes substantial funding to increasing resilience--both 
here in the United States and in the most vulnerable developing 
countries--to those impacts.
  Finally, the bill sets up a system of carrots and sticks to encourage 
other countries to take action to combat global warming. The bill 
establishes an international forest protection fund to reduce heat 
trapping emissions from tropical deforestation. It also gives major 
developing countries that take ``comparable action'' to reduce global 
warming pollution access to an international clean technology fund, to 
promote deployment of low-carbon energy technologies. Only countries 
that take comparable action--or those that are among the least 
developed countries or that have very low emissions--will be able to 
sell offset credits into the U.S. market. And countries that fail to 
take comparable action by 2020 will have to buy special reserve 
allowances to cover the emissions generated by any covered primary 
goods--like iron and steel, aluminum, cement, glass, or paper--that 
they import into the United States. These incentives will help to 
ensure that all countries band together to combat global warming--as we 
must if we are to preserve our precious planet.
  Climate change represents the single greatest threat now facing 
humanity, but it also presents an unprecedented opportunity. The iCAP 
Act represents a bold and comprehensive response to that challenge and 
opportunity. I urge my colleagues to support this bill--to take action 
now to avert a climate catastrophe, to protect our national security, 
and to unleash a green energy revolution that will bring prosperity and 
robust economic growth to America. I am confident that after this bill 
reaches its goal in 2050--long after many of us have shuffled off our 
mortal coils--historians will look back on the beginning of this new 
millennium and say that it was an era of technological development that 
in the course of a generation changed the course of the planet.

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