Unlike previous versions, this one spells out which groups are politically-favored enough to receive preferential treatment in the form of free carbon dioxide emissions allowances. This draft also includes “Increased Investments in Energy Efficiency and Renewable Energy.” In other words, increased subsidies for politically-favored forms of energy. The premise of this section of the bill seems to be that the American people need the federal government to tell them how to use energy cost-effectively.

Like Waxman-Markey, this bill is shaping up to be incredibly costly and incredibly intrusive into all aspects our energy use.

1. It appears the Senators do not trust cap-and-trade to produce the result they want. If they did, the bill would not need to increase hundreds of pages of additional (and costly) energy regulations.
2. In spite of their claim that this bill will create jobs, portions of the bill suggest the Senators understand that their legislation will be costly for Americans. This is why the bill contains subsidies for people who lose their jobs as a result of the bill’s provisions.
3. It appears that the Senators want the Environmental Protection Agency (EPA) to regulate greenhouse gases using the Clean Air Act. Unlike the Waxman-Markey bill, the Boxer-Kerry permits EPA to move forward with regulations.[1] Even the Washington Post believes that it is not efficient for EPA to regulate greenhouse gases using the Clean Air Act.
4. A recent study shows that the Waxman-Markey bill will redistribute $14 billion per year from the nation’s poorest citizens to the nation’s richest citizen. Because the Boxer-Kerry bill is functionally similar to Waxman-Markey, the Boxer-Kerry bill will benefit the rich at the expense of the poor.

A couple other interesting features:

• The bill’s summary does not describe the bill as “cap-and-trade” bill. Instead, the cap-and-trade provisions are called “pollution reduction and investment.” Apparently, Americans are seeing cap-and-trade for what it is—a tax.
• The bill’s summary only mentions “greenhouse gases” once and does not mention carbon dioxide. Instead, the summary describes these emissions as “carbon pollution.” This is a misnomer, as New York Times reporter Andrew Revkin has pointed out. Not all greenhouse gases contain carbon (nitrous oxide and sulfur hexafluoride for example) and not all emissions which contain carbon are greenhouse gases (carbon monoxide is an example). It would seem that Senators Boxer and Kerry prefer a sound bite to accurately portraying the emissions they seek to regulate.

[1] As we have noted before, Waxman-Markey’s attempt to limit EPA’s ability to regulate greenhouse gases is ineffectual. The limitation only prohibits EPA from regulating greenhouse gases based on the impact on “global climate change.” (Sec. 831-835) That language does not prohibit EPA from regulating carbon dioxide based on non-global climate change concerns such as ocean acidification. This is especially telling because there are a number of sections in Waxman-Markey where climate change and ocean acidification are coupled (see e.g. Sec. 471).

Apparently, Senators Boxer and Kerry understand the difficulties they will face in passing a cap-and-trade bill this year. It seems that, in order to create leverage to secure more votes, the drafts do not completely spell out how the carbon dioxide allowances will be allocated. Instead the draft bills contain many placeholders. The following outlines the placeholders in the first bill leaked today:

SEC. 101. DISTRIBUTION OF ALLOWANCES FOR INVESTMENT IN CLEAN VEHICLES.

[PLACEHOLDER FOR AUTHORIZING LANGUAGE]

SEC. 124. DISTRIBUTION OF ALLOWANCES FOR COMMERCIAL DEPLOYMENT OF CARBON CAPTURE AND SEQUESTRATION.

[PLACEHOLDER FOR AUTHORIZING LANGUAGE]

SEC. 131. DISTRIBUTION OF ALLOWANCES TO STATES.

[PLACEHOLDER FOR AUTHORIZING LANGUAGE]

SEC. 201. ENERGY INNOVATION HUBS.

[PLACEHOLDER FOR AUTHORIZING LANGUAGE]

SEC. 202. ADVANCED ENERGY RESEARCH.

[PLACEHOLDER FOR AUTHORIZING LANGUAGE]

SEC. 454. ENERGY EFFICIENCY IN BUILDING CODES.

[PLACEHOLDER FOR TEXT PROVIDING ALLOCATION FOR PROGRAM UNDER SECTION 174]

SEC. 455. BUILDING RETROFIT PROGRAM.

[PLACEHOLDER FOR TEXT PROVIDING ALLOCATION FOR PROGRAM UNDER SECTION 175]

SEC. 456. FLOOD PREVENTION.

[PLACEHOLDER FOR TEXT PROVIDING ALLOCATION FOR PROGRAM UNDER SECTION 181]

SEC. 457. WILDFIRE.

PLACEHOLDER FOR TEXT PROVIDING ALLOCATION FOR PROGRAM UNDER SECTION 182]

SEC. 460. GREEN JOBS AND WORKER TRANSITION.

[PLACEHOLDER FOR TEXT PROVIDING ALLOCATION FOR PROGRAM UNDER SUBTITLE B OF TITLE III or for ENERGY EFFICIENCY AND RENEWABLE ENERGY WORKER TRAINING FUND UNDER SECTION 322]

SEC. 461. NATIONAL CLIMATE CHANGE ADAPTATION PROGRAM.

[PLACEHOLDER FOR TEXT PROVIDING ALLOCATION FOR PROGRAM UNDER SECTION 351]

SEC. 462. CLIMATE CHANGE HEALTH PROTECTION AND PROMOTION FUND.

[PLACEHOLDER FOR TEXT PROVIDING ALLOCATION FOR PROGRAM UNDER SECTION 367]

SEC. 463. CLIMATE CHANGE SAFEGUARDS FOR NATURAL RESOURCES CONSERVATION.

[PLACEHOLDER FOR TEXT PROVISING ALLOCATION FOR PROGRAM UNDER SUBPART C OF PART 1 OF SUBTITLE E OF TITLE III (section  371 et seq.)]

SEC. 464. NATURAL RESOURCES CLIMATE CHANGE ADAPTATION FUND.

PLACEHOLDER FOR TEXT PROVISING ALLOCATION FOR PROGRAM UNDER SECTION 380]

SEC. 465. INVESTMENT IN ENERGY EFFICIENCY AND RENEWABLE ENERGY.

PLACEHOLDER FOR TEXT PROVISING ALLOCATION FOR PROGRAMS UNDER SUBSECTIONS (a)(8), (b)(6), and (b)(7) of SECTION 782, and SECTION 788, of the Clean Air Act (as added by SECTION 411)]

Subtitle D—International Climate Change Program

Sec. 341.

TO BE SUPPLIED.

SEC. 2. FINDINGS.

TO BE SUPPLIED

SEC. 142. NUCLEAR WASTE RESEARCH AND DEVELOPMENT.

TO BE SUPPLIED

SEC. 173. ADVANCED BIOFUELS.

TO BE SUPPLIED

SEC. 181. FLOOD PREVENTION.

TO BE SUPPLIED

SEC. 790. ENERGY REFUND PROGRAM.

TO BE SUPPLIED

Subtitle D—International Climate Change Program

SEC. 341.

TO BE SUPPLIED.

SEC. 788. CLIMATE CHANGE CONSUMER REBATES.

TO BE SUPPLIED

After the first draft bill was leaked, and appeared in a story in Greenwire, an updated draft was leaked. This second draft did not contain as many placeholders as the first, instead it gives the EPA Administrator discretion to allocate many of the allowances. This still gives Senators Boxer and Kerry bargaining power to allocate allowances to politically preferred groups.

But it also raises an important question—if Congress needs to act to limit the damage of EPA regulating carbon dioxide under the Clean Air Act, how is the second Boxer-Kerry draft an improvement over EPA regulation? This is especially important because the Boxer-Kerry draft does not limit EPA authority to regulate greenhouse gases using the Clean Air Act.[1]