What’s Different? Waxman-Markey Vs. Kerry-Boxer Climate Bills

by Bill Chameides | October 2nd, 2009
posted by Erica Rowell (Editor)

Permalink | 6 comments

This post has been updated.

How does the newly unveiled Senate climate bill draft compare to the Waxman-Markey American Clean Energy and Security Act passed by the House in June?

As many have pointed out, the Kerry-Boxer bill has stuck pretty close to the Waxman-Markey template, but there are some differences. Here’s a quick run-through of some key distinctions, but keep in mind that some elements of the new bill (like the permit allocation distribution) have yet to be specified and others will be added as it wends its way through the various committees.

At a Glance: Waxman-Markey and Kerry-Boxer

House Bill (Waxman-Markey)
American Clean Energy and Security Act
Proposed Senate Bill (Kerry-Boxer)
Clean Energy Jobs and American Power Act
2020 Emissions Target Cuts emissions by 17% (using a 2005 baseline) Cuts emissions by 20% (using a 2005 baseline)
2030 Emissions Target 42% 42%
2050 Emissions Target 83% 83%
EPA’s authority to regulate greenhouse gas emissions

EPA authority superceded EPA retained
Carbon offsets Capped at 2 billion tons per year Capped at 2 billion tons per year
International carbon offsets

Capped at 50% of total offsets allowed (except when there are insufficient domestic offsets in which case cap rises to 75% of total) Capped at 25% of total offsets, with increased international oversight.
Carbon market: Oversight Carbon markets overseen by the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission (CFTC) Carbon markets overseen by CFTC only; regulators have more oversight
Carbon market: Cost stabilization Sets a $10/ton carbon permit price floor Sets a $11/ton carbon permit price floor
Carbon market: Cost containment Uses a “strategic reserve pool” to stabilize prices when they exceed 60% of the historical price. Uses a “strategic reserve pool” to stabilize prices when they reach a threshold price set at $28/ton in 2012 and increasing each year thereafter.
Trade protection Employs border tariffs to compensate for international carbon inequities No mechanism yet to deal with non-carbon constrained economies
Treatment of indirect land use emissions in assessing carbon content of biofuels Indirect land use emissions excluded from analysis (see my post on this) No language yet
Natural gas and nuclear energy Gives nuclear access to loan guarantees and clean energy investment funds as a clean energy technology  Includes provisions to promote nuclear energy and natural gas
Transportation Allows states to use carbon funds to support green transportation Requires states to use carbon funds to support green transportation
Methane emissions Regulates methane emissions from certain sources Methane reductions voluntary and can be used as offsets until 2020 when regulations kick in

The Hot-Button Issue? Nukes

While much will probably be made in the press of the tighter 2020 emissions target in the Kerry-Boxer bill, I think the nuclear provision will be the one that catches a lot of fire during the backroom negotiations.

The provision for nuclear energy in the Senate draft bill goes farther than Waxman-Markey in that it devotes an entire section to removing barriers and promoting the deployment of new nuclear plants. (Nuclear is included in Waxman-Markey as one clean-energy option, but isn’t front and center.)

Nevertheless, nuclear energy is one of those hot-button issues. For some Senate fence-sitters support for nuclear energy is critical (see my posts on Sens. Graham and McCain) and thus fleshing out these provisions may help to bring such folks into the fold. But for many environmentalists, support of nuclear power is a deal-killer. At least that was the case in 2005 when subsidies for nuclear were added to the McCain-Lieberman climate bill. The addition brought minimal support from the right, while losing the support of key Democratic senators (including Barbara Boxer). In the end the bill went down to a resounding defeat.

We’ll have to wait and see what happens this time. I predict one difference between this go-round and the last Senate effort on a climate bill: nuclear provision or not, a positive vote from the junior U.S. senator from California is in the bag. What do you think?

Correction – 10/14/2009: Water efficiency provisions dropped from table

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  1. Terry Moore
    Jan 5, 2010

    Can you explain, please, whether eith the Waxman-Markey bill or the Kerry-boxer bill would allow regulated entities to host offset projects? I can find no language addresses this, although the basic concept of offsets is that they would in general be hosted by non-regulated facilities. Both bills leave decisions on offset project eligibility definition to the EPA rule-making process. During the House debate on the day Waxman-Markey was passed, Rep.Waxman responded to a question asking “where will the first offsets come from?” by saying he expected the EPA to approve some of the existing methodologies and projects in existing voluntary programs such as the CCX. These protocols can measure scope 2 (indirect reductions via reduced purchase electricity), so it seems logical that a regulated facility could host a scope 2 project and earn offsets from the project.

    • Bill Chameides
      Feb 1, 2010

      Terry, In principle, the basic answer to your question is no. If the emissions are from a regulated source under the cap, offsets cannot be counted as an additional emission reduction. Offsets by definition have to come from outside the cap and be additional. This Web site has a nice breakdown of the differences: Note parts in all caps (which are mine) from excerpt: “’OFFSET CREDITS’ ARE GENERATED BY EMISSION REDUCTIONS AT PROJECTS THAT ARE NOT SUBJECT TO THE EMISSION CAP THAT GENERATE TRADABLE INSTRUMENTS (THE OFFSETS) THAT CAN BE USED FOR COMPLIANCE PURPOSES BY CAPPED ENTITIES IN LIEU OF ALLOWANCES. Both ACESA and Kerry-Boxer would allow two billion tons of offsets to be used per year by covered entities to meet their compliance obligations. Kerry-Boxer sets an initial split allowing 75 percent of these two billion offsets to be from domestic projects, and 25 percent of them to be from foreign projects. However, the amount of international offsets can increase by 750 million if there are insufficient domestic offsets available for compliance. By comparison, ACESA sets the initial split at 50/50, allowing another 500 million tons of international offsets if domestic offsets are unavailable. TO THE EXTENT THAT SOURCES ARE SUBJECT TO COMMAND-AND-CONTROL REGULATION — LIKE NEW SOURCE PERFORMANCE STANDARDS (NSPS) UNDER THE CLEAN AIR ACT — THEY ARE INELIGIBLE TO GENERATE OFFSETS. KERRY-BOXER PROVIDES THAT UNTIL THE YEAR 2020, THE EPA SHALL NOT PROMULGATE NSPS FOR GREENHOUSE GASES FOR SOURCES THAT ARE UNCAPPED AND QUALIFY AS OFFSET PROJECTS. THIS APPEARS TO BE A METHOD FOR ALLOWING DOMESTIC OFFSETS TO BE GENERATED FROM METHANE EMISSIONS FROM COAL MINES, LANDFILLS, AND THE CAPTURE OF VENTING, FLARING, AND FUGITIVE EMISSIONS FROM OIL AND GAS SYSTEMS, WHICH THE BILL EXPLICITLY SAYS EPA MUST CONSIDER AS A POTENTIAL OFFSET TYPE. THIS IS IMPORTANT AS THESE METHANE OFFSETS CAN PRODUCE A SIGNIFICANT NUMBER OF DOMESTIC OFFSETS. BY COMPARISON, ACESA TARGETS METHANE EMISSION SOURCES FOR COMMAND-AND-CONTROL REGULATION, WHICH WOULD RENDER SOURCES INELIGIBLE TO QUALIFY AS OFFSETS TO THE EXTENT THEY ARE REGULATED. Under analyses of ACESA by the EPA, the Energy Information Agency, and others, offsets have been recognized as a potentially key source of lower-cost instruments for satisfying the compliance obligations of covered entities. The availability or lack of offsets, either domestically and internationally, can significantly reduce or increase the overall costs of compliance of covered entities.” – – – – – – – – – – More specifically, within the bills, EPA and/or USDA get to decide who is allowed to provide offsets. The bills do not specifically exclude anyone, leaving that to EPA/USDA. Whether or not covered entities could provide offsets sort of depends on your definition of covered entities. If a facility, e.g., a steel plant, is under the cap then it would not be able to provide offsets. If it is in a normally capped sector (e.g., steel manufacturing but the facility itself is not capped — it is below the 25,000-ton CO2 emissions threshold), then it’s possible that they could be allowed to supply offsets by making emissions reductions. But again, it’s EPA/USDA’s call.

  2. Sarah
    Oct 14, 2009

    Can you elaborate on what EPA authority is superseded/retained? What I’ve seen is that in Waxman-Markey, it directed EPA to set emissions standards on sources outside of the cap while in Kerry-Boxer it forbid EPA from regulating these sources until 2020 to allow for offset generation from sources outside of the cap. I do recall that the Waxman-Markey bill disallowed EPA from considering GHG/climate change impacts in Title V permits, perhaps this is what you’re referreing to? Does Kerry-Boxer explicitly allow this for new sources and if so how does it handle the double regulation of these sources under EPA permits + cap and trade? Can you point me to a section in the bill?

    • Bill Chameides
      Oct 23, 2009

      Sarah, I was specifically referring to Waxman-Markey limiting EPA’s authority under the Clean Air Act. Waxman-Markey prohibits EPA from: 1) classifying GHGs as criteria pollutants on the basis of their climate impacts (Sec. 831), 2) designating any GHG as a hazardous air pollutant on the basis of its climate impacts (Sec. 833), 3) setting New Source Review standards for GHGs on the basis of their climate impacts (Sec. 834), and 4) considering the climate impacts of GHG emissions when issuing operating permits under Title V of the CAA (Sec. 835). Under Kerry-Boxer, EPA retains all of the above except EPA is prevented from establishing regulations that would interfere with un-capped sources’ ability to generate offsets until 2020 (Sec. 811). This is what you refer to. By excluding EPA’s authority to regulate GHGs under the CAA, Waxman-Markey prevents EPA from being able to step in if the limits set by MW are insufficient to prevent endangerment. The Kerry-Boxer draft bill retains EPA’s authority should GHGs remain a problem, thus providing a regulatory check should the market-approach fail. Nor is it really an either-or situation where it’s either cap or standards. For example, Kerry-Boxer puts coal-fired power plants under the cap, but also specifies that new coal-fired power plants permitted after 2009 will need to reduce emissions by 50 percent or more by 2025 (or sooner should carbon capture become commercially viable) on top of the cap. For further reading, the World Resources Institute’s good summary ( ) gives more info on how WM interacts with the CAA and the Center for Progressive Reform touches on how KB interacts with the CAA ( ).

  3. Water Interested
    Oct 5, 2009

    There is one mistake in the blog. The blog states that Waxman-Markey has no water efficiency provisions, but Sections 215-217 encourage water efficiency and promote the WaterSense program. Similar provisions are in. Kerry-Boxer in sections 141-143.

    • Erica Rowell (Editor)
      Oct 14, 2009

      Water Interested – Yep. You’re right. Waxman-Markey does have water efficiency provisions, including promotion of the government’s Water Sense program. We have corrected the post. Thanks for reading the post *and* the bill.

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