To provide for a program of scientific research on abrupt climate change, to accelerate the reduction of greenhouse gas emissions in the United States by establishing a market-driven system of greenhouse gas tradeable allowances that could be used interchangeably with passenger vehicle fuel economy standard credits, to limit greenhouse gas emissions in the United States and reduce dependence upon foreign oil, and ensure benefits to consumers from the trading in such allowances.

January 9, 2003

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

To provide for a program of scientific research on abrupt climate change, to accelerate the reduction of greenhouse gas emissions in the United States by establishing a market-driven system of greenhouse gas tradeable allowances that could be used interchangeably with passenger vehicle fuel economy standard credits, to limit greenhouse gas emissions in the United States and reduce dependence upon foreign oil, and ensure benefits to consumers from the trading in such allowances.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Climate Stewardship Act of 2003'.

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 scholarships.

Sec. 102. Commerce Department study of technology transfer barriers.

Sec. 103. Report on United States impact of Kyoto protocol.

Sec. 104. Research grants.

Sec. 105. Abrupt climate change 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.

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. 311. Covered entities must submit allowances for emissions.

Sec. 312. Compliance.

Sec. 313. Tradeable allowances and fuel economy standard credits.

Sec. 314. Borrowing against future reductions.

Sec. 315. Other uses of tradeable allowances.

Sec. 316. 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. Initial allocations for early participation and accelerated participation.

Sec. 335. Bonus for accelerated participation.

Sec. 336. Ensuring target adequacy.

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.

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) COVERED SECTORS- The term `covered sectors' means the electricity, transportation, industry, and commercial sectors, as such terms are used in the Inventory.

(4) 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 over 10,000 metric tons of greenhouse gas per year, measured in units of carbon dioxide equivalence, 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 equivalence.

(5) DATABASE- The term `database' means the National Greenhouse Gas Database established under section 201.

(6) DIRECT EMISSIONS- The term `direct emissions' means greenhouse gas emissions by an entity from a facility that is owned or controlled by that entity.

(7) 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.

(8) GREENHOUSE GAS- The term `greenhouse gas' means--

(A) carbon dioxide;

(B) methane;

(C) nitrous oxide;

(D) hydrofluorocarbons;

(E) perfluorocarbons; and

(F) sulfur hexafluoride.

(9) 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; and

(C) not reported as direct emissions by the entity from which they were emitted.

(10) 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).

(11) PHASE I ALLOTMENT- The term `Phase I allotment' means--

(A) the amount of emissions emitted by a covered sector, as identified in the Inventory for the calendar year preceding the calendar year in which this Act is enacted (reduced by the amount of allowances allocated to early and accelerated participants under section 334 of this Act); multiplied by--

(B) the result of--

(i) the total greenhouse emissions for all covered sectors for the year 2000, as identified in the 2000 Inventory; divided by

(ii) the total greenhouse emissions for all covered sectors for the calendar year preceding the date of enactment of this Act, as identified in the Inventory.

(12) PHASE II ALLOTMENT- The term `Phase II allotment' means--

(A) the amount of emissions emitted by a covered sector, as identified in the Inventory for the calendar year preceding the calendar year in which this Act is enacted (reduced by the amount of allowances allocated to early and accelerated participants under section 334 of this Act); multiplied by--

(B) the result of--

(i) the total greenhouse emissions for all covered sectors for the year 1990, as identified in the 1990 Inventory; divided by

(ii) the total greenhouse emissions for all covered sectors for the calendar year preceding the date of enactment of this Act, as identified in the Inventory.

(13) REGISTRY- The term `registry' means the registry of greenhouse gas emission reductions established under section 201(b)(2).

(14) SECRETARY- The term `Secretary' means the Secretary of Commerce.

(15) 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 or genetically modified organisms.

(16) SOURCE CATEGORY- The term `source category' means a process or activity that leads to direct emissions of greenhouse gases, as listed in the Inventory.

TITLE I--FEDERAL CLIMATE CHANGE RESEARCH AND RELATED ACTIVITIES

SEC. 101. NATIONAL SCIENCE FOUNDATION SCHOLARSHIPS.

The Director of the National Science Foundation shall establish a scholarship program for post-secondary students studying global climate change, including capability in observation, analysis, modeling, paleoclimatology, consequences, and adaptation.

SEC. 102. COMMERCE DEPARTMENT STUDY OF TECHNOLOGY TRANSFER BARRIERS.

(a) STUDY- The Assistant Secretary of Technology Policy at Department 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. The study shall be submitted 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 Assistant Secretary shall work with the existing interagency working group to address identified barriers.

(b) 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'.

(c) 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. 103. REPORT ON UNITED STATES IMPACT OF KYOTO PROTOCOL.

Within 6 months after the date of enactment of this Act, the Secretary shall submit 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 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. 104. 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 2004 and each fiscal year thereafter, there are authorized to be appropriated to the National Science Foundation not less than $17,000,000, to be made available through the Science and Technology Policy Institute, for research in those priority areas.'.

SEC. 105. 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.

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 enable the reduced production in the United States of greenhouse gases associated with global warming, including carbon dioxide, methane, nitrous oxide, ozone, perfluorocarbons, hydrofluorocarbons, and sulfur hexafluoride; and'.

SEC. 107. DEVELOPMENT OF NEW MEASUREMENT TECHNOLOGIES.

The Secretary shall initiate a program to develop, with technical assistance from appropriate Federal agencies, innovative standards and measurement technologies (including technologies to measure carbon changes due to changes in land use cover) to calculate--

(1) greenhouse gas emissions and reductions from agriculture, forestry, and other land use practices;

(2) noncarbon dioxide greenhouse gas emissions from transportation;

(3) greenhouse gas emissions from facilities or sources using remote sensing technology; and

(4) any other greenhouse gas emission or reductions for which no accurate or reliable measurement technology exists.

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 Act of 2003).

`(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;