1 Specific provisions in the bill define the covered entities and the respective gases subject to regulation more precisely; however, the emissions accounting in NEMS precludes a more detailed treatment.

2 Energy Information Administration, Annual Energy Outlook 2006, DOE/EIA-0383(2006)(Washington, DC, February 2006), web site www.eia.gov/oiaf/aeo/index.html

3 Energy Information Administration, Impacts of Modeled Recommendations of the National Commission on Energy Policy, SR/OIAF/2005-02 (Washington, DC, April, 2005) web site http://www.eia.gov/oiaf/servicerpt/bingaman/index.html

4 Energy Information Administration, Energy Market Impacts of Alternative Greenhouse Intensity Reduction Goals, SR/OIAF/2006-01 (Washington, DC, March, 2006) web site http://www.eia.gov/oiaf/servicerpt/agg/pdf/sroiaf(2006)01.pdf

5 Energy Information Administration, Analysis of S.139, the Climate Stewardship Act of 2003, SR/OIAF/2003-02
(Washington, DC, June 2003) web site http://www.eia.gov/oiaf/servicerpt/ml/pdf/sroiaf(2003)02.pdf

6 Offset credits are certified reductions in greenhouse gases from uncovered (or exempted) sources.  Under the emission offset provision, covered entities can submit “offset credits” in place of allowances.  Therefore, the relevant compliance target measure is covered emissions less offsets.

7 Greenhouse gas intensity is defined as the emissions of greenhouse gases from covered sources per real dollar of GDP (in 2000 dollars).  Greenhouse gases are measured in metric tons of carbon dioxide (CO2) equivalent.

8 Energy Information Administration, Impacts of Modeled Recommendations of the National Commission on EnergyPolicy,  SR/OIAF/2005-02 (Washington, DC, April, 2005) web site http://www.eia.gov/oiaf/servicerpt/bingaman/index.html

9 Energy Information Administration, Energy Market Impacts of Alternative Greenhouse Intensity Reduction Goals,  SR/OIAF/2006-01 (Washington, DC, March, 2006) web site http://www.eia.gov/oiaf/servicerpt/agg/pdf/sroiaf(2006)01.pdf

10 Energy Information Administration, Analysis of S.139, the Climate Stewardship Act of 2003,  SR/OIAF/2003-02
(Washington, DC, June 2003) web site http://www.eia.gov/oiaf/servicerpt/ml/pdf/sroiaf(2003)02.pdf

11 Specific provisions in the bill define the covered entities and the respective gases subject to regulation more precisely; however, the emissions accounting in NEMS precludes a more detailed treatment.

12 An exception is that the early auction for 2012 allowances is held in 2009, 3 years in advance.  Also, allowances purchased in advance may not be used until the year for which they were issued.

13 The term “phased” is meant to describe the gradually increasing share of allowances that are auctioned over time. 

14 These reports are all available at http://www.eia.gov/oiaf/service_rpts.htm.

15 See “Addendum” in the “Global Change Policy Book” at http://www.whitehouse.gov/news/releases/2002/02/climatechange.html. The business-as-usual (BAU) projections cited in the addendum are somewhat higher than a “Policies and Measures” case EPA developed for the U.S. Climate Action Report 2002.

16 U.S. Department of State, U.S. Climate Action Report 2002 (Washington, DC, May 2002), Chapter 5, “Projected Greenhouse Gas Emissions,” pp. 70-80, web site: http://yosemite.epa.gov/oar/globalwarming.nsf/content/ResourceCenterPublicationsUSClimateActionReport.html.

17 Personal communication from Casey Delhotal, of the Environmental Protection Agency, to Dan Skelly of the Energy Information Administration, on July 7, 2005. EIA adjusted the EPA’s preliminary no-measures case projections to extrapolate from the most recent 2002-to-2004 data on these gases as published by EIA, as well as to estimate the intervening years of the projections, since the projections were only provided for every 5 years beginning in 2005 and ending in 2020. In addition, EIA extrapolated the projection to 2030 for this analysis based on the average annual growth rates of individual emissions sources from 2015 to 2020.

18 The potential energy efficiency improvements and other carbon mitigation effects of the proposed RD&D provisions and incentives of the bill are not evaluated in this report.

19 The figure plots total covered GHG gas emissions, less offsets credits, compared to the target. Not shown are the increases in carbon sequestration in the Phased Auction case that are projected as a result of the proposed bill’s allowance allocation incentives. Total GHG emissions are somewhat higher than covered emissions because some sources are exempted.

20 The 8.5-percent rate (real dollars) approximates the cost of capital in the electric power industry, where investments to reduce GHG emissions are likely to be tied to expectations of allowance price growth. Under this reasoning, allowance prices are assumed to increase at a real rate of 8.5 percent per year until the safety-valve level is reached or the bank balance of allowances is exhausted. Once the safety-valve price is attained, holding bank allowances would be uneconomical due to the assumed 5 percent escalation rate of the safety-valve price.

21 Energy Information Administration, Analysis of S.139, the Climate Stewardship Act of 2003, SR/OIAF/2003-02 (Washington, DC, June 2003) web site http://www.eia.gov/oiaf/servicerpt/ml/pdf/sroiaf(2003)02.pdf.