II 

109TH CONGRESS 

1ST SESSION S. 1151 

To provide for a program to accelerate the reduction of greenhouse gas 

emissions in the United States by establishing a market-driven system 

of greenhouse gas tradeable allowances, to limit greenhouse gas emissions 

in the United States and reduce dependence upon foreign oil, to support 

the deployment of new climate change-related technologies, and ensure 

benefits to consumers from the trading in such allowances, and for 

other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 26, 2005 

Mr. MCCAIN (for himself and Mr. LIEBERMAN) introduced the following bill; 

which was read twice and referred to the Committee on Environment and 

Public Works 

A BILL 

To provide for a program to accelerate the reduction of 

greenhouse gas emissions in the United States by establishing a market-driven system of greenhouse gas 

tradeable allowances, to limit greenhouse gas emissions 

in the United States and reduce dependence upon foreign 

oil, to support the deployment of new climate changerelated technologies, and ensure benefits to consumers 

from the trading in such allowances, and for other purposes. 
2 

•S 1151 IS 

1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Climate Stewardship 

3 and Innovation Act of 2005’’. 

4 SEC. 2. TABLE OF CONTENTS. 

5 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 fellowships. 

Sec. 102. Report on United States impact of Kyoto protocol. 

Sec. 103. Research grants. 

Sec. 104. Abrupt climate change research. 

Sec. 105. Impact on low-income populations 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. 

Sec. 110. Agricultural outreach program. 

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. 301. Covered entities must submit allowances for emissions. 

Sec. 302. Compliance. 

Sec. 303. Borrowing against future reductions. 

Sec. 304. Other uses of tradeable allowances. 

Sec. 305. 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. Ensuring target adequacy. 

Sec. 335. Initial allocations for early participation and accelerated participation. 

Sec. 336. Bonus for accelerated participation. 

SUBTITLE C—CLIMATE CHANGE CREDIT CORPORATION
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•S 1151 IS 

Sec. 351. Establishment. 

Sec. 352. Purposes and functions. 

SUBTITLE D—SEQUESTRATION ACCOUNTING; PENALTIES

Sec. 371. Sequestration accounting. 

Sec. 372. Penalties. 

TITLE IV—INNOVATION AND COMPETITIVENESS

Sec. 401. Findings. 

SUBTITLE A—INNOVATION INFRASTRUCTURE

Sec. 421. The Innovation Administration. 

Sec. 422. Technology transfer opportunities. 

Sec. 423. Government-sponsored technology investment program. 

Sec. 424. Federal technology innovation personnel incentives. 

Sec. 425. Interdisciplinary research and commercialization. 

Sec. 426. Climate innovation partnerships. 

Sec. 427. National medal of climate stewardship innovation. 

Sec. 428. Math and science teachers’ enhancement program. 

Sec. 429. Patent study. 

Sec. 430. Lessons-learned program. 

SUBTITLE B—SPECIFIC PROGRAM INITIATIVES

Sec. 451. Transportation. 

Sec. 452. Agricultural sequestration. 

Sec. 453. Geological storage of sequestered greenhouse gases. 

Sec. 454. Energy efficiency audits. 

Sec. 455. Adaptation technologies. 

Sec. 456. Advanced research and development for safety and nonproliferation. 

SUBTITLE C—CLIMATE TECHNOLOGY DEPLOYMENT PROGRAM

PART I—PROGRAM AUTHORITY

Sec. 471. Government-industry partnerships for first-of-a-kind engineering design. 

Sec. 472. Demonstration programs. 

PART II—FINANCING

Sec. 481. Climate Technology Financing Board. 

Sec. 482. Responsibilities of the Secretary. 

Sec. 483. Limitations. 

Sec. 484. Source of funding for programs. 

PART III—DEFINITIONS

Sec. 486. Definitions. 

SUBTITLE D—REVERSE AUCTION FOR TECHNOLOGY DISSEMINATION

Sec. 491. Climate technology challenge program. 
4 

•S 1151 IS 

1 SEC. 3. DEFINITIONS. 

2 In this Act: 

3 (1) ADMINISTRATOR.—The term ‘‘Adminis4 trator’’ means the Administrator of the Environ5 mental Protection Agency. 

6 (2) BASELINE.—The term ‘‘baseline’’ means 

7 the historic greenhouse gas emission levels of an en8 tity, as adjusted upward by the Administrator to re9 flect actual reductions that are verified in accord10 ance with— 

11 (A) regulations promulgated under section 

12 201(c)(1); and 

13 (B) relevant standards and methods devel14 oped under this title. 

15 (3) CARBON DIOXIDE EQUIVALENTS.—The term 

16 ‘‘carbon dioxide equivalents’’ means, for each green17 house gas, the amount of each such greenhouse gas 

18 that makes the same contribution to global warming 

19 as one metric ton of carbon dioxide, as determined 

20 by the Administrator. 

21 (4) COVERED SECTORS.—The term ‘‘covered 

22 sectors’’ means the electricity, transportation, indus23 try, and commercial sectors, as such terms are used 

24 in the Inventory. 

25 (5) COVERED ENTITY.—The term ‘‘covered en26 tity’’ means an entity (including a branch, depart-
5 

•S 1151 IS 

1 ment, agency, or instrumentality of Federal, State, 

2 or local government) that— 

3 (A) owns or controls a source of green4 house gas emissions in the electric power, in5 dustrial, or commercial sectors of the United 

6 States economy (as defined in the Inventory), 

7 refines or imports petroleum products for use in 

8 transportation, or produces or imports 

9 hydrofluorocarbons, perfluorocarbons, or sulfur 

10 hexafluoride; and 

11 (B) emits, from any single facility owned 

12 by the entity, over 10,000 metric tons of green13 house gas per year, measured in units of carbon 

14 dioxide equivalents, or produces or imports— 

15 (i) petroleum products that, when 

16 combusted, will emit, 

17 (ii) hydrofluorocarbons, 

18 perfluorocarbons, or sulfur hexafluoride 

19 that, when used, will emit, or 

20 (iii) other greenhouse gases that, 

21 when used, will emit, 

22 over 10,000 metric tons of greenhouse gas per 

23 year, measured in units of carbon dioxide 

24 equivalents. 
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•S 1151 IS 

1 (6) DATABASE.—The term ‘‘database’’ means 

2 the national greenhouse gas database established 

3 under section 201. 

4 (7) DIRECT EMISSIONS.—The term ‘‘direct 

5 emissions’’ means greenhouse gas emissions by an 

6 entity from a facility that is owned or controlled by 

7 that entity. 

8 (8) FACILITY.—The term ‘‘facility’’ means a 

9 building, structure, or installation located on any 1 

10 or more contiguous or adjacent properties of an enti11 ty in the United States. 

12 (9) GREENHOUSE GAS.—The term ‘‘greenhouse 

13 gas’’ means— 

14 (A) carbon dioxide; 

15 (B) methane; 

16 (C) nitrous oxide; 

17 (D) hydrofluorocarbons; 

18 (E) perfluorocarbons; and 

19 (F) sulfur hexafluoride. 

20 (10) INDIRECT EMISSIONS.—The term ‘‘indirect 

21 emissions’’ means greenhouse gas emissions that 

22 are— 

23 (A) a result of the activities of an entity; 

24 but 
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•S 1151 IS 

1 (B) emitted from a facility owned or con2 trolled by another entity. 

3 (11) INVENTORY.—The term ‘‘Inventory’’ 

4 means the Inventory of U.S. Greenhouse Gas Emis5 sions and Sinks, prepared in compliance with the 

6 United Nations Framework Convention on Climate 

7 Change Decision 3/CP.5). 

8 (12) LEAKAGE.—The term ‘‘leakage’’ means— 

9 (A) an increase in greenhouse gas emis10 sions by one facility or entity caused by a re11 duction in greenhouse gas emissions by another 

12 facility or entity; or 

13 (B) a decrease in sequestration that is 

14 caused by an increase in sequestration at an15 other location. 

16 (13) PERMANENCE.—The term ‘‘permanence’’ 

17 means the extent to which greenhouse gases that are 

18 sequestered will not later be returned to the atmos19 phere. 

20 (14) REGISTRY.—The term ‘‘registry’’ means 

21 the registry of greenhouse gas emission reductions 

22 established under section 201(b)(2). 

23 (15) SECRETARY.—The term ‘‘Secretary’’ 

24 means the Secretary of Commerce. 

25 (16) SEQUESTRATION.— 
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•S 1151 IS 

1 (A) IN GENERAL.—The term ‘‘sequestra2 tion’’ means the capture, long-term separation, 

3 isolation, or removal of greenhouse gases from 

4 the atmosphere. 

5 (B) INCLUSIONS.—The term ‘‘sequestra6 tion’’ includes— 

7 (i) agricultural and conservation prac8 tices; 

9 (ii) reforestation; 

10 (iii) forest preservation; and 

11 (iv) any other appropriate method of 

12 capture, long-term separation, isolation, or 

13 removal of greenhouse gases from the at14 mosphere, as determined by the Adminis15 trator. 

16 (C) EXCLUSIONS.—The term ‘‘sequestra17 tion’’ does not include— 

18 (i) any conversion of, or negative im19 pact on, a native ecosystem; or 

20 (ii) any introduction of non-native 

21 species. 

22 (17) SOURCE CATEGORY.—The term ‘‘source 

23 category’’ means a process or activity that leads to 

24 direct emissions of greenhouse gases, as listed in the 

25 Inventory. 
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•S 1151 IS 

1 (18) STATIONARY SOURCE.—The term ‘‘sta2 tionary source’’ means generally any source of 

3 greenhouse gases except those emissions resulting di4 rectly from an engine for transportation purposes. 

5 TITLE I—FEDERAL CLIMATE 

6 CHANGE RESEARCH AND RE7 LATED ACTIVITIES 

8 SEC. 101. NATIONAL SCIENCE FOUNDATION FELLOWSHIPS. 

9 The Director of the National Science Foundation 

10 shall establish a fellowship program for students pursuing 

11 graduate studies in global climate change, including capa12 bility in observation, analysis, modeling, paleoclimatology, 

13 consequences, and adaptation. 

14 SEC. 102. REPORT ON UNITED STATES IMPACT OF KYOTO 

15 PROTOCOL. 

16 Within 6 months after the date of enactment of this 

17 Act, the Secretary shall execute a contract with the Na18 tional Academy of Science for a report to the Senate Com19 mittee on Commerce, Science, and Transportation and the 

20 House of Representatives Committee on Science on the ef21 fects that the entry into force of the Kyoto Protocol with22 out United States participation will have on— 

23 (1) United States industry and its ability to 

24 compete globally; 
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1 (2) international cooperation on scientific re2 search and development; and 

3 (3) United States participation in international 

4 environmental climate change mitigation efforts and 

5 technology deployment. 

6 SEC. 103. RESEARCH GRANTS. 

7 Section 105 of the Global Change Research Act of 

8 1990 (15 U.S.C. 2935) is amended— 

9 (1) by redesignating subsection (c) as sub10 section (d); and 

11 (2) by inserting after subsection (b) the fol12 lowing: 

13 ‘‘(c) RESEARCH GRANTS.— 

14 ‘‘(1) COMMITTEE TO DEVELOP LIST OF PRI15 ORITY RESEARCH AREAS.—The Committee shall de16 velop a list of priority areas for research and devel17 opment on climate change that are not being ad18 dressed by Federal agencies. 

19 ‘‘(2) DIRECTOR OF OSTP TO TRANSMIT LIST TO

20 NSF.—The Director of the Office of Science and 

21 Technology Policy shall transmit the list to the Na22 tional Science Foundation. 

23 ‘‘(3) FUNDING THROUGH NSF.— 

24 ‘‘(A) BUDGET REQUEST.—The National 

25 Science Foundation shall include, as part of the 
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•S 1151 IS 

1 annual request for appropriations for the 

2 Science and Technology Policy Institute, a re3 quest for appropriations to fund research in the 

4 priority areas on the list developed under para5 graph (1). 

6 ‘‘(B) AUTHORIZATION.—For fiscal year 

7 2005 and each fiscal year thereafter, there are 

8 authorized to be appropriated to the National 

9 Science Foundation not less than $25,000,000, 

10 to be made available through the Science and 

11 Technology Policy Institute, for research in 

12 those priority areas.’’. 

13 SEC. 104. ABRUPT CLIMATE CHANGE RESEARCH. 

14 (a) IN GENERAL.—The Secretary, through the Na15 tional Oceanic and Atmospheric Administration, shall 

16 carry out a program of scientific research on potential ab17 rupt climate change designed— 

18 (1) to develop a global array of terrestrial and 

19 oceanographic indicators of paleoclimate in order 

20 sufficiently to identify and describe past instances of 

21 abrupt climate change; 

22 (2) to improve understanding of thresholds and 

23 nonlinearities in geophysical systems related to the 

24 mechanisms of abrupt climate change; 
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•S 1151 IS 

1 (3) to incorporate these mechanisms into ad2 vanced geophysical models of climate change; and 

3 (4) to test the output of these models against 

4 an improved global array of records of past abrupt 

5 climate changes. 

6 (b) ABRUPT CLIMATE CHANGE DEFINED.—In this 

7 section, the term ‘‘abrupt climate change’’ means a change 

8 in climate that occurs so rapidly or unexpectedly that 

9 human or natural systems may have difficulty adapting 

10 to it. 

11 (c) AUTHORIZATION OF APPROPRIATIONS.—There 

12 are authorized to be appropriated to the Secretary for fis13 cal year 2005 $60,000,000 to carry out this section, such 

14 sum to remain available until expended. 

15 SEC. 105. IMPACT ON LOW-INCOME POPULATIONS RE16 SEARCH. 

17 (a) IN GENERAL.—The Secretary shall conduct re18 search on the impact of climate change on low-income pop19 ulations everywhere in the world. The research shall— 

20 (1) include an assessment of the adverse impact 

21 of climate change on developing countries and on 

22 low-income populations in the United States; 

23 (2) identify appropriate climate change adapta24 tion measures and programs for developing countries 

25 and low-income populations and assess the impact of 
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•S 1151 IS 

1 those measures and programs on low-income popu2 lations; 

3 (3) identify appropriate climate change mitiga4 tion strategies and programs for developing coun5 tries and low-income populations and assess the im6 pact of those strategies and programs on developing 

7 countries and on low-income populations in the 

8 United States; and 

9 (4) include an estimate of the costs of devel10 oping and implementing those climate change adap11 tation and mitigation programs. 

12 (b) REPORT.—Within 1 year after the date of enact13 ment of this Act, the Secretary shall transmit a report 

14 on the research conducted under subsection (a) to the Sen15 ate Committee on Commerce, Science, and Transpor16 tation, the Senate Committee on Environment and Public 

17 Works, the House of Representatives Committee on 

18 Science, and the House of Representatives Committee on 

19 Energy and Commerce. 

20 (c) AUTHORIZATION OF APPROPRIATIONS.—There 

21 are authorized to be appropriated to the Secretary 

22 $2,000,000 to carry out the research required by sub23 section (a). 
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•S 1151 IS 

1 SEC. 106. NIST GREENHOUSE GAS FUNCTIONS. 

2 Section 2(c) of the National Institute of Standards 

3 and Technology Act (15 U.S.C. 272(c)) is amended— 

4 (1) by striking ‘‘and’’ after the semicolon in 

5 paragraph (21); 

6 (2) by redesignating paragraph (22) as para7 graph (23); and 

8 (3) by inserting after paragraph (21) the fol9 lowing: 

10 ‘‘(22) perform research to develop enhanced 

11 measurements, calibrations, standards, and tech12 nologies which will facilitate activities that reduce 

13 emissions of greenhouse gases or increase sequestra14 tion of greenhouse gases, including carbon dioxide, 

15 methane, nitrous oxide, ozone, perfluorocarbons, 

16 hydrofluorocarbons, and sulfur hexafluoride; and’’. 

17 SEC. 107. DEVELOPMENT OF NEW MEASUREMENT TECH18 NOLOGIES. 

19 To facilitate implementation of section 204, the Sec20 retary shall initiate a program to develop, with technical 

21 assistance from appropriate Federal agencies, innovative 

22 standards and measurement technologies to calculate 

23 greenhouse gas emissions or reductions for which no accu24 rate or reliable measurement technology exists. The pro25 gram shall include— 
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•S 1151 IS 

1 (1) technologies (including remote sensing tech2 nologies) to measure carbon changes and other 

3 greenhouse gas emissions and reductions from agri4 culture, forestry, and other land use practices; and 

5 (2) technologies to calculate non-carbon dioxide 

6 greenhouse gas emissions from transportation. 

7 SEC. 108. ENHANCED ENVIRONMENTAL MEASUREMENTS 

8 AND STANDARDS. 

9 The National Institute of Standards and Technology 

10 Act (15 U.S.C. 271 et seq.) is amended— 

11 (1) by redesignating sections 17 through 32 as 

12 sections 18 through 33, respectively; and 

13 (2) by inserting after section 16 the following: 

14 ‘‘SEC. 17. CLIMATE CHANGE STANDARDS AND PROCESSES. 

15 ‘‘(a) IN GENERAL.—The Director shall establish 

16 within the Institute a program to perform and support re17 search on global climate change standards and processes, 

18 with the goal of providing scientific and technical knowl19 edge applicable to the reduction of greenhouse gases (as 

20 defined in section 3(8) of the Climate Stewardship and 

21 Innovation Act of 2005) and of facilitating implementation 

22 of section 204 of that Act. 

23 ‘‘(b) RESEARCH PROGRAM.— 

24 ‘‘(1) IN GENERAL.—The Director is authorized 

25 to conduct, directly or through contracts or grants, 
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•S 1151 IS 

1 a global climate change standards and processes re2 search program. 

3 ‘‘(2) RESEARCH PROJECTS.—The specific con4 tents and priorities of the research program shall be 

5 determined in consultation with appropriate Federal 

6 agencies, including the Environmental Protection 

7 Agency, the National Oceanic and Atmospheric Ad8 ministration, and the National Aeronautics and 

9 Space Administration. The program generally shall 

10 include basic and applied research— 

11 ‘‘(A) to develop and provide the enhanced 

12 measurements, calibrations, data, models, and 

13 reference material standards which will enable 

14 the monitoring of greenhouse gases; 

15 ‘‘(B) to assist in establishing a baseline 

16 reference point for future trading in greenhouse 

17 gases and the measurement of progress in emis18 sions reduction; 

19 ‘‘(C) that will be exchanged internationally 

20 as scientific or technical information which has 

21 the stated purpose of developing mutually rec22 ognized measurements, standards, and proce23 dures for reducing greenhouse gases; and 
17 

•S 1151 IS 

1 ‘‘(D) to assist in developing improved in2 dustrial processes designed to reduce or elimi3 nate greenhouse gases. 

4 ‘‘(c) NATIONAL MEASUREMENT LABORATORIES.— 

5 ‘‘(1) IN GENERAL.—In carrying out this sec6 tion, the Director shall utilize the collective skills of 

7 the National Measurement Laboratories of the Na8 tional Institute of Standards and Technology to im9 prove the accuracy of measurements that will permit 

10 better understanding and control of these industrial 

11 chemical processes and result in the reduction or 

12 elimination of greenhouse gases. 

13 ‘‘(2) MATERIAL, PROCESS, AND BUILDING RE14 SEARCH.—The National Measurement Laboratories 

15 shall conduct research under this subsection that in16 cludes— 

17 ‘‘(A) developing material and manufac18 turing processes which are designed for energy 

19 efficiency and reduced greenhouse gas emissions 

20 into the environment; 

21 ‘‘(B) developing chemical processes to be 

22 used by industry that, compared to similar 

23 processes in commercial use, result in reduced 

24 emissions of greenhouse gases or increased se25 questration of greenhouse gases; and 
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1 ‘‘(C) enhancing building performance with 

2 a focus in developing standards or tools which 

3 will help incorporate low- or no-emission tech4 nologies into building designs. 

5 ‘‘(3) STANDARDS AND TOOLS.—The National 

6 Measurement Laboratories shall develop standards 

7 and tools under this subsection that include software 

8 to assist designers in selecting alternate building 

9 materials, performance data on materials, artificial 

10 intelligence-aided design procedures for building sub11 systems and ‘smart buildings’, and improved test 

12 methods and rating procedures for evaluating the 

13 energy performance of residential and commercial 

14 appliances and products. 

15 ‘‘(d) NATIONAL VOLUNTARY LABORATORY ACCREDI16 TATION PROGRAM.—The Director shall utilize the Na17 tional Voluntary Laboratory Accreditation Program under 

18 this section to establish a program to include specific cali19 bration or test standards and related methods and proto20 cols assembled to satisfy the unique needs for accredita21 tion in measuring the production of greenhouse gases. In 

22 carrying out this subsection the Director may cooperate 

23 with other departments and agencies of the Federal Gov24 ernment, State and local governments, and private organi25 zations.’’. 
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1 SEC. 109. TECHNOLOGY DEVELOPMENT AND DIFFUSION. 

2 The Director of the National Institute of Standards 

3 and Technology, through the Manufacturing Extension 

4 Partnership Program, may develop a program to promote 

5 the use, by the more than 380,000 small manufacturers, 

6 of technologies and techniques that result in reduced emis7 sions of greenhouse gases or increased sequestration of 

8 greenhouse gases. 

9 SEC. 110. AGRICULTURAL OUTREACH PROGRAM. 

10 (a) IN GENERAL.—The Secretary of Agriculture, act11 ing through the Global Change Program Office and in 

12 consultation with the heads of other appropriate depart13 ments and agencies, shall establish the Climate Change 

14 Education and Outreach Initiative Program to educate, 

15 and reach out to, agricultural organizations and individual 

16 farmers on global climate change. 

17 (b) PROGRAM COMPONENTS.—The program— 

18 (1) shall be designed to ensure that agricultural 

19 organizations and individual farmers receive detailed 

20 information about— 

21 (A) the potential impact of climate change 

22 on their operations and well-being; 

23 (B) market-driven economic opportunities 

24 that may come from storing carbon in soils and 

25 vegetation, including emerging private sector 

26 markets for carbon storage; and 
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•S 1151 IS 

1 (C) techniques for measuring, monitoring, 

2 verifying, and inventorying such carbon capture 

3 efforts; 

4 (2) may incorporate existing efforts in any area 

5 of activity referenced in paragraph (1) or in related 

6 areas of activity; 

7 (3) shall provide— 

8 (A) outreach materials to interested par9 ties; 

10 (B) workshops; and 

11 (C) technical assistance; and 

12 (4) may include the creation and development 

13 of regional centers on climate change or coordination 

14 with existing centers (including such centers within 

15 NRCS and the Cooperative State Research Edu16 cation and Extension Service). 

17 TITLE II—NATIONAL 

18 GREENHOUSE GAS DATABASE 

19 SEC. 201. NATIONAL GREENHOUSE GAS DATABASE AND 

20 REGISTRY ESTABLISHED. 

21 (a) ESTABLISHMENT.—As soon as practicable after 

22 the date of enactment of this Act, the Administrator, in 

23 coordination with the Secretary, the Secretary of Energy, 

24 the Secretary of Agriculture, and private sector and non25 governmental organizations, shall establish, operate, and 
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1 maintain a database, to be known as the ‘‘National Green2 house Gas Database’’, to collect, verify, and analyze infor3 mation on greenhouse gas emissions by entities. 

4 (b) NATIONAL GREENHOUSE GAS DATABASE COM5 PONENTS.—The database shall consist of— 

6 (1) an inventory of greenhouse gas emissions; 

7 and 

8 (2) a registry of greenhouse gas emission reduc9 tions and increases in greenhouse gas sequestra10 tions. 

11 (c) COMPREHENSIVE SYSTEM.— 

12 (1) IN GENERAL.—Not later than 2 years after 

13 the date of enactment of this Act, the Administrator 

14 shall promulgate regulations to implement a com15 prehensive system for greenhouse gas emissions re16 porting, inventorying, and reductions registration. 

17 (2) REQUIREMENTS.—The Administrator shall 

18 ensure, to the maximum extent practicable, that— 

19 (A) the comprehensive system described in 

20 paragraph (1) is designed to— 

21 (i) maximize completeness, trans22 parency, and accuracy of information re23 ported; and 
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1 (ii) minimize costs incurred by entities 

2 in measuring and reporting greenhouse gas 

3 emissions; and 

4 (B) the regulations promulgated under 

5 paragraph (1) establish procedures and proto6 cols necessary— 

7 (i) to prevent the double-counting of 

8 greenhouse gas emissions or emission re9 ductions reported by more than 1 reporting 

10 entity; 

11 (ii) to provide for corrections to errors 

12 in data submitted to the database; 

13 (iii) to provide for adjustment to data 

14 by reporting entities that have had a sig15 nificant organizational change (including 

16 mergers, acquisitions, and divestiture), in 

17 order to maintain comparability among 

18 data in the database over time; 

19 (iv) to provide for adjustments to re20 flect new technologies or methods for 

21 measuring or calculating greenhouse gas 

22 emissions; 

23 (v) to account for changes in registra24 tion of ownership of emission reductions 
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1 resulting from a voluntary private trans2 action between reporting entities; and 

3 (vi) to clarify the responsibility for re4 porting in the case of any facility owned or 

5 controlled by more than 1 entity. 

6 (3) SERIAL NUMBERS.—Through regulations 

7 promulgated under paragraph (1), the Administrator 

8 shall develop and implement a system that pro9 vides— 

10 (A) for the verification of submitted emis11 sions reductions registered under section 204; 

12 (B) for the provision of unique serial num13 bers to identify the registered emission reduc14 tions made by an entity relative to the baseline 

15 of the entity; 

16 (C) for the tracking of the registered re17 ductions associated with the serial numbers; 

18 and 

19 (D) for such action as may be necessary to 

20 prevent counterfeiting of the registered reduc21 tions. 

22 SEC. 202. INVENTORY OF GREENHOUSE GAS EMISSIONS 

23 FOR COVERED ENTITIES. 

24 (a) IN GENERAL.—Not later than July 1st of each 

25 calendar year after 2008, each covered entity shall submit 
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1 to the Administrator a report that states, for the pre2 ceding calendar year, the entity-wide greenhouse gas emis3 sions (as reported at the facility level), including— 

4 (1) the total quantity of direct greenhouse gas 

5 emissions from stationary sources, expressed in units 

6 of carbon dioxide equivalents, except those reported 

7 under paragraph (3); 

8 (2) the amount of petroleum products sold or 

9 imported by the entity and the amount of green10 house gases, expressed in units of carbon dioxide 

11 equivalents, that would be emitted when these prod12 ucts are used for transportation in the United 

13 States, as determined by the Administrator under 

14 section 301(b); 

15 (3) the amount of hydrofluorocarbons, 

16 perfluorocarbons, or sulfur hexafluoride, expressed 

17 in units of carbon dioxide equivalents, that are sold 

18 or imported by the entity and will ultimately be 

19 emitted in the United States, as determined by the 

20 Administrator under section 301(d); and 

21 (4) such other categories of emissions as the 

22 Administrator determines in the regulations promul23 gated under section 201(c)(1) may be practicable 

24 and useful for the purposes of this Act, such as— 
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1 (A) indirect emissions from imported elec2 tricity, heat, and steam; 

3 (B) process and fugitive emissions; and 

4 (C) production or importation of green5 house gases. 

6 (b) COLLECTION AND ANALYSIS OF DATA.—The Ad7 ministrator shall collect and analyze information reported 

8 under subsection (a) for use under title III. 

9 SEC. 203. GREENHOUSE GAS REDUCTION REPORTING. 

10 (a) IN GENERAL.—Subject to the requirements de11 scribed in subsection (b)— 

12 (1) a covered entity may register greenhouse 

13 gas emission reductions achieved after 1990 and be14 fore 2010 under this section; and 

15 (2) an entity that is not a covered entity may 

16 register greenhouse gas emission reductions achieved 

17 at any time since 1990 under this section. 

18 (b) REQUIREMENTS.— 

19 (1) IN GENERAL.—The requirements referred 

20 to in subsection (a) are that an entity (other than 

21 an entity described in paragraph (2)) shall— 

22 (A) establish a baseline; and 

23 (B) submit the report described in sub24 section (c)(1). 
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1 (2) REQUIREMENTS APPLICABLE TO ENTITIES

2 ENTERING INTO CERTAIN AGREEMENTS.—An entity 

3 that enters into an agreement with a participant in 

4 the registry for the purpose of a carbon sequestra5 tion project shall not be required to comply with the 

6 requirements specified in paragraph (1) unless that 

7 entity is required to comply with the requirements 

8 by reason of an activity other than the agreement. 

9 (c) REPORTS.— 

10 (1) REQUIRED REPORT.—Not later than July 

11 1st of the each calendar year beginning more than 

12 2 years after the date of enactment of this Act, but 

13 subject to paragraph (3), an entity described in sub14 section (a) shall submit to the Administrator a re15 port that states, for the preceding calendar year, the 

16 entity-wide greenhouse gas emissions (as reported at 

17 the facility level), including— 

18 (A) the total quantity of direct greenhouse 

19 gas emissions from stationary sources, ex20 pressed in units of carbon dioxide equivalents; 

21 (B) the amount of petroleum products sold 

22 or imported by the entity and the amount of 

23 greenhouse gases, expressed in units of carbon 

24 dioxide equivalents, that would be emitted when 

25 these products are used for transportation in 
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1 the United States, as determined by the Admin2 istrator under section 301(b); 

3 (C) the amount of hydrofluorocarbons, 

4 perfluorocarbons, or sulfur hexafluoride, ex5 pressed in units of carbon dioxide equivalents, 

6 that are sold or imported by the entity and will 

7 ultimately be emitted in the United States, as 

8 determined by the Administrator under section 

9 301(d); and 

10 (D) such other categories of emissions as 

11 the Administrator determines in the regulations 

12 promulgated under section 201(c)(1) may be 

13 practicable and useful for the purposes of this 

14 Act, such as— 

15 (i) indirect emissions from imported 

16 electricity, heat, and steam; 

17 (ii) process and fugitive emissions; 

18 and 

19 (iii) production or importation of 

20 greenhouse gases. 

21 (2) VOLUNTARY REPORTING.—An entity de22 scribed in subsection (a) may (along with estab23 lishing a baseline and reporting emissions under this 

24 section)— 
28 

•S 1151 IS 

1 (A) submit a report described in paragraph 

2 (1) before the date specified in that paragraph 

3 for the purposes of achieving and 

4 commoditizing greenhouse gas reductions 

5 through use of the registry and for other pur6 poses; and 

7 (B) submit to the Administrator, for inclu8 sion in the registry, information that has been 

9 verified in accordance with regulations promul10 gated under section 201(c)(1) and that relates 

11 to— 

12 (i) any activity that resulted in the 

13 net reduction of the greenhouse gas emis14 sions of the entity or a net increase in se15 questration by the entity that were carried 

16 out during or after 1990 and before the es17 tablishment of the database, verified in ac18 cordance with regulations promulgated 

19 under section 201(c)(1), and submitted to 

20 the Administrator before the date that is 4 

21 years after the date of enactment of this 

22 Act; and 

23 (ii) with respect to the calendar year 

24 preceding the calendar year in which the 

25 information is submitted, any project or 
29 

•S 1151 IS 

1 activity that resulted in the net reduction 

2 of the greenhouse gas emissions of the en3 tity or a net increase in net sequestration 

4 by the entity. 

5 (3) PROVISION OF VERIFICATION INFORMATION

6 BY REPORTING ENTITIES.—Each entity that submits 

7 a report under this subsection shall provide informa8 tion sufficient for the Administrator to verify, in ac9 cordance with measurement and verification methods 

10 and standards developed under section 204, that the 

11 greenhouse gas report of the reporting entity— 

12 (A) has been accurately reported; and 

13 (B) in the case of each voluntary report 

14 under paragraph (2), represents— 

15 (i) actual reductions in direct green16 house gas emissions— 

17 (I) relative to historic emission 

18 levels of the entity; and 

19 (II) after accounting for any in20 creases in indirect emissions described 

21 in paragraph (1)(C)(i); or 

22 (ii) actual increases in net sequestra23 tion. 

24 (4) FAILURE TO SUBMIT REPORT.—An entity 

25 that participates or has participated in the registry 
30 

•S 1151 IS 

1 and that fails to submit a report required under this 

2 subsection shall be prohibited from using, or allow3 ing another entity to use, its registered emissions re4 ductions or increases in sequestration to satisfy the 

5 requirements of section 301. 

6 (5) INDEPENDENT THIRD-PARTY

7 VERIFICATION.—To meet the requirements of this 

8 section and section 203, an entity that is required 

9 to submit a report under this section may— 

10 (A) obtain independent third-party 

11 verification; and 

12 (B) present the results of the third-party 

13 verification to the Administrator. 

14 (6) AVAILABILITY OF DATA.— 

15 (A) IN GENERAL.—The Administrator 

16 shall ensure that information in the database 

17 is— 

18 (i) published; and 

19 (ii) accessible to the public, including 

20 in electronic format on the Internet. 

21 (B) EXCEPTION.—Subparagraph (A) shall 

22 not apply in any case in which the Adminis23 trator determines that publishing or otherwise 

24 making available information described in that 

25 subparagraph poses a risk to national security 
31 

•S 1151 IS 

1 or discloses confidential business information 

2 that can not be derived from information that 

3 is otherwise publicly available and that would 

4 cause competitive harm if published. 

5 (7) DATA INFRASTRUCTURE.—The Adminis6 trator shall ensure, to the maximum extent prac7 ticable, that the database uses, and is integrated 

8 with, Federal, State, and regional greenhouse gas 

9 data collection and reporting systems in effect as of 

10 the date of enactment of this Act. 

11 (8) ADDITIONAL ISSUES TO BE CONSIDERED.— 

12 In promulgating the regulations under section 

13 201(c)(1) and implementing the database, the Ad14 ministrator shall take into consideration a broad 

15 range of issues involved in establishing an effective 

16 database, including— 

17 (A) the data and information systems and 

18 measures necessary to identify, track, and 

19 verify greenhouse gas emissions in a manner 

20 that will encourage private sector trading and 

21 exchanges; 

22 (B) the greenhouse gas reduction and se23 questration measurement and estimation meth24 ods and standards applied in other countries, as 

25 applicable or relevant; 
32 

•S 1151 IS 

1 (C) the extent to which available fossil 

2 fuels, greenhouse gas emissions, and greenhouse 

3 gas production and importation data are ade4 quate to implement the database; and 

5 (D) the differences in, and potential 

6 uniqueness of, the facilities, operations, and 

7 business and other relevant practices of persons 

8 and entities in the private and public sectors 

9 that may be expected to participate in the data10 base. 

11 (d) ANNUAL REPORT.—The Administrator shall pub12 lish an annual report that— 

13 (1) describes the total greenhouse gas emissions 

14 and emission reductions reported to the database 

15 during the year covered by the report; 

16 (2) provides entity-by-entity and sector-by-sec17 tor analyses of the emissions and emission reduc18 tions reported; 

19 (3) describes the atmospheric concentrations of 

20 greenhouse gases; 

21 (4) provides a comparison of current and past 

22 atmospheric concentrations of greenhouse gases; and 

23 (5) describes the activity during the year cov24 ered by the period in the trading of greenhouse gas 

25 emission allowances. 
33 

•S 1151 IS 

1 SEC. 204. MEASUREMENT AND VERIFICATION. 

2 (a) STANDARDS.— 

3 (1) IN GENERAL.—Not later than 1 year after 

4 the date of enactment of this Act, the Secretary 

5 shall establish by rule, in coordination with the Ad6 ministrator, the Secretary of Energy, and the Sec7 retary of Agriculture, comprehensive measurement 

8 and verification methods and standards to ensure a 

9 consistent and technically accurate record of green10 house gas emissions, emission reductions, sequestra11 tion, and atmospheric concentrations for use in the 

12 registry. 

13 (2) REQUIREMENTS.—The methods and stand14 ards established under paragraph (1) shall include— 

15 (A) a requirement that a covered entity 

16 use a continuous emissions monitoring system, 

17 or another system of measuring or estimating 

18 emissions that is determined by the Secretary 

19 to provide information with precision, reli20 ability, accessibility, and timeliness similar to 

21 that provided by a continuous emissions moni22 toring system where technologically feasible; 

23 (B) establishment of standardized meas24 urement and verification practices for reports 

25 made by all entities participating in the reg26 istry, taking into account— 
34 

•S 1151 IS 

1 (i) protocols and standards in use by 

2 entities requiring or desiring to participate 

3 in the registry as of the date of develop4 ment of the methods and standards under 

5 paragraph (1); 

6 (ii) boundary issues, such as leakage; 

7 (iii) avoidance of double counting of 

8 greenhouse gas emissions and emission re9 ductions; 

10 (iv) protocols to prevent a covered en11 tity from avoiding the requirements of this 

12 Act by reorganization into multiple entities 

13 that are under common control; and 

14 (v) such other factors as the Sec15 retary, in consultation with the Adminis16 trator, determines to be appropriate; 

17 (C) establishment of methods of— 

18 (i) estimating greenhouse gas emis19 sions, for those cases in which the Sec20 retary determines that methods of moni21 toring, measuring or estimating such emis22 sions with precision, reliability, accessi23 bility, and timeliness similar to that pro24 vided by a continuous emissions monitoring 
35 

•S 1151 IS 

1 system are not technologically feasible at 

2 present; and 

3 (ii) reporting the accuracy of such es4 timations; 

5 (D) establishment of measurement and 

6 verification standards applicable to actions 

7 taken to reduce, avoid, or sequester greenhouse 

8 gas emissions; 

9 (E) in coordination with the Secretary of 

10 Agriculture, standards to measure the results of 

11 the use of carbon sequestration and carbon re12 capture technologies, including— 

13 (i) soil carbon sequestration practices; 

14 and 

15 (ii) forest preservation and reforest16 ation activities that adequately address the 

17 issues of permanence, leakage, and 

18 verification; 

19 (E) establishment of such other measure20 ment and verification standards as the Sec21 retary, in consultation with the Secretary of Ag22 riculture, the Administrator, and the Secretary 

23 of Energy, determines to be appropriate; 

24 (F) establishment of standards for obtain25 ing the Secretary’s approval of the suitability of 
36 

•S 1151 IS 

1 geological storage sites that include evaluation 

2 of both the geology of the site and the entity’s 

3 capacity to manage the site; and 

4 (G) establishment of other features that, 

5 as determined by the Secretary, will allow enti6 ties to adequately establish a fair and reliable 

7 measurement and reporting system. 

8 (b) REVIEW AND REVISION.—The Secretary shall pe9 riodically review, and revise as necessary, the methods and 

10 standards developed under subsection (a). 

11 (c) PUBLIC PARTICIPATION.—The Secretary shall— 

12 (1) make available to the public for comment, 

13 in draft form and for a period of at least 90 days, 

14 the methods and standards developed under sub15 section (a); and 

16 (2) after the 90-day period referred to in para17 graph (1), in coordination with the Secretary of En18 ergy, the Secretary of Agriculture, and the Adminis19 trator, adopt the methods and standards developed 

20 under subsection (a) for use in implementing the 

21 database. 

22 (d) EXPERTS AND CONSULTANTS.— 

23 (1) IN GENERAL.—The Secretary may obtain 

24 the services of experts and consultants in the private 

25 and nonprofit sectors in accordance with section 
37 

•S 1151 IS 

1 3109 of title 5, United States Code, in the areas of 

2 greenhouse gas measurement, certification, and 

3 emission trading. 

4 (2) AVAILABLE ARRANGEMENTS.—In obtaining 

5 any service described in paragraph (1), the Sec6 retary may use any available grant, contract, cooper7 ative agreement, or other arrangement authorized by 

8 law. 

9 TITLE III—MARKET-DRIVEN 

10 GREENHOUSE GAS REDUCTIONS 

11 SUBTITLE A—EMISSION REDUCTION REQUIREMENTS; 

12 USE OF TRADEABLE ALLOWANCES

13 SEC. 301. COVERED ENTITIES MUST SUBMIT ALLOWANCES 

14 FOR EMISSIONS. 

15 (a) IN GENERAL.—Beginning with calendar year 

16 2010— 

17 (1) each covered entity in the electric genera18 tion, industrial, and commercial sectors shall submit 

19 to the Administrator one tradeable allowance for 

20 every metric ton of greenhouse gases, measured in 

21 units of carbon dioxide equivalents, that it emits 

22 from stationary sources, except those described in 

23 paragraph (2); 

24 (2) each producer or importer of 

25 hydrofluorocarbons, perfluorocarbons, or sulfur 
38 

•S 1151 IS 

1 hexafluoride that is a covered entity shall submit to 

2 the Administrator one tradeable allowance for every 

3 metric ton of hydrofluorocarbons, perfluorocarbons, 

4 or sulfur hexafluoride, measured in units of carbon 

5 dioxide equivalents; that it produces or imports and 

6 that will ultimately be emitted in the United States, 

7 as determined by the Administrator under sub8 section (d) and 

9 (3) each petroleum refiner or importer that is 

10 a covered entity shall submit one tradeable allowance 

11 for every unit of petroleum product it sells that will 

12 produce one metric ton of greenhouse gases, meas13 ured in units of carbon dioxide equivalents, as deter14 mined by the Administrator under subsection (b), 

15 when used for transportation. 

16 (b) DETERMINATION OF TRANSPORTATION SECTOR

17 AMOUNT.—For the transportation sector, the Adminis18 trator shall determine the amount of greenhouse gases, 

19 measured in units of carbon dioxide equivalents, that will 

20 be emitted when petroleum products are used for trans21 portation. 

22 (c) EXCEPTION FOR CERTAIN DEPOSITED EMIS23 SIONS.—Notwithstanding subsection (a), a covered entity 

24 is not required to submit a tradeable allowance for any 

25 amount of greenhouse gas that would otherwise have been 
39 

•S 1151 IS 

1 emitted from a facility under the ownership or control of 

2 that entity if— 

3 (1) the emission is deposited in a geological 

4 storage facility approved by the Administrator under 

5 section 204(a)(2)(F); and 

6 (2) the entity agrees to submit tradeable allow7 ances for any portion of the deposited emission that 

8 is subsequently emitted from that facility. 

9 (d) DETERMINATION OF HYDROFLUROCARBON, 

10 PERFLUOROCARBON, AND SULFUR HEXAFLUORIDE

11 AMOUNT.—The Administrator shall determine the 

12 amounts of hydrofluorocarbons, perfluorocarbons, or sul13 fur hexafluoride, measured in units of carbon dioxide 

14 equivalents, that will be deemed to be emitted for purposes 

15 of this Act. 

16 SEC. 302. COMPLIANCE. 

17 (a) IN GENERAL.— 

18 (1) SOURCE OF TRADEABLE ALLOWANCES

19 USED.—A covered entity may use a tradeable allow20 ance to meet the requirements of this section with21 out regard to whether the tradeable allowance was 

22 allocated to it under subtitle B or acquired from an23 other entity or the Climate Change Credit Corpora24 tion established under section 351. 
40 

•S 1151 IS 

1 (2) VERIFICATION BY ADMINISTRATOR.—At 

2 various times during each year, the Administrator 

3 shall determine whether each covered entity has met 

4 the requirements of this section. In making that de5 termination, the Administrator shall— 

6 (A) take into account the tradeable allow7 ances submitted by the covered entity to the 

8 Administrator; and 

9 (B) retire the serial number assigned to 

10 each such tradeable allowance. 

11 (b) ALTERNATIVE MEANS OF COMPLIANCE.—For the 

12 years 2010 and after, a covered entity may satisfy up to 

13 15 percent of its total allowance submission requirement 

14 under this section by— 

15 (1) submitting tradeable allowances from an16 other nation’s market in greenhouse gas emissions 

17 if— 

18 (A) the Secretary determines that the 

19 other nation’s system for trading in greenhouse 

20 gas emissions is complete, accurate, and trans21 parent and reviews that determination at least 

22 once every 5 years; 

23 (B) the other nation has adopted enforce24 able limits on its greenhouse gas emissions 
41 

•S 1151 IS 

1 which the tradeable allowances were issued to 

2 implement; and 

3 (C) the covered entity certifies that the 

4 tradeable allowance has been retired unused in 

5 the other nation’s market; 

6 (2) submitting a registered net increase in se7 questration, as registered in the database, adjusted, 

8 if necessary, to comply with the accounting stand9 ards and methods established under section 372; 

10 (3) submitting a greenhouse gas emissions re11 duction (other than a registered net increase in se12 questration) that was registered in the database by 

13 a person that is not a covered entity; or 

14 (4) submitting credits obtained from the Ad15 ministrator under section 303. 

16 (c) DEDICATED PROGRAM FOR SEQUESTRATION IN

17 AGRICULTURAL SOILS.—If a covered entity chooses to 

18 satisfy 15 percent of its total allowance submission re19 quirements under the provisions of subsection (b), it shall 

20 satisfy at least 01.5 percent of its total allowance submis21 sion requirement by submitting registered net increases in 

22 sequestration in agricultural soils, as registered in the 

23 database, adjusted, if necessary, to comply with the ac24 counting standards and methods established under section 

25 371. 
42 

•S 1151 IS 

1 SEC. 303. BORROWING AGAINST FUTURE REDUCTIONS. 

2 (a) IN GENERAL.—The Administrator shall establish 

3 a program under which a covered entity may— 

4 (1) receive a credit in the current calendar year 

5 for anticipated reductions in emissions in a future 

6 calendar year; and 

7 (2) use the credit in lieu of a tradeable allow8 ance to meet the requirements of this Act for the 

9 current calendar year, subject to the limitation im10 posed by section 302(b). 

11 (b) DETERMINATION OF TRADEABLE ALLOWANCE

12 CREDITS.—The Administrator may make credits available 

13 under subsection (a) only for anticipated reductions in 

14 emissions that— 

15 (1) are attributable to the realization of capital 

16 investments in equipment, the construction, recon17 struction, or acquisition of facilities, or the deploy18 ment of new technologies— 

19 (A) for which the covered entity has exe20 cuted a binding contract and secured, or ap21 plied for, all necessary permits and operating or 

22 implementation authority; 

23 (B) that will not become operational within 

24 the current calendar year; and 

25 (C) that will become operational and begin 

26 to reduce emissions from the covered entity 
43 

•S 1151 IS 

1 within 5 years after the year in which the credit 

2 is used; and 

3 (2) will be realized within 5 years after the year 

4 in which the credit is used. 

5 (c) CARRYING COST.—If a covered entity uses a cred6 it under this section to meet the requirements of this Act 

7 for a calendar year (referred to as the use year), the 

8 tradeable allowance requirement for the year from which 

9 the credit was taken (referred to as the source year) shall 

10 be increased by an amount equal to— 

11 (1) 10 percent for each credit borrowed from 

12 the source year; multiplied by 

13 (2) the number of years beginning after the use 

14 year and before the source year. 

15 (d) MAXIMUM BORROWING PERIOD.—A credit from 

16 a year beginning more than 5 years after the current year 

17 may not be used to meet the requirements of this Act for 

18 the current year. 

19 (e) FAILURE TO ACHIEVE REDUCTIONS GENERATING

20 CREDIT.—If a covered entity that uses a credit under this 

21 section fails to achieve the anticipated reduction for which 

22 the credit was granted for the year from which the credit 

23 was taken, then— 

24 (1) the covered entity’s requirements under this 

25 Act for that year shall be increased by the amount 
44 

•S 1151 IS 

1 of the credit, plus the amount determined under 

2 subsection (c); 

3 (2) any tradeable allowances submitted by the 

4 covered entity for that year shall be counted first 

5 against the increase in those requirements; and 

6 (3) the covered entity may not use credits 

7 under this section to meet the increased require8 ments. 

9 SEC. 304. OTHER USES OF TRADEABLE ALLOWANCES. 

10 (a) IN GENERAL.—Tradeable allowances may be sold, 

11 exchanged, purchased, retired, or used as provided in this 

12 section. 

13 (b) INTERSECTOR TRADING.—Covered entities may 

14 purchase or otherwise acquire tradeable allowances from 

15 other covered sectors to satisfy the requirements of section 

16 301. 

17 (c) CLIMATE CHANGE CREDIT ORGANIZATION.—The 

18 Climate Change Credit Corporation established under sec19 tion 351 may sell tradeable allowances allocated to it 

20 under section 332(a)(2) to any covered entity or to any 

21 investor, broker, or dealer in such tradeable allowances. 

22 The Climate Change Credit Corporation shall use all pro23 ceeds from such sales in accordance with the provisions 

24 of section 352. 
45 

•S 1151 IS 

1 (d) BANKING OF TRADEABLE ALLOWANCES.—Not2 withstanding the requirements of section 301, a covered 

3 entity that has more than a sufficient amount of tradeable 

4 allowances to satisfy the requirements of section 301, may 

5 refrain from submitting a tradeable allowance to satisfy 

6 the requirements in order to sell, exchange, or use the 

7 tradeable allowance in the future. 

8 SEC. 305. EXEMPTION OF SOURCE CATEGORIES. 

9 (a) IN GENERAL.—The Administrator may grant an 

10 exemption from the requirements of this Act to a source 

11 category if the Administrator determines, after public no12 tice and comment, that it is not feasible to measure or 

13 estimate emissions from that source category, until such 

14 time as measurement or estimation becomes feasible. 

15 (b) REDUCTION OF LIMITATIONS.—If the Adminis16 trator exempts a source category under subsection (a), the 

17 Administrator shall also reduce the total tradeable allow18 ances under section 331(a)(1) by the amount of green19 house gas emissions that the exempted source category 

20 emitted in calendar year 2000, as identified in the 2000 

21 Inventory. 

22 (c) LIMITATION ON EXEMPTION.—The Administrator 

23 may not grant an exemption under subsection (a) to car24 bon dioxide produced from fossil fuel. 
46 

•S 1151 IS 

1 SUBTITLE B—ESTABLISHMENT AND ALLOCATION OF

2 TRADEABLE ALLOWANCES

3 SEC. 331. ESTABLISHMENT OF TRADEABLE ALLOWANCES. 

4 (a) IN GENERAL.—The Administrator shall promul5 gate regulations to establish tradeable allowances, denomi6 nated in units of carbon dioxide equivalents, for calendar 

7 years beginning after 2009, equal to— 

8 (1) 5896 million metric tons, measured in units 

9 of carbon dioxide equivalents, reduced by 

10 (2) the amount of emissions of greenhouse 

11 gases in calendar year 2000 from non-covered enti12 ties. 

13 (b) SERIAL NUMBERS.—The Administrator shall as14 sign a unique serial number to each tradeable allowance 

15 established under subsection (a), and shall take such ac16 tion as may be necessary to prevent counterfeiting of 

17 tradeable allowances. 

18 (c) NATURE OF TRADEABLE ALLOWANCES.—A 

19 tradeable allowance is not a property right, and nothing 

20 in this title or any other provision of law limits the author21 ity of the United States to terminate or limit a tradeable 

22 allowance. 

23 (d) NON-COVERED ENTITY.— 

24 (1) IN GENERAL.—In this section the term 

25 ‘‘non-covered entity’’ means an entity that— 
47 

•S 1151 IS 

1 (A) owns or controls a source of green2 house gas emissions in the electric power, in3 dustrial, or commercial sectors of the United 

4 States economy (as defined in the Inventory), 

5 refines or imports petroleum products for use in 

6 transportation, or produces or imports 

7 hydrofluorocarbons, perfluorocarbons, or sulfur 

8 hexafluoride; and 

9 (B) is not a covered entity. 

10 (2) EXCEPTION.—Notwithstanding paragraph 

11 (1), an entity that is a covered entity for any cal12 endar year beginning after 2009 shall not be consid13 ered to be a non-covered entity for purposes of sub14 section (a) only because it emitted, or its products 

15 would have emitted, 10,000 metric tons or less of 

16 greenhouse gas, measured in units of carbon dioxide 

17 equivalents, in the year 2000. 

18 SEC. 332. DETERMINATION OF TRADEABLE ALLOWANCE 

19 ALLOCATIONS. 

20 (a) IN GENERAL.—The Secretary shall determine— 

21 (1) the amount of tradeable allowances to be al22 located to each covered sector of that sector’s allot23 ments; and 
48 

•S 1151 IS 

1 (2) the amount of tradeable allowances to be al2 located to the Climate Change Credit Corporation 

3 established under section 351. 

4 (b) ALLOCATION FACTORS.—In making the deter5 mination required by subsection (a), the Secretary shall 

6 consider— 

7 (1) the distributive effect of the allocations on 

8 household income and net worth of individuals; 

9 (2) the impact of the allocations on corporate 

10 income, taxes, and asset value; 

11 (3) the impact of the allocations on income lev12 els of consumers and on their energy consumption; 

13 (4) the effects of the allocations in terms of eco14 nomic efficiency; 

15 (5) the ability of covered entities to pass 

16 through compliance costs to their customers; 

17 (6) the degree to which the amount of alloca18 tions to the covered sectors should decrease over 

19 time; and 

20 (7) the need to maintain the international com21 petitiveness of United States manufacturing and 

22 avoid the additional loss of United States manufac23 turing jobs. 

24 (c) ALLOCATION RECOMMENDATIONS AND IMPLE25 MENTATION.—Before allocating or providing tradeable al-
49 

•S 1151 IS 

1 lowances under subsection (a) and within 24 months after 

2 the date of enactment of this Act, the Secretary shall sub3 mit the determinations under subsection (a) to the Senate 

4 Committee on Commerce, Science, and Transportation, 

5 the Senate Committee on Environment and Public Works, 

6 the House of Representatives Committee on Science, and 

7 the House of Representatives Committee on Energy and 

8 Commerce. The Secretary’s determinations under para9 graph (1), including the allocations and provision of 

10 tradeable allowances pursuant to that determination, are 

11 deemed to be a major rule (as defined in section 804(2) 

12 of title 5, United States Code), and subject to the provi13 sions of chapter 8 of that title. 

14 SEC. 333. ALLOCATION OF TRADEABLE ALLOWANCES. 

15 (a) IN GENERAL.—Beginning with calendar year 

16 2010 and after taking into account any initial allocations 

17 under section 335, the Administrator shall— 

18 (1) allocate to each covered sector that sector’s 

19 allotments determined by the Administrator under 

20 section 332 (adjusted for any such initial allocations 

21 and the allocation to the Climate Change Credit 

22 Corporation established under section 351); and 

23 (2) allocate to the Climate Change Credit Cor24 poration established under section 351 the tradeable 

25 allowances allocable to that Corporation. 
50 

•S 1151 IS 

1 (b) INTRASECTORIAL ALLOTMENTS.—The Adminis2 trator shall, by regulation, establish a process for the allo3 cation of tradeable allowances under this section, without 

4 cost to covered entities, that will— 

5 (1) encourage investments that increase the ef6 ficiency of the processes that produce greenhouse 

7 gas emissions; 

8 (2) minimize the costs to the government of al9 locating the tradeable allowances; 

10 (3) not penalize a covered entity for emissions 

11 reductions made before 2010 and registered with the 

12 database; and 

13 (4) provide sufficient allocation for new en14 trants into the sector. 

15 (c) POINT SOURCE ALLOCATION.—The Adminis16 trator shall allocate the tradeable allowances for the elec17 tricity generation, industrial, and commercial sectors to 

18 the entities owning or controlling the point sources of 

19 greenhouse gas emissions within that sector. 

20 (d) HYDROFLUOROCARBONS, PERFLUOROCARBONS, 

21 AND SULFUR HEXAFLUORIDE.—The Administrator shall 

22 allocate the tradeable allowances for producers or import23 ers of hydrofluorocarbons, perfluorocarbons, or sulfur 

24 hexafluoride to such producers or importers. 
51 

•S 1151 IS 

1 (e) SPECIAL RULE FOR ALLOCATION WITHIN THE

2 TRANSPORTATION SECTOR.—The Administrator shall al3 locate the tradeable allowances for the transportation sec4 tor to petroleum refiners or importers that produce or im5 port petroleum products that will be used as fuel for trans6 portation. 

7 (f) ALLOCATIONS TO RURAL ELECTRIC COOPERA8 TIVES.—For each electric generating unit that is owned 

9 or operated by a rural electric cooperative, the Adminis10 trator shall allocate each year, at no cost, allowances in 

11 an amount equal to the greenhouse gas emissions of each 

12 such unit in 2000, plus an amount equal to the average 

13 emissions growth expected for all such units. The alloca14 tions shall be offset from the allowances allocated to the 

15 Climate Change Credit Corporation. 

16 (g) EARLY AUCTION FOR TECHNOLOGY DEPLOY17 MENT AND DISSEMINATION.— 

18 (1) IN GENERAL.—Within 1 year after the date 

19 of enactment of this Act, the Administrator, in con20 sultation with the Secretary of Energy and the Sec21 retary of Commerce, shall allocate tradeable allow22 ances by the Climate Change Credit Corporation for 

23 auction before 2010. The Climate Change Credit 

24 Corporation shall use the proceeds of the auction, 

25 together with any funds received as reimbursements 
52 

•S 1151 IS 

1 under subtitle C of title IV of this Act, to support 

2 the programs established by that subtitle until the 

3 secretary of Energy and the Corporation jointly de4 termine that the purposes of those programs have 

5 been accomplished. The Corporation shall also use 

6 the proceeds of the auction to support the programs 

7 established by subtitle D of title IV of this Act until 

8 2010. 

9 (2) DETERMINATION OF ALLOCATION.—In de10 termining the amount of tradeable allowances to be 

11 allocated to the Climate Change Credit Corporation 

12 under this subsection, the Administrator shall con13 sider— 

14 (A) the expected market value of tradeable 

15 allowances for auction; 

16 (B) the annual funding required for the 

17 programs established by subtitle C of title IV; 

18 (C) the repayment provisions of those pro19 grams; and 

20 (D) the allocation factors in section 

21 332(b). 

22 (3) LIMITATION.—In allocating tradeable allow23 ances under paragraph (1) the Administrator shall 

24 take into account the purposes of section 331 and 
53 

•S 1151 IS 

1 the impact, if any, the allocation under paragraph 

2 (1) may have on achieving those purposes. 

3 (h) ALLOCATION TO COVERED ENTITIES IN STATES

4 ADOPTING MANDATORY GREENHOUSE GAS EMISSIONS

5 REDUCTION PROGRAMS.—For a covered entity operating 

6 in any State that has adopted a legally binding and en7 forceable program to achieve and maintain reductions that 

8 are consistent with, or more stringent than, reductions 

9 mandated by this Act, and which requirements are effec10 tive prior to 2010, the Administrator shall consider such 

11 binding state actions in making the final determination 

12 of allocation to such covered entities. 

13 SEC. 334. ENSURING TARGET ADEQUACY. 

14 (a) IN GENERAL.—Beginning 2 years after the date 

15 of enactment of this Act, the Under Secretary of Com16 merce for Oceans and Atmosphere shall review the allow17 ances established by section 331 no less frequently than 

18 biennially— 

19 (1) to re-evaluate the levels established by that 

20 subsection, after taking into account the best avail21 able science and the most currently available data, 

22 and 

23 (2) to re-evaluate the environmental and public 

24 health impacts of specific concentration levels of 

25 greenhouse gases, 
54 

•S 1151 IS 

1 to determine whether the allowances established by sub2 section (a) continue to be consistent with the objective of 

3 the United Nations’ Framework Convention on Climate 

4 Change of stabilizing levels of greenhouse gas emissions 

5 at a level that will prevent dangerous anthropogenic inter6 ference with the climate system. 

7 (b) REVIEW OF 2010 LEVELS.—The Under Secretary 

8 shall specifically review in 2008 the level established under 

9 section 331(a)(1), and transmit a report on his reviews, 

10 together with any recommendations, including legislative 

11 recommendations, for modification of the levels, to the 

12 Senate Committee on Commerce, Science, and Transpor13 tation, the Senate Committee on Environment and Public 

14 Works, the House of Representatives Committee on 

15 Science, and the House of Representatives Committee on 

16 Energy and Commerce. 

17 SEC. 335. INITIAL ALLOCATIONS FOR EARLY PARTICIPA18 TION AND ACCELERATED PARTICIPATION. 

19 (a) Before making any allocations under section 333, 

20 the Administrator shall allocate— 

21 (1) to any covered entity an amount of 

22 tradeable allowances equivalent to the amount of 

23 greenhouse gas emissions reductions registered by 

24 that covered entity in the national greenhouse gas 

25 database if— 
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•S 1151 IS 

1 (A) the covered entity has requested to use 

2 the registered reduction in the year of alloca3 tion; 

4 (B) the reduction was registered prior to 

5 2010; and 

6 (C) the Administrator retires the unique 

7 serial number assigned to the reduction under 

8 section 201(c)(3); and 

9 (2) to any covered entity that has entered into 

10 an accelerated participation agreement under section 

11 336, such tradeable allowances as the Administrator 

12 has determined to be appropriate under that section. 

13 (b) Any covered entity that is subject to a State man14 datory greenhouse gas emissions reduction program that 

15 meets the requirements of subsection (h) of section 333 

16 shall be eligible for the allocation of allowances under this 

17 section and section 336 if the requirements of the State 

18 mandatory greenhouse gas emission reduction program 

19 are consistent with, or more stringent than, the emission 

20 targets established by this Act. 

21 SEC. 336. BONUS FOR ACCELERATED PARTICIPATION. 

22 (a) IN GENERAL.—If a covered entity executes an 

23 agreement with the Administrator under which it agrees 

24 to reduce its level of greenhouse gas emissions to a level 

25 no greater than the level of its greenhouse gas emissions 
56 

•S 1151 IS 

1 for calendar year 1990 by the year 2010, then, for the 

2 6-year period beginning with calendar year 2010, the Ad3 ministrator shall— 

4 (1) provide additional tradeable allowances to 

5 that entity when allocating allowances under section 

6 334 in order to recognize the additional emissions 

7 reductions that will be required of the covered entity; 

8 (2) allow that entity to satisfy 20 percent of its 

9 requirements under section 301 by— 

10 (A) submitting tradeable allowances from 

11 another nation’s market in greenhouse gas 

12 emissions under the conditions described in sec13 tion 312(b)(1); 

14 (B) submitting a registered net increase in 

15 sequestration, as registered in the National 

16 Greenhouse Gas Database established under 

17 section 201, and as adjusted by the appropriate 

18 sequestration discount rate established under 

19 section 371; or 

20 (C) submitting a greenhouse gas emission 

21 reduction (other than a registered net increase 

22 in sequestration) that was registered in the Na23 tional Greenhouse Gas Database by a person 

24 that is not a covered entity. 
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1 (b) TERMINATION.—An entity that executes an 

2 agreement described in subsection (a) may terminate the 

3 agreement at any time. 

4 (c) FAILURE TO MEET COMMITMENT.—If an entity 

5 that executes an agreement described in subsection (a) 

6 fails to achieve the level of emissions to which it committed 

7 by calendar year 2010— 

8 (1) its requirements under section 301 shall be 

9 increased by the amount of any tradeable allowances 

10 provided to it under subsection (a)(1); and 

11 (2) any tradeable allowances submitted there12 after shall be counted first against the increase in 

13 those requirements. 

14 SUBTITLE C—CLIMATE CHANGE CREDIT CORPORATION

15 SEC. 351. ESTABLISHMENT. 

16 (a) IN GENERAL.—The Climate Change Credit Cor17 poration is established as a nonprofit corporation without 

18 stock. The Corporation shall not be considered to be an 

19 agency or establishment of the United States Government. 

20 (b) APPLICABLE LAWS.—The Corporation shall be 

21 subject to the provisions of this title and, to the extent 

22 consistent with this title, to the District of Columbia Busi23 ness Corporation Act. 

24 (c) BOARD OF DIRECTORS.—The Corporation shall 

25 have a board of directors of 5 individuals who are citizens 
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1 of the United States, of whom 1 shall be elected annually 

2 by the board to serve as chairman. No more than 3 mem3 bers of the board serving at any time may be affiliated 

4 with the same political party. The members of the board 

5 shall be appointed by the President of the United States, 

6 by and with the advice and consent of the Senate and shall 

7 serve for terms of 5 years. 

8 SEC. 352. PURPOSES AND FUNCTIONS. 

9 (a) TRADING.—The Corporation— 

10 (1) shall receive and manage tradeable allow11 ances allocated to it under section 333(a)(2); and 

12 (2) shall buy and sell tradeable allowances, 

13 whether allocated to it under that section or ob14 tained by purchase, trade, or donation from other 

15 entities; but 

16 (3) may not retire tradeable allowances unused. 

17 (b) USE OF TRADEABLE ALLOWANCES AND PRO18 CEEDS.— 

19 (1) IN GENERAL.—The Corporation shall use 

20 the tradeable allowances, and proceeds derived from 

21 its trading activities in tradeable allowances, to re22 duce costs borne by consumers as a result of the 

23 greenhouse gas reduction requirements of this Act. 

24 The reductions— 
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•S 1151 IS 

1 (A) may be obtained by buy-down, subsidy, 

2 negotiation of discounts, consumer rebates, or 

3 otherwise; 

4 (B) shall be, as nearly as possible, equi5 tably distributed across all regions of the 

6 United States; and 

7 (C) may include arrangements for pref8 erential treatment to consumers who can least 

9 afford any such increased costs. 

10 (2) TRANSITION ASSISTANCE TO DISLOCATED

11 WORKERS AND COMMUNITIES.—The Corporation 

12 shall allocate a percentage of the proceeds derived 

13 from its trading activities in tradeable allowances to 

14 provide transition assistance to dislocated workers 

15 and communities. Transition assistance may take 

16 the form of— 

17 (A) grants to employers, employer associa18 tions, and representatives of employees— 

19 (i) to provide training, adjustment as20 sistance, and employment services to dis21 located workers; and 

22 (ii) to make income-maintenance and 

23 needs-related payments to dislocated work24 ers; and 
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1 (B) grants to State and local governments 

2 to assist communities in attracting new employ3 ers or providing essential local government serv4 ices. 

5 (3) PHASE-OUT OF TRANSITION ASSISTANCE.— 

6 The percentage allocated by the Corporation under 

7 paragraph (2)— 

8 (A) shall be 20 percent for 2010; 

9 (B) shall be reduced by 2 percentage 

10 points each year thereafter; and 

11 (C) may not be reduced below zero. 

12 (4) ADAPTATION AND MITIGATION ASSISTANCE

13 FOR LOW-INCOME PERSONS AND COMMUNITIES.— 

14 The Corporation shall allocate at least 10 percent of 

15 the proceeds derived from its trading activities to 

16 funding climate change adaptation and mitigation 

17 programs to assist low-income populations identified 

18 in the report submitted under section 106(b) as hav19 ing particular needs in addressing the impact of cli20 mate change. 

21 (5) ADAPTATION ASSISTANCE FOR FISH AND

22 WILDLIFE HABITAT.—The Corporation shall fund ef23 forts to strengthen and restore habitat that improves 

24 the ability of fish and wildlife to adapt successfully 

25 to climate change. The Corporation shall deposit the 
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1 proceeds from no less than 10 percent of the total 

2 allowances allocated to it in the wildlife restoration 

3 fund subaccount known as the Wildlife Conservation 

4 and Restoration Account established under section 3 

5 of the Pittman-Robertson Wildlife Restoration Act 

6 (16 U.S.C. 669b). Amounts deposited in the sub7 account under this paragraph shall be available 

8 without further appropriation for obligation and ex9 penditure under that Act. 

10 (6) TECHNOLOGY DEPLOYMENT PROGRAMS.— 

11 The Corporation shall establish and carry out a pro12 gram, through direct grants, revolving loan pro13 grams, or other financial measures, to provide sup14 port for the deployment of technology to assist in 

15 compliance with this Act by distributing the pro16 ceeds from no less than 50 percent of the total al17 lowances allocated in support of the program estab18 lished under section 491. 

19 SUBTITLE D—SEQUESTRATION ACCOUNTING; 

20 PENALTIES

21 SEC. 371. SEQUESTRATION ACCOUNTING. 

22 (a) SEQUESTRATION ACCOUNTING.—If a covered en23 tity uses a registered net increase in sequestration to sat24 isfy the requirements of section 301 for any year, that 

25 covered entity shall submit information to the Adminis-
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1 trator every 5 years thereafter sufficient to allow the Ad2 ministrator to determine, using the methods and stand3 ards created under section 204, whether that net increase 

4 in sequestration still exists. Unless the Administrator de5 termines that the net increase in sequestration continues 

6 to exist, the covered entity shall offset any loss of seques7 tration by submitting additional tradeable allowances of 

8 equivalent amount in the calender year following that de9 termination. 

10 (b) REGULATIONS REQUIRED.—The Secretary, act11 ing through the Under Secretary of Commerce for Science 

12 and Technology, in coordination with the Secretary of Ag13 riculture, the Secretary of Energy, and the Administrator, 

14 shall issue regulations establishing the sequestration ac15 counting rules for all classes of sequestration projects. 

16 (c) CRITERIA FOR REGULATIONS.—In issuing regula17 tions under this section, the Secretary shall use the fol18 lowing criteria: 

19 (1) If the range of possible amounts of net in20 crease in sequestration for a particular class of se21 questration project is not more than 10 percent of 

22 the median of that range, the amount of sequestra23 tion awarded shall be equal to the median value of 

24 that range. 
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1 (2) If the range of possible amounts of net in2 crease in sequestration for a particular class of se3 questration project is more than 10 percent of the 

4 median of that range, the amount of sequestration 

5 awarded shall be equal to the fifth percentile of that 

6 range. 

7 (3) The regulations shall include procedures for 

8 accounting for potential leakage from sequestration 

9 projects and for ensuring that any registered in10 crease in sequestration is in addition that which 

11 would have occurred if this Act had not been en12 acted. 

13 (d) UPDATES.—The Secretary shall update the se14 questration accounting rules for every class of sequestra15 tion project at least once every 5 years. 

16 SEC. 372. PENALTIES. 

17 Any covered entity that fails to meet the require18 ments of section 301 for a year shall be liable for a civil 

19 penalty, payable to the Administrator, equal to thrice the 

20 market value (determined as of the last day of the year 

21 at issue) of the tradeable allowances that would be nec22 essary for that covered entity to meet those requirements 

23 on the date of the emission that resulted in the violation. 
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1 TITLE IV—INNOVATION AND 

2 COMPETITIVENESS 

3 SEC. 401. FINDINGS. 

4 The Congress finds the following: 

5 (1) Innovation, the process that ultimately pro6 vides new and improved products, manufacturing 

7 processes, and services, is the basis for technological 

8 progress. This technological advancement is a key 

9 element of sustained economic growth. 

10 (2) The innovation economy is fundamentally 

11 different from the industrial or even the information 

12 economy. It requires a new vision and new ap13 proaches. 

14 (3) Changing innovation processes and the evo15 lution of the relative contribution made by the pri16 vate and public sectors have emphasized the need for 

17 strong industry-science linkages. 

18 (4) Patent regimes play an increasingly complex 

19 role in encouraging innovation, disseminating sci20 entific and technical knowledge, and enhancing mar21 ket entry and firm creation. 

22 (5) Increasing participation and maintaining 

23 quality standards in tertiary education in science 

24 and technology are imperative to meet growing de-
65 

•S 1151 IS 

1 mand for workers with scientific and technological 

2 knowledge and skills. 

3 (6) Research, innovation, and human capital 

4 are our principal strengths. By sustaining United 

5 States investments in research and finding collabo6 rative arrangements to leverage existing resources 

7 and funds in a scarce budget environment, we en8 sure that America remains at the forefront of sci9 entific and technological capability. 

10 (7) Technology transfer of publicly funded re11 search is a critical mechanism for optimizing the re12 turn on taxpayer investment, particularly where 

13 other benefits are not measurable at all or are very 

14 long-term. 

15 (8) Identifying metrics to quantify program ef16 fectiveness is of increasing importance because the 

17 entire innovation process is continuing to evolve in 

18 an arena of increasing global competition. Metrics 

19 need to take into account a wide range of steps in 

20 a highly complex process, as well as the ultimate 

21 product or service, but should not constrain the con22 tinued evolution or development of new technology 

23 transfer approaches. 

24 (9) The United States lacks a national innova25 tion strategy and agenda, including an aggressive 
66 

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1 public policy strategy that energizes the environment 

2 for national innovation, and no Federal agency is re3 sponsible for developing national innovation policy. 

4 SUBTITLE A—INNOVATION INFRASTRUCTURE

5 SEC. 421. THE INNOVATION ADMINISTRATION. 

6 (a) IN GENERAL.—Section 5 of the Stevenson7 Wydler Technology Innovation Act of 1990 (15 U.S.C. 

8 3704) is amended— 

9 (1) by striking ‘‘a Technology’’ in subsection 

10 (a) and inserting ‘‘an Innovation’’; 

11 (2) by striking ‘‘The Technology’’ in subsection 

12 (a) and inserting ‘‘The Innovation’’; 

13 (3) by striking ‘‘of Technology’’ in subsection 

14 (a)(3) and inserting ‘‘of Innovation’’; 

15 (4) by striking ‘‘Technology’’ each place it ap16 pears in subsection (b) and in subsection (c)(1) and 

17 inserting ‘‘Innovation’’; 

18 (5) by inserting ‘‘(1) IN GENERAL.—’’ before 

19 ‘‘The Secretary’’ in subsection (c) and redesignating 

20 paragraphs (1) through (15) as subparagraphs (A) 

21 through (O); and 

22 (6) by adding at the end of subsection (c) the 

23 following: 

24 ‘‘(2) SPECIFIC INNOVATION-RELATED DU25 TIES.— 
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1 ‘‘(A) IN GENERAL.—The Secretary, 

2 through the Under Secretary, shall— 

3 ‘‘(i) provide advice to the President 

4 with respect to the policies and conduct of 

5 the Innovation Administration, including 

6 ways to improve research and development 

7 concerning climate change innovation and 

8 the methods of collecting and dissemi9 nating findings of such research; 

10 ‘‘(ii) provide advice to the President 

11 and the Congress on the development of 

12 climate change innovation research pro13 grams; 

14 ‘‘(iii) develop and monitor metrics to 

15 be used by the Federal government in 

16 managing the innovation process; 

17 ‘‘(iv) develop and establish govern18 ment wide climate change innovation policy 

19 and strategic plans, consistent with the 

20 strategic plans of the United States Cli21 mate Change Science Program and the 

22 United States Climate Technology Chal23 lenge Program, including an implementa24 tion plan, developed in consultation with 

25 the Secretary of Energy and the Climate 
68 

•S 1151 IS 

1 Change Credit Corporation, for the Cli2 mate Technology Challenge Program under 

3 section 491, addressing technology prior4 ities, total funding, opportunities for Fed5 eral procurement, and other issues; 

6 ‘‘(v) review and evaluate on a con7 tinuing basis— 

8 ‘‘(I) technologies available for 

9 transfer and deployment to the com10 mercial sector; 

11 ‘‘(II) all statutes and regulations 

12 pertaining to Federal programs which 

13 assist in the transfer and deployment 

14 of technologies, both domestically and 

15 internationally; and 

16 ‘‘(III) new and emerging innova17 tion policy issues affecting the deploy18 ment of new technologies, including 

19 identification of barriers to commer20 cialization and recommendations for 

21 removal of those barriers; 

22 ‘‘(vi) assess the extent to which such 

23 policies, programs, practices, and proce24 dures facilitate or impede the promotion of 

25 the policies set forth in subsection (b); 
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1 ‘‘(vii) gather information about the 

2 implementation, effectiveness, and impact 

3 of the deployed climate change related 

4 technologies based on metrics developed 

5 under clause (iii); 

6 ‘‘(viii) make recommendations to the 

7 President and the Congress and other offi8 cials of Federal agencies or other Federal 

9 entities, regarding ways to better promote 

10 the policies developed under paragraph 

11 (1)(B); 

12 ‘‘(ix) provide advice, recommenda13 tions, legislative proposals to the Congress 

14 on a continuing basis, and any additional 

15 information the Agency or the Congress 

16 deems appropriate; 

17 ‘‘(x) make recommendations to the 

18 President, the Congress, and Federal agen19 cies or entities regarding policy on Federal 

20 purchasing behavior that would provide in21 centives to industry to bring new products 

22 to market faster; 

23 ‘‘(xi) conduct economic analysis in 

24 support of climate change technology de25 velopment and deployment; 
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•S 1151 IS 

1 ‘‘(xii) work with academia to develop 

2 education programs to support the multi3 disciplinary nature of innovation; 

4 ‘‘(xiii) establish partnerships with in5 dustry to determine the needs for the fu6 ture workforce to support deployed tech7 nologies; 

8 ‘‘(xiv) assist in the search for partners 

9 to establish public-private partnerships, 

10 and in searching for capital funds from the 

11 investment community for new businesses 

12 in the climate change technology sector; 

13 and 

14 ‘‘(xv) identify opportunities to pro15 mote cooperation on research, development, 

16 and commercialization with other countries 

17 and make recommendations, based on the 

18 opportunities so identified to the Secretary 

19 of State. 

20 ‘‘(B) ANNUAL REPORT.— 

21 ‘‘(i) IN GENERAL.—The Administrator 

22 shall prepare and submit to the President 

23 and the appropriate committees of the 

24 Congress a report entitled ‘Climate Change 

25 Innovation: A Progress Report’ within 6 
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•S 1151 IS 

1 months after the date of enactment of the 

2 Climate Stewardship and Innovation Act of 

3 2005 and annually thereafter. 

4 ‘‘(ii) CONTENTS.—The report shall 

5 assess the status of the Nation in achiev6 ing the purposes set forth in subsection 

7 (b), with particular focus on the new and 

8 emerging issues impacting the deployment 

9 of new climate change technologies. The 

10 report shall present, as appropriate, avail11 able data on research, education, work12 force, financing, and market opportunities. 

13 The report shall include recommendations 

14 for policy change. 

15 ‘‘(iii) CONSULTATION REQUIRED.—In 

16 determining the findings, conclusions, and 

17 recommendations of the report, the Agency 

18 shall seek input from industry, academia, 

19 and other interested parties.’’. 

20 (b) REFERENCES.—Any reference to the Technology 

21 Administration in any other Federal law, Executive order, 

22 rule, regulation, or delegation of authority, or any docu23 ment or pertaining to the Technology Administration or 

24 an officer or employee of the Technology Administration, 

25 is deemed to refer to the Innovation Administration or an 
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•S 1151 IS 

1 officer or employee of the Innovation Administration, as 

2 appropriate. 

3 SEC. 422. TECHNOLOGY TRANSFER OPPORTUNITIES. 

4 (a) IN GENERAL.—The Secretary of Commerce shall 

5 conduct a study of technology transfer barriers, best prac6 tices, and outcomes of technology transfer activities at 

7 Federal laboratories related to the licensing and commer8 cialization of energy efficient technologies, and other tech9 nologies that, compared to similar technology in commer10 cial use, result in reduced emissions of greenhouse gases, 

11 increased ability to adapt to climate change impacts, or 

12 increased sequestration of greenhouse gases. The Sec13 retary shall submit a report setting forth the findings and 

14 conclusions of the study to the Senate Committee on Com15 merce, Science, and Transportation and the House of Rep16 resentatives Committee on Science within 6 months after 

17 the date of enactment of this Act. The Secretary shall 

18 work with the existing interagency working group to ad19 dress identified barriers to technology transfer. 

20 (b) BUSINESS OPPORTUNITIES STUDY.—The Sec21 retary of Commerce shall perform an analysis of business 

22 opportunities, both domestically and internationally, avail23 able for climate change technologies. The Secretary shall 

24 transmit the Secretary’s findings and recommendations 

25 from the first such analysis to the Senate Committee on 
73 

•S 1151 IS 

1 Commerce, Science, and Transportation and the House of 

2 Representatives Committee on Science within 6 months 

3 after the date of enactment of this Act, and shall transmit 

4 a revised report of such findings and recommendations to 

5 those Committees annually thereafter. 

6 (c) AGENCY REPORT TO INCLUDE INFORMATION ON

7 TECHNOLOGY TRANSFER INCOME AND ROYALTIES.— 

8 Paragraph (2)(B) of section 11(f) of the Stevenson9 Wydler Technology Innovation Act of 1980 (15 U.S.C. 

10 3710(f)) is amended— 

11 (1) by striking ‘‘and’’ after the semicolon in 

12 clause (vi); 

13 (2) by redesignating clause (vii) as clause (ix); 

14 and 

15 (3) by inserting after clause (vi) the following: 

16 ‘‘(vii) the number of fully-executed li17 censes which received royalty income in the 

18 preceding fiscal year for climate-change or 

19 energy-efficient technology; 

20 ‘‘(viii) the total earned royalty income 

21 for climate-change or energy-efficient tech22 nology; and’’. 

23 (d) INCREASED INCENTIVES FOR DEVELOPMENT OF

24 CLIMATE-CHANGE OR ENERGY-EFFICIENT TECH25 NOLOGY.—Section 14(a) of the Stevenson-Wydler Tech-
74 

•S 1151 IS 

1 nology Innovation Act of 1980 (15 U.S.C. 3710c(a)) is 

2 amended— 

3 (1) by striking ‘‘15 percent,’’ in paragraph 

4 (1)(A) and inserting ‘‘15 percent (25 percent for cli5 mate change-related technologies),’’; and 

6 (2) by inserting ‘‘($250,000 for climate change7 related technologies)’’ after ‘‘$150,000’’ each place 

8 it appears in paragraph (3). 

9 SEC. 423. GOVERNMENT-SPONSORED TECHNOLOGY IN10 VESTMENT PROGRAM. 

11 (a) PURPOSE.—It is the purpose of this section to 

12 provide financial support for the development, through 

13 private enterprise, of technology that has potential appli14 cation to climate change adaptation and mitigation. 

15 (b) FINANCIAL SUPPORT.—The Secretary of Com16 merce may establish a nonprofit government sponsored en17 terprise for the purpose of providing investment in private 

18 sector technologies that show promise for climate change 

19 adaptation and mitigation applications. 

20 (c) TERMS; CONDITIONS; TRANSPARENCY.—The Sec21 retary shall report within 30 days after the end of each 

22 calendar quarter to the Senate Committee on Commerce, 

23 Science, and Transportation and the House of Represent24 atives Committee on Science on its operations during that 

25 preceding calendar quarter. 
75 

•S 1151 IS 

1 (d) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated to the Secretary of Com3 merce for the use of the enterprise established under sub4 section (b) such sums as may be necessary to carry out 

5 the purpose of this section. 

6 SEC. 424. FEDERAL TECHNOLOGY INNOVATION PER7 SONNEL INCENTIVES. 

8 The Stevenson-Wydler Technology Innovation Act of 

9 1980 (15 U.S.C. 3701 et seq.) is amended by adding at 

10 the end the following: 

11 ‘‘SEC. 24. FEDERAL TECHNOLOGY INNOVATION PERSONNEL 

12 INCENTIVES. 

13 ‘‘(a) IN GENERAL.—The head of a Federal labora14 tory may authorize the participation by any employee of 

15 the laboratory in an activity described in subsection (b) 

16 in order to achieve the purposes of this Act. 

17 ‘‘(b) AUTHORIZED ACTIVITIES.— 

18 ‘‘(1) COMMERCIAL DEVELOPMENT PARTICIPA19 TION ARRANGEMENTS.— 

20 ‘‘(A) IN GENERAL.—The head of a Federal 

21 laboratory may, under the authority provided by 

22 section 12(b)(5) of this Act, authorize an em23 ployee to participate, as an officer or employee, 

24 in the creation of an enterprise established to 

25 commercially exploit research work realized in 
76 

•S 1151 IS 

1 carrying out that employee’s responsibilities as 

2 an employee of that laboratory for a period of 

3 up to 24 months. The authority may be re4 newed for an additional 12-month period. 

5 ‘‘(B) LIMITATIONS.—In addition to the re6 quirements set forth in section 12, an employee 

7 may not be authorized under subparagraph (A) 

8 to participate in such an enterprise if— 

9 ‘‘(i) it would be prejudicial to the nor10 mal functioning of the laboratory; 

11 ‘‘(ii) by its nature, terms and condi12 tions, or the manner in which the authority 

13 would be exercised, participation by that 

14 employ would reflect adversely on the func15 tions exercised by that employee as an em16 ployee of the laboratory, or risk compro17 mising or calling in question the independ18 ence or neutrality of the laboratory; or 

19 ‘‘(iii) the interests of the enterprise 

20 are of such a nature as to be prejudicial to 

21 the mission or integrity of the laboratory 

22 or employee. 

23 ‘‘(C) RELATIONSHIP TO LABORATORY EM24 PLOYMENT.— 
77 

•S 1151 IS 

1 ‘‘(i) REPRESENTATION.—The em2 ployee may not represent the employee’s 

3 official position or the laboratory while 

4 participating in the creation of the enter5 prise. 

6 ‘‘(ii) FEDERAL EMPLOYMENT STA7 TUS.—Beginning with the effective date of 

8 the authorization under subsection (a), an 

9 employee shall be placed in a temporary 

10 status without duties or pay and shall 

11 cease all duties in connection with the lab12 oratory. 

13 ‘‘(iii) RETURN TO SERVICE.—At the 

14 end of the authorization period, the em15 ployee may be restored to his former posi16 tion in the laboratory upon termination of 

17 any employment or professional relation18 ship with the enterprise. 

19 ‘‘(2) SERVICE IN PRIVATE SECTOR ADVISORY

20 CAPACITY.— 

21 ‘‘(A) IN GENERAL.—The head of a Federal 

22 laboratory may, under the authority provided by 

23 section 12(b)(5) of this Act, authorize an em24 ployee to serve, as a member of the board of di25 rectors of, as a member of an advisory com-
78 

•S 1151 IS 

1 mittee to, or in any similar capacity with a cor2 poration, partnership, joint venture, or other 

3 business enterprise for a period of not more 

4 than 5 years in order to provide advice and 

5 counsel on ways to improve the diffusion and 

6 use of an invention or other intellectual prop7 erty of a Federal laboratory. 

8 ‘‘(B) QUALIFYING INVESTMENT.—Under 

9 the authorization, an employee authorized to 

10 serve on the board of directors of a corporation 

11 may purchase and hold the number of quali12 fying shares of stock needed to serve as a mem13 ber of that board. 

14 ‘‘(C) PARTICIPATION IN CERTAIN PRO15 CEEDINGS.—An employee authorized under 

16 subparagraph (A) may not participate in any 

17 grant evaluation, contract negotiation, or other 

18 proceeding in which the corporation, partner19 ship, joint venture, or other business enterprise 

20 has an interest during the authorization pe21 riod.’’. 

22 SEC. 425. INTERDISCIPLINARY RESEARCH AND COMMER23 CIALIZATION. 

24 (a) IN GENERAL.—The Director of the National 

25 Science Foundation shall develop and implement a plan 
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•S 1151 IS 

1 to increase and establish priorities for funding for multi2 disciplinary and interdisciplinary research at universities 

3 in support of the adaptation to and mitigation of climate 

4 change. The plan shall— 

5 (1) address the cross-fertilization and fusion of 

6 research within and across the biological and phys7 ical sciences, the spectrum of engineering disciplines, 

8 and entirely new fields of scientific exploration; and 

9 (2) include the area of emerging service 

10 sciences. 

11 (b) REPORT TO CONGRESS.—The Director shall 

12 transmit a copy of the plan to the Senate Committee on 

13 Commerce, Science, and Transportation and the House of 

14 Representatives Committee on Science within 6 months 

15 after the date of enactment of this Act. 

16 (c) SERVICE SCIENCE DEFINED.—In this section, the 

17 term ‘‘service science’’ means the melding together of the 

18 fields of computer science, operations research, industrial 

19 engineering, mathematics, management science, decision 

20 sciences, social sciences, and legal sciences in a manner 

21 that may transform entire enterprises and drive innova22 tion at the intersection of business and technology exper23 tise. 
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•S 1151 IS 

1 SEC. 426. CLIMATE INNOVATION PARTNERSHIPS. 

2 (a) IN GENERAL.—The Secretary of Commerce, in 

3 consultation with the Director of the National Science 

4 Foundation, shall create a program of public-private part5 nerships that— 

6 (1) focus on supporting climate change related 

7 regional innovation; 

8 (2) bridge the gap between the long-term re9 search and commercialization; 

10 (3) focus on deployment of technologies needed 

11 by a particular region in adapting or mitigating the 

12 impacts of climate change; and 

13 (4) support activities that are selected from 

14 proposals submitted in merit-based competitions. 

15 (b) INSTITUTIONAL DIVERSITY.—In creating the pro16 gram, the Secretary and the Administrator shall— 

17 (1) encourage institutional diversity; and 

18 (2) provide that universities, research centers, 

19 national laboratories, and other non-profit organiza20 tions are allowed to partner with private industry in 

21 submitting applications. 

22 (c) GRANTS.—The Secretary may make grants under 

23 the program to the partnerships, but the Federal share 

24 of funding for any project may not exceed 50 percent of 

25 the total investment in any fiscal year. 
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•S 1151 IS 

1 (d) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated to the Secretary such 

3 sums as may be necessary to carry out this section. 

4 SEC. 427. NATIONAL MEDAL OF CLIMATE STEWARDSHIP IN5 NOVATION. 

6 (a) IN GENERAL.—There is established a National 

7 Medal of Climate Stewardship Innovation, which shall be 

8 of such design and materials, and bear such inscription, 

9 as the President may prescribe. The President shall award 

10 the medal on the basis of recommendations submitted by 

11 the National Science Foundation and the Secretary of 

12 Commerce to individuals who, in the judgment of the 

13 President, are deserving of special recognition by reason 

14 of their outstanding contributions to knowledge in the field 

15 of climate change innovation. 

16 (b) CRITERIA.—The medal shall be awarded in ac17 cordance with the following criteria: 

18 (1) ANNUAL LIMIT.—No more than 20 individ19 uals may be awarded the medal in any calendar 

20 year. 

21 (2) CITIZENSHIP.—No individual may be 

22 awarded the medal unless, at the time the award is 

23 made, the individual is— 

24 (A) a citizen or other national of the 

25 United States; or 
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1 (B) an alien lawfully admitted to the 

2 United States for permanent residence who— 

3 (i) has filed a petition for naturaliza4 tion in the manner prescribed by section 

5 334 of the Immigration and Nationality 

6 Act (8 U.S.C. 1445); and 

7 (ii) is not permanently ineligible to be8 come a citizen of the United States. 

9 (3) POSTHUMOUS AWARD.— 

10 (A) IN GENERAL.—Notwithstanding para11 graph (2), the medal may be awarded post12 humously to an individual who, at the time of 

13 death, met the conditions set forth in para14 graph (2). 

15 (B) 5-YEAR LIMITATION.—Notwith16 standing subparagraph (A), the medal may not 

17 be awarded posthumously to an individual after 

18 the fifth anniversary of that individual’s death. 

19 (c) INSCRIPTION AND CERTIFICATE.—Each medal 

20 shall be suitably inscribed. Each individual awarded the 

21 medal shall also receive a citation descriptive of the award. 

22 (d) PRESENTATION.—The presentation of the medal 

23 shall be made by the President with such ceremonies as 

24 the President deems proper, including attendance by ap25 propriate Members of Congress. 
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1 SEC. 428. MATH AND SCIENCE TEACHERS’ ENHANCEMENT 

2 PROGRAM. 

3 (a) IN GENERAL.—The Director of the National 

4 Science Foundation shall establish within the Foundation 

5 a climate change science and technology enhancement pro6 gram for teachers. 

7 (b) PURPOSE.—The purpose of the program is to 

8 provide for professional development of mathematics and 

9 science teachers at elementary, middle, and secondary 

10 schools (as defined by the Director), including improving 

11 the education and skills of those teachers with respect 

12 to— 

13 (1) teaching strategies; 

14 (2) subject-area expertise; and 

15 (3) the understanding of climate change science 

16 and technology and the environmental, economic, 

17 and social impacts of climate change on commerce. 

18 (c) PROGRAM AREAS.—In carrying out the program 

19 under this section, the Director shall focus on the areas 

20 of— 

21 (1) scientific measurements; 

22 (2) tests and standards development; 

23 (3) industrial competitiveness and quality; 

24 (4) manufacturing; 

25 (5) technology transfer; and 
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1 (6) any other area of expertise that the Direc2 tor determines to be appropriate. 

3 (d) APPLICATION PROCEDURE.—The Director shall 

4 prescribe procedures and selection criteria for participants 

5 in the program. 

6 (e) AWARDS.—The Director shall issue awards under 

7 the program to participants. In issuing the awards, the 

8 Director shall ensure that the maximum number of par9 ticipants practicable participate in the program. In order 

10 to ensure a maximum level of participation of participants, 

11 the program under this section shall be conducted on an 

12 annual basis during the summer months, when a majority 

13 of elementary, middle, and secondary schools are not in 

14 classes. 

15 (f) AUTHORIZATION OF APPROPRIATIONS.—There 

16 are authorized to be appropriated to the Director for car17 rying out this section— 

18 (1) $2,500,000 for fiscal year 2006; and 

19 (2) $2,500,000 for fiscal year 2007. 

20 SEC. 429. PATENT STUDY. 

21 (a) IN GENERAL.—The Director of the Patent and 

22 Trademark Office, in consultation with representatives of 

23 interested parties in the private sector, shall conduct a 

24 study to determine the extent to which changes to the 

25 United States patent system are necessary to increase the 
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1 flow of climate change-related technologies. The study 

2 shall address— 

3 (1) the balance between the protection of the 

4 inventor and the disclosure of information; 

5 (2) the role of patents in innovation within the 

6 covered sectors; 

7 (3) the extent to which patents facilitate in8 creased investments in climate change research and 

9 development; 

10 (4) the international deployment of United 

11 States developed climate change related technologies 

12 on the United States patent system; 

13 (5) ways to leverage databases as innovation 

14 tools; 

15 (6) best practices for collaborative standard set16 ting; and 

17 (7) any other issues the Director deems appro18 priate. 

19 (b) REPORT.—Within 6 months after the date of en20 actment of this Act, the Director shall transmit a report 

21 setting forth the findings and conclusions of the study to 

22 the Congress. 

23 SEC. 430. LESSONS-LEARNED PROGRAM. 

24 (a) IN GENERAL.—Within 180 days after the date 

25 of enactment of this Act, the Secretary of Energy shall 
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1 establish a national lessons-learned and best practices pro2 gram to ensure that lessons learned and best practices 

3 concerning energy efficiency and greenhouse gas emission 

4 reductions are available to the public. The program shall 

5 contain consumer awareness initiatives including product 

6 labeling and campaigns to raise public awareness. The 

7 Secretary shall determine the process and frequency by 

8 which the information is provided. 

9 (b) PROGRAM CONTENT.—The program— 

10 (1) may include experiences realized outside of 

11 the Federal government; 

12 (2) shall include criteria by which entries in the 

13 program are determined; 

14 (3) shall use a standardized, user-friendly for15 mat for data reports; and 

16 (4) may include any other matters the Sec17 retary deems appropriate. 

18 SUBTITLE B—SPECIFIC PROGRAM INITIATIVES

19 SEC. 451. TRANSPORTATION. 

20 (a) IN GENERAL.—The Secretary of Energy, the Ad21 ministrator of the Environmental Protection Agency, and 

22 the Secretary of Transportation shall establish jointly a 

23 competitive, merit-based research program to fund pro24 posals that— 
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1 (1) develop technologies that aid in reducing 

2 fuel use or reduce greenhouse gas emissions associ3 ated with any fuel; 

4 (2) further develop existing or new technologies 

5 to create renewable fuels created from less carbon or 

6 energy-intensive practices than current renewable 

7 fuel production; or 

8 (3) remove existing barriers for deployment of 

9 existing fuels that dramatically reduce greenhouse 

10 gas emissions; 

11 (4) support low-carbon transportation fuels, in12 cluding renewable hydrogen, advanced cellulosic eth13 anol, and biomass-based diesel substitutes, and the 

14 technical hurdles to market entry; 

15 (5) support short-term and long-term tech16 nology improvements for United States cars and 

17 light trucks that reduce greenhouse gas emissions, 

18 including advanced, high-power hybrid vehicle bat19 teries, advanced gasoline engine designs, fuel cells, 

20 hydrogen storage, power electronics, and lightweight 

21 materials; 

22 (6) support advanced heavy-duty truck tech23 nologies to reduce greenhouse gas emissions from 

24 the existing and new fleets, including aerodynamics, 

25 weight reduction, improved tires, anti-idling tech-
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1 nology, high-efficiency engines, and hybrid systems; 

2 or 

3 (7) expand research into the climatological im4 pacts of air travel and support advanced tech5 nologies to reduce greenhouse gas emissions from 

6 aircraft including advanced turbines, aerodynamics, 

7 and logistics technology that reduces delays, in8 creases load factors and cuts in-air emissions. 

9 (b) REAL-WORLD TEST PROCEDURES.—The Admin10 istrator of the Environmental Protection Agency, in con11 sultation with the Secretary of Transportation, shall— 

12 (1) conduct research and establish a Federal 

13 test procedure for certifying fuel economy of heavy 

14 duty vehicles; and 

15 (2) update Federal test procedures for certi16 fying fuel economy of automobiles and light duty 

17 trucks so the results better reflect real-world oper18 ating conditions. 

19 (c) INCORPORATION INTO PROGRAM.—The Secre20 taries shall ensure that the program established under 

21 subsection (a) is incorporated into the United States Cli22 mate Technology Challenge Program. 

23 (d) MARKETING STUDY.—The Secretary of Trans24 portation, in coordination with the Secretary of Com25 merce, shall conduct a study on how the government can 
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1 accelerate the market for low-carbon vehicles. The results 

2 of the study shall be submitted to the Congress within 6 

3 months after the date of enactment of this Act. 

4 SEC. 452. AGRICULTURAL SEQUESTRATION. 

5 (a) IN GENERAL.—The Director of the Office of 

6 Science and Technology Policy shall establish an inter7 agency panel of representatives from the United States 

8 Forest Service, Agriculture Research Service, Agricultural 

9 Experiment Stations and Extension Service, Economic 

10 Research Service Natural Resource Conservation Service, 

11 Environmental Protection Agency, the U.S. Geological 

12 Survey, and the National Institute of Standards and Tech13 nology to establish standards for measurement (and re14 measurement) of sequestered carbon, including lab proce15 dures, field sampling methods, and accuracy of sampling 

16 statistics. 

17 (b) DUTIES.—The interagency panel shall— 

18 (1) develop discounted default values for the 

19 amount of greenhouse gas emission reductions due 

20 to carbon sequestration or emissions reductions from 

21 improved practices and technologies; 

22 (2) develop technologies for low-cost laboratory 

23 and field measurement; 

24 (3) develop procedures to improve the accuracy 

25 of equations used to estimate greenhouse gas emis-
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1 sions reductions produced by adoption of improved 

2 land management technologies and practices; 

3 (4) develop local and regional databases on car4 bon sequestration in soils and biomass, greenhouse 

5 gas emissions, and adopted land management tech6 nologies and practices; 

7 (5) develop computation methods for 

8 additionality discounts for prospective greenhouse 

9 gas offsets; 

10 (6) develop entitywide reporting requirements 

11 to evaluate project-level leakage; 

12 (7) develop commodity-specific greenhouse gas 

13 offset discount factors for market-level leakage, and 

14 update those factors periodically; 

15 (8) develop guidelines and standards for green16 house gas offset and reduction project monitoring 

17 and verification and uniform qualifications for third 

18 party verifiers, including specification of conflict of 

19 interest conditions; 

20 (9) increase landowner accessibility to tech21 nologies and practices by— 

22 (A) improving and expanding availability 

23 and adoption of best management practices for 

24 soils, crop residues, and forests to achieve addi-
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1 tional carbon sequestration that meets stand2 ards as bona fide greenhouse gas offsets; 

3 (B) improving and expanding availability 

4 and adoption of best management practices for 

5 soils, crop residues, and forests to achieve re6 ductions in emissions of carbon dioxide, meth7 ane, and nitrous oxides that meet standards as 

8 bona fide greenhouse gas emissions reductions; 

9 and 

10 (C) establishing incentives for land man11 agers to help finance investments in facilities 

12 that produce bona fide greenhouse gas offsets 

13 or reductions through carbon sequestration or 

14 direct greenhouse gas emissions reductions; and 

15 (10) establish best practices to address non-per16 manence and risk of release of sequestered green17 house gases by— 

18 (A) assessing and quantifying risks, both 

19 advertent and inadvertent, of release of green20 house gases sequestered in soils and biomass; 

21 and 

22 (B) establishing insurance instruments 

23 concerning the release, both advertent and inad24 vertent, of sequestered greenhouse gases. 
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1 (c) ADDITIONALITY DEFINED.—In this section the 

2 term ‘‘additionality’’ means emissions reduction and se3 questration activities that result in atmospheric benefits 

4 that would not otherwise have occurred. 

5 SEC. 453. GEOLOGICAL STORAGE OF SEQUESTERED 

6 GREENHOUSE GASES. 

7 (a) IN GENERAL.—The Secretary of Energy, in con8 sultation with the Secretary of Agriculture and the Admin9 istrator of the Environmental Protection Agency, shall es10 tablish guidelines for setting individual project baselines 

11 for reductions of greenhouse gas emissions and greenhouse 

12 gas storage in various types of geological formations to 

13 serve as the basis for determining the amount of green14 house gas reductions produced by the project. 

15 (b) SPECIFIC ACTIVITIES.—The Secretary of Energy, 

16 in consultation with the Director of the U.S. Geological 

17 Survey, shall— 

18 (1) develop local and regional databases on ex19 isting practices and technologies for greenhouse gas 

20 injection in underground aquifers; 

21 (2) develop methods for computation of 

22 additionality discounts for prospective greenhouse 

23 gas reductions or offsets due to carbon dioxide injec24 tion and storage in underground aquifers; 
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1 (3) develop accepted standards for monitoring 

2 of carbon dioxide stored in geological subsurface res3 ervoirs by— 

4 (A) developing minimum suitability stand5 ards for identifying and monitoring of geologi6 cal storage sites including oil, gas, and coal bed 

7 methane reservoir and deep saline aquifers; and 

8 (B) testing monitoring standards using 

9 sites with long term (multi-decade) large injec10 tions of carbon dioxide into oil field enhanced 

11 recovery projects; and 

12 (4) address non-permanence and risk of release 

13 of sequestered greenhouse gas by— 

14 (A) establishing guidelines for risk assess15 ment of inadvertent greenhouse gas release, 

16 both long-term and short-term, associated with 

17 geological sequestration sites; and 

18 (B) developing insurance instruments to 

19 address greenhouse gas release liability in geo20 logical sequestration. 

21 (c) NATIONAL GEOLOGICAL CARBON SEQUESTRA22 TION ASSESSMENT.— 

23 (1) FINDINGS.—The Congress finds the fol24 lowing: 
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1 (A) One of the most promising options for 

2 avoiding emissions of carbon dioxide is through 

3 long-term storage by geological sequestration in 

4 stable geological formations, which involves— 

5 (i) capturing carbon dioxide from in6 dustrial sources; and 

7 (ii) injecting the captured carbon di8 oxide into geological storage sites, such as 

9 deep saline formations, unmineable coal 

10 seams, and depleted gas and oil fields. 

11 (B) As of the date of introduction of this 

12 Act, there are only very broad estimates of na13 tional geological storage capacity. 

14 (C) The potential to recover additional oil 

15 and gas resources through enhanced oil and gas 

16 recovery using captured carbon dioxide emis17 sions is an option that could add the equivalent 

18 of tens-of-billions of barrels of oil to the na19 tional resource base. 

20 (D) An initial geological survey of storage 

21 capacity in the subsurface of sedimentary ba22 sins in the United States would— 

23 (i) provide estimates of storage capac24 ity based on clearly defined geological pa25 rameters with stated ranges of uncertainty; 
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•S 1151 IS 

1 (ii) allow for an initial determination 

2 of whether a basin or 1 or more portions 

3 of the basin may be developed into a stor4 age site; and 

5 (iii) provide information on— 

6 (I) a baseline for monitoring in7 jections and post injection phases of 

8 storage; and 

9 (II) early opportunities for 

10 matching carbon dioxide sources and 

11 sinks for early deployment of zero12 emissions fossil fuel plants using cap13 ture and storage technologies. 

14 (2) NATIONAL GEOLOGICAL CARBON SEQUES15 TRATION ASSESSMENT.— 

16 (A) DEVELOPMENT AND TESTING OF AS17 SESSMENT METHODOLOGY.— 

18 (i) IN GENERAL.—Not later than 1 

19 year after the date of enactment of this 

20 Act, the Director of the United States Geo21 logical Survey shall develop and test meth22 ods for the conduct of a national assess23 ment of geological storage capacity for car24 bon dioxide. 
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•S 1151 IS 

1 (ii) OPPORTUNITY FOR REVIEW AND

2 COMMENT.—During the period beginning 

3 on the date that is 180 days after the date 

4 of enactment of this Act and ending on the 

5 date of completion of the development and 

6 testing of the methodologies under clause 

7 (i), the Director shall provide the Under 

8 Secretary for Oceans and Atmosphere of 

9 the Department of Commerce, the Sec10 retary of Energy, the Administrator of the 

11 Environmental Protection Agency, the Di12 rector of the Minerals Management Serv13 ice, the Director of the Bureau of Land 

14 Management, the heads of other Federal 

15 land management agencies, the heads of 

16 State land management agencies, industry 

17 stakeholders, and other interested parties 

18 with an opportunity to review and com19 ment on the proposed methodologies. 

20 (B) ASSESSMENT.— 

21 (i) IN GENERAL.—The Director shall 

22 conduct the assessment during the period 

23 beginning on the date on which the devel24 opment and testing of the methodologies is 

25 completed under subparagraph (A) and 
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1 ending 4 years after the date of enactment 

2 of this Act. 

3 (ii) AVAILABILITY OF INFORMA4 TION.—The Director shall establish an 

5 Internet database accessible to the public 

6 that provides the results of the assessment, 

7 including a detailed description of the data 

8 collected under the assessment. 

9 (iii) REPORT.—Not later than 1 year 

10 after the date on which the assessment is 

11 completed under clause (i), the Director 

12 shall submit to the appropriate committees 

13 of Congress and the President a report 

14 that describes the findings of the assess15 ment. 

16 (3) AUTHORIZATION OF APPROPRIATIONS.— 

17 There are authorized to be appropriated 

18 $15,000,000 to carry out this section for fiscal years 

19 2006 through 2009. 

20 SEC. 454. ENERGY EFFICIENCY AUDITS. 

21 (a) IN GENERAL.—The Secretary of Energy shall es22 tablish a program to reduce greenhouse gas emissions 

23 through the deployment of energy efficiency measures, in24 cluding appropriate technologies, by large commercial cus25 tomers by providing for energy audits. The program shall 
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1 provide incentives for large users of electricity or natural 

2 gas to obtain an energy audit. 

3 (b) COMPONENTS.—The energy audit shall provide 

4 users with an inventory of potential energy efficiency 

5 measures, including appropriate technologies, and their 

6 cost savings over time, along with financing options to ini7 tiate the project. 

8 (c) REIMBURSEMENT OF AUDIT COSTS.—If any of 

9 the recommendations of an energy audit implemented by 

10 a facility owner result in cost savings greater than 5 times 

11 the cost of the original audit, then the facility owner shall 

12 reimburse the Secretary for the cost of the audit. 

13 SEC. 455. ADAPTATION TECHNOLOGIES. 

14 (a) IN GENERAL.—The Director of the Office of 

15 Science and Technology Policy shall establish a program 

16 on adaptation technologies as part of the Climate Tech17 nology Challenge Program. The Director shall perform an 

18 assessment of the climate change technological needs of 

19 various regions of the country. This assessment shall be 

20 provided to the Senate Committee on Commerce, Science, 

21 and Transportation and the House of Representatives 

22 Committee on Science within 6 months after the date of 

23 enactment of this Act. 

24 (b) REGIONAL ESTIMATES.—The Director of the Of25 fice of Science and Technology Policy, in consultation with 
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1 the Secretaries of Transportation, Homeland Security, 

2 Agriculture, Housing and Urban Development, Health 

3 and Human Services, Defense, Interior, Energy, and Com4 merce, the Administrator of the Environmental Protection 

5 Agency , the Director of U.S. Geologic Survey, and other 

6 such Federal offices as the Director deems necessary, 

7 along with relevant State agencies, shall perform 6 re8 gional infrastructure cost assessments covering the United 

9 States, and a national cost assessment, to provide esti10 mates of the range of costs that should be anticipated for 

11 adaptation to the impacts of climate change. The Director 

12 shall develop those estimates for low, medium, and high 

13 probabilities of climate change and its potential impacts. 

14 The assessments shall be provided to the Senate Com15 mittee on Commerce, Science, and Transportation and the 

16 House of Representatives Committee on Science within 1 

17 year after the date of enactment of this Act. 

18 SEC. 456. ADVANCED RESEARCH AND DEVELOPMENT FOR 

19 SAFETY AND NONPROLIFERATION. 

20 The Secretary of Energy shall establish, operate, and 

21 report biannually to Congress the results of— 

22 (1) a program of research and development fo23 cused on advanced once-through fuel cycles; 

24 (2) a Nuclear System Modeling project to carry 

25 out the analysis, research, simulation, and collection 
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1 of engineering data needed to evaluate all fuel cycles 

2 with respect to cost, inherent safety, waste manage3 ment and proliferation-avoidance and -resistance; 

4 and 

5 (3) an Advanced Diversified Waste-Disposal 

6 Research Program, to complement the current re7 pository authorized under the Nuclear Waste Policy 

8 Act, for deep-bore hole disposal options, alternative 

9 geological environments, and improved engineered 

10 barriers. 

11 SUBTITLE C—CLIMATE TECHNOLOGY DEPLOYMENT

12 PROGRAM

13 PART I—PROGRAM AUTHORITY

14 SEC. 471. GOVERNMENT-INDUSTRY PARTNERSHIPS FOR 

15 FIRST-OF-A-KIND ENGINEERING DESIGN. 

16 (a) IN GENERAL.—The Corporation may provide 

17 funding for a cost-sharing program to address first-of-a18 kind engineering costs inherent in building the first facil19 ity of a substantially new design that generates electricity 

20 with low or no net greenhouse gas emissions or produces 

21 transportation fuels that result in low or no net green22 house gas emissions, including Integrated Gasification 

23 Combined Cycle Advanced Coal power generating facilities 

24 using carbon capture technology with geological storage 

25 of greenhouse gases, advanced reactor designs, large scale 
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1 biofuels facilities that maximize the use of cellulosic bio2 mass, and large scale solar concentrating power facilities. 

3 (b) PROJECT SELECTION.—The Secretary of Energy 

4 in coordination with the Corporation shall select the final 

5 designs to be supported, in terms of reducing greenhouse 

6 gas emissions, demonstrating a new technology, meeting 

7 other clean air attainment goals, generating economic ben8 efits, contributing to energy security, contributing to fuel 

9 and technology diversity, maintaining price stability, and 

10 attaining cost effectiveness and economic competitiveness. 

11 (c) COST-SHARING LIMITATIONS.— 

12 (1) CORPORATION’S SHARE OF COSTS.—Costs 

13 for the program shall be shared equally between the 

14 Corporation and the builder of such first facilities. 

15 (2) NUCLEAR REACTORS.—Funding under this 

16 section for any nuclear facility— 

17 (A) may not exceed $200,000,000 for an 

18 individual project; and 

19 (B) shall be available for no more than 1 

20 of each of the 3 designs certified by the Nuclear 

21 Regulatory Commission. 

22 (d) REIMBURSEMENT OF COSTS.—For any subse23 quently-built facility that uses a design supported by the 

24 cost-sharing program under this section, the Secretary of 

25 Energy and the Corporation shall specify an amount to 
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•S 1151 IS 

1 be paid to the Corporation in order for the Corporation 

2 to receive full reimbursement for costs the Corporation in3 curred in connection with the design, considering the pro4 gram’s objectives, including the costs of promoting the de5 ployment of cost-effective, economically competitive tech6 nologies with no or low net greenhouse gas emissions. 

7 (e) REIMBURSEMENT FOR DELAY.—If the construc8 tion of such a first facility of a substantially new design 

9 is not started within 10 years after the date on which a 

10 commitment under the cost-sharing program is made by 

11 the Secretary, then the industry partner shall reimburse 

12 the Corporation for any costs incurred by the Corporation 

13 under the program. 

14 (f) JURISDICTION.— 

15 (1) NUCLEAR REGULATORY COMMISSION.— 

16 Nothing in this Act shall affect the jurisdiction of 

17 the Nuclear Regulatory Commission over nuclear 

18 power plant design approvals or combined construc19 tion and operating licenses pursuant to the Atomic 

20 Energy Act of 1954 (42 U.S.C. 2011 et seq.). 

21 (2) REGULATORY AGENCIES.—Nothing in this 

22 Act affects the jurisdiction of any Federal, State, or 

23 local government regulatory agency. 
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1 SEC. 472. DEMONSTRATION PROGRAMS. 

2 (a) NUCLEAR REGULATORY COMMISSION LICENSING

3 PROCESS.— 

4 (1) DEMONSTRATION PROGRAM.—Within 24 

5 months after the date of enactment of this Act, the 

6 Secretary of Energy shall establish a demonstration 

7 program to reduce the first-time regulatory costs of 

8 the current Nuclear Regulatory Commission licens9 ing process incurred by the first applicant using an 

10 advanced reactor design. 

11 (2) PERMITS; LICENSES; COST-SHARING.— 

12 (A) The demonstration program shall— 

13 (i) address the Early Site Permit ap14 plications and the combined construction 

15 and operating license applications; and 

16 (ii) be jointly funded by the Depart17 ment of Energy and the applicant. 

18 (B) The Secretary shall work with the ap19 plicant to determine the appropriate percentage 

20 of costs that the Department and the applicant 

21 shall each provide. 

22 (3) REIMBURSEMENT FOR LICENSE TRANS23 FER.—If an applicant decides to transfer a permit 

24 granted by the Commission under the program to 

25 another entity, the applicant shall reimburse the De26 partment for its costs in obtaining the permit. 
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1 (b) RETOOLING OF ADVANCED VEHICLE MANUFAC2 TURING.— 

3 (1) IN GENERAL.—Within 24 months after the 

4 date of enactment of this Act, the Secretary of En5 ergy shall establish a program to demonstrate the 

6 effectiveness of retooling an existing vehicle or vehi7 cle component manufacturing facility to reduce re8 duced greenhouse gas emissions from vehicles and 

9 increasing competitiveness of advanced technology 

10 vehicle production facilities. 

11 (2) PROGRAM ELEMENTS.— 

12 (A) ACTIVITIES SUPPORTED.—The dem13 onstration program shall be designed— 

14 (i) to re-equip an existing manufac15 turing facility to produce advanced tech16 nology vehicles or components that will re17 sult in reduced greenhouse gas emissions; 

18 and 

19 (ii) to conduct engineering integration 

20 activities of advanced technological vehicles 

21 and components. 

22 (B) FUNDING.—The program shall be 

23 jointly funded by the private sector and the De24 partment of Energy. Secretary of Energy shall 

25 work with participating entities to determine 
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•S 1151 IS 

1 the appropriate percentage of costs that each 

2 shall provide. 

3 (C) ELIGIBLE COMPONENTS AND ACTIVI4 TIES.—The Secretary, in coordination with the 

5 Administrator of the Environmental Protection 

6 Agency and the Secretary of Transportation, 

7 shall determine what advanced technology com8 ponents and engineering integration activities 

9 will qualify for support under the program. 

10 (D) ELIGIBLE COSTS.—Costs eligible to be 

11 shared under this subsection include the cost of 

12 engineering tasks related to— 

13 (i) incorporating qualifying compo14 nents into the design of advanced tech15 nology vehicles; and 

16 (ii) designing new tooling and equip17 ment for production facilities that produce 

18 qualifying components or advanced tech19 nology vehicles. 

20 (3) LIMITATION.—No more than 2 facilities 

21 may receive financial assistance under the program 

22 for re-equipment and expansion or for engineering 

23 integration. 

24 (4) ADVANCED TECHNOLOGY VEHICLE DE25 FINED.—In this subsection, the term ‘‘advanced 
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1 technology vehicle’’ means a light duty motor vehicle 

2 that is either a hybrid or advanced lean burn tech3 nology motor vehicle, and that meets the following 

4 additional performance criteria: 

5 (A) The vehicle shall meet the Tier II Bin 

6 5 emission standard established in regulations 

7 prescribed by the Administrator under that Act. 

8 (B) The vehicle shall meet any new emis9 sion standard for fine particulate matter pre10 scribed by the Administrator under that Act. 

11 (C) The vehicle shall achieve at least 125 

12 percent of the base year city fuel economy for 

13 its weight class. 

14 PART II—FINANCING

15 SEC. 481. CLIMATE TECHNOLOGY FINANCING BOARD. 

16 (a) PURPOSE.—The Climate Technology Financing 

17 Board shall work with the Sedretary of Energy to make 

18 financial assistance available to joint venture partnerships 

19 and promote private sector participation in financing eligi20 ble projects under this subtitle. 

21 (b) ESTABLISHMENT.— 

22 (1) IN GENERAL.—Not later than 90 days after 

23 the date of enactment of this Act, the Secretary of 

24 Energy shall establish within the Department of En25 ergy a Climate Technology Financing Board, which 
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1 shall be responsible for assisting the Secretary in 

2 carrying out this subtitle. 

3 (2) MEMBERSHIP.—The Climate Technology 

4 Financing Board shall be comprised of— 

5 (A) the Secretary of Energy, who shall 

6 serve as chair; and 

7 (B) 6 additional members appointed by the 

8 Secretary, including— 

9 (i) the Chief Financial Officer of the 

10 Department of Energy; 

11 (ii) at least 1 representative of the 

12 Corporation; and 

13 (iii) other members with experience in 

14 corporate and project finance in the energy 

15 sector as deemed necessary by the Sec16 retary to carry out the functions of the 

17 Board. 

18 (3) REPRESENTATION OF FEDERAL INTER19 EST.—The Climate Technology Financing Board 

20 shall represent the Federal government’s interest in 

21 all negotiations with project developers interested in 

22 forming joint venture partnerships and obtaining se23 cured loans or loan guarantees under this subtitle. 

24 (c) REGULATIONS.— 
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1 (1) IN GENERAL.—Not later than 12 months 

2 after the date of enactment of this Act, the Climate 

3 Technology Financing Board, through the Secretary 

4 of Energy, shall publish in the Federal Register such 

5 final regulations as may be necessary to implement 

6 section 482 of this title. 

7 (2) PROJECT SELECTION CRITERIA.—In select8 ing eligible projects for financial assistance under 

9 this subtitle, the Board shall consider, among other 

10 relevant criteria— 

11 (A) the extent to which the project reduces 

12 greenhouse gases, demonstrates new tech13 nologies, meets other clean air attainment 

14 goals, generates economic benefits, contributes 

15 to energy security, contributes to fuel and tech16 nology diversity, and maintains price stability, 

17 cost effectiveness, and economic competitive18 ness; 

19 (B) the extent to which assistance under 

20 this subtitle would foster innovative public-pri21 vate partnerships and attract private equity in22 vestment; 

23 (C) the likelihood that assistance under 

24 this subtitle would enable the project to proceed 
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•S 1151 IS 

1 at an earlier date than the project would other2 wise be able to proceed without such assistance; 

3 (D) the extent to which the project rep4 resents the construction of the first generation 

5 of facilities that use substantially new tech6 nology; and 

7 (E) any other criteria deemed necessary by 

8 the Secretary for the promotion of long-term 

9 cost effective climate change-related tech10 nologies. 

11 (3) MANDATORY REGULATORY PROVISIONS.— 

12 The regulations required by paragraph (1) shall in13 clude the following: 

14 (A) The general terms and conditions 

15 under which non-recourse financial assistance 

16 will be provided. Those terms shall include— 

17 (i) a debt-to-equity ratio of up to 80 

18 percent debt from the Corporation, ap19 proved by the Secretary, and no less than 

20 20 percent equity from the project devel21 oper; 

22 (ii) a pledge of the eligible project’s 

23 assets to the Secretary and the project de24 veloper to secure their respective loan and 

25 equity contributions; and 
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1 (iii) loan repayment terms generally 

2 consistent with financial terms available to 

3 project developers in the United States 

4 power generation industry. 

5 (B) The general terms and conditions 

6 under which loan guarantees will be provided, 

7 which shall be consistent with section 483(c). 

8 (C) The procedures by which project own9 ers and project developers may request such fi10 nancial assistance. 

11 (D) A process under which the Climate 

12 Technology Financing Board, the joint venture 

13 partnership, and the project developer shall ne14 gotiate commercially reasonable terms con15 sistent with terms generally available in the 

16 United States power generation industry re17 garding cost, construction schedule, and other 

18 conditions under which the project developer 

19 shall acquire the loan from the joint venture 

20 partnership and repay the secured loan and ac21 quire an undivided interest in the eligible 

22 project when the project achieves commercial 

23 operation. Terms prescribed under this sub24 paragraph shall include— 
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1 (i) a defined right of the joint venture 

2 partnership to terminate the loan agree3 ment upon a date certain for project delays 

4 that are not the fault of the project devel5 oper; and 

6 (ii) may not refer to the Federal Ac7 quisition Regulations. 

8 (E) Provisions to retain independent third9 party engineering assistance, satisfactory to the 

10 Climate Technology Financing Board, the 

11 project developer, and the joint venture partner12 ship, to verify and validate construction costs 

13 and construction schedules, to monitor con14 struction, and authorize draws on financing 

15 during construction to ensure that construction 

16 is consistent with generally accepted utility 

17 practice, and to make recommendations as to 

18 the cause of delay or cost increases should such 

19 delays or cost increases occur. 

20 (F) Provisions to ensure— 

21 (i) continued project development and 

22 construction in the event of a delay to 

23 achieving commercial operation caused by 

24 an event outside the control of the joint de-
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1 velopment partners and the project devel2 oper; and 

3 (ii) continued project operations in the 

4 event the sale of the eligible project to the 

5 project developer is not executed due to an 

6 event outside the control of the project de7 veloper. 

8 (G) Any other information necessary for 

9 the Secretary of Energy to discharge fully the 

10 obligation conferred under this subtitle, includ11 ing a process for negotiating the terms and con12 ditions of such financial assistance. 

13 (d) COMPREHENSIVE IMPLEMENTATION PLAN.—Not 

14 later than 12 months after the date of enactment of this 

15 Act, the Climate Technology Financing Board shall pre16 pare and transmit to the President and Congress a com17 prehensive plan for implementation of this subtitle. 

18 (e) PROGRESS REPORTS.—Not later than 12 months 

19 after the comprehensive plan required by subsection (d) 

20 and annually thereafter the Secretary shall prepare and 

21 transmit to the President and the Congress a report sum22 marizing progress in satisfying the requirements estab23 lished by the subtitle. 
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1 SEC. 482. RESPONSIBILITIES OF THE SECRETARY. 

2 (a) FINANCIAL ASSISTANCE.—Subject to the require3 ments of the Federal Credit Reform Act of 1990 (2 U.S.C. 

4 661 et seq.), the Secretary, in coordination with the Cor5 poration, may make available to joint venture partnerships 

6 for eligible project costs such Federal financial assistance 

7 as the Climate Technology Financing Board determines 

8 is necessary to enable access to, or to supplement, private 

9 sector financing for projects if the Board determines that 

10 such projects are needed to reduce greenhouse gas emis11 sions, contribute to energy security, fuel or technology di12 versity, or clean air attainment goals. The Secretary, in 

13 coordination with the Corporation, shall prescribe such 

14 terms and conditions for financial assistance as the Sec15 retary deems necessary or appropriate to protect the fi16 nancial interests of the United States. 

17 (b) REQUIREMENTS.—Approval criteria for financial 

18 assistance under subsection (a) shall include— 

19 (1) the creditworthiness of the project; 

20 (2) the extent to which Federal financial assist21 ance would encourage public-private partnerships, 

22 attract private-sector investment, and demonstrate 

23 safe and secure electric generation or fuel production 

24 technology; 

25 (3) the likelihood that Federal financial assist26 ance would hasten commencement of the project; 
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1 (4) in the case of a nuclear power plant, wheth2 er the project developer provides reasonable assur3 ance to the Secretary that the project developer can 

4 successfully manage nuclear power plant operations; 

5 (5) the extent to which the project will dem6 onstrate safe and secure reduced or zero greenhouse 

7 gas emitting electric generating or fuel production 

8 technology; and 

9 (6) any other criteria the Secretary deems nec10 essary or appropriate. 

11 (c) RESERVE AMOUNT.—Before entering into any 

12 agreements under this subtitle, the Secretary, in consulta13 tion with the Director of the Office of Management and 

14 Budget, shall determine an appropriate capital reserve 

15 subsidy amount for any loan or loan guarantee provided 

16 by the agreement. The Secretary, in consultation with the 

17 project developer, shall determine the appropriate type of 

18 Federal financial assistance to be provided for eligible 

19 projects. 

20 (d) CONFIDENTIALITY.—The Secretary and the Cor21 poration shall protect the confidentiality of any informa22 tion that is certified by a project developer to be commer23 cially sensitive. 

24 (e) FULL FAITH AND CREDIT.—All loans or loan 

25 guarantees provided by the Secretary under this subtitle 
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1 shall be general obligations of the United States backed 

2 by the full faith and credit of the United States. 

3 SEC. 483. LIMITATIONS. 

4 (a) SECURED LOANS.— 

5 (1) IN GENERAL.—The financial assistance pro6 vided by this subtitle for secured loans or loan guar7 antees— 

8 (A) shall be available for new low or zero 

9 greenhouse gas emitting energy generating or 

10 fuel production facilities, including— 

11 (i) no more than 3 integrated gasifi12 cation combined cycle coal power plants 

13 with carbon capture and geological storage 

14 of greenhouse gases; 

15 (ii) no more than the first of each of 

16 the 3 advanced reactor design projects for 

17 which applications for combined construc18 tion and operating licenses have been filed 

19 on or before December 31, 2015; 

20 (iii) no more than 3 large scale 

21 biofuels production facilities that encour22 age a diversity of pioneer projects relying 

23 on different feedstocks in different regions 

24 of the country and maximizing the use of 

25 cellulosic biomass; and 
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1 (iv) no more than 3 large scale solar 

2 facilities of greater than 5 megawatts ca3 pacity which begin operation after Decem4 ber 31, 2005, and before January 1, 2011; 

5 and 

6 (B) may not exceed 80 percent of eligible 

7 project costs for each project. 

8 (2) GOVERNMENT-CAUSED DELAYS.—Para9 graph (1)(B) of this subsection does not apply if— 

10 (A) with respect to a nuclear power 

11 plant— 

12 (i) the conditions specified in the con13 struction and operation license issued by 

14 the Nuclear Regulatory Commission 

15 change; and 

16 (ii) the changed conditions result in 

17 project delays or changes in project scope 

18 after the start of construction that are not 

19 attributable to private sector project man20 agement, construction, or variances from 

21 the Nuclear Regulatory Commission’s ap22 proved design criteria or safety require23 ments; or 
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1 (B) with respect to an advanced coal power 

2 plant, biofuels production facility, solar power 

3 facility, or other eligible facility— 

4 (i) the conditions specified in the con5 struction permit change; and 

6 (ii) the changed conditions result in 

7 project delays or changes in project scope 

8 after the start of construction that are not 

9 attributable to private sector project man10 agement, construction, or variances from 

11 the approved design criteria or safety re12 quirements. 

13 (3) ADDITIONAL ASSISTANCE.—If paragraph 

14 (1)(B) of this subsection does not apply for reasons 

15 described in paragraph (2), then the financial assist16 ance payable to the project developer shall include 

17 additional capital costs, costs of project oversight, 

18 lost replacement power, and calculated interest, as 

19 determined appropriate by the Secretary of Energy. 

20 (b) LOAN REPAYMENT TERMS.— 

21 (1) The repayment terms for non-recourse se22 cured loans made under this subtitle shall be nego23 tiated among the Climate Technology Financing 

24 Board, the joint venture partnership, and the project 
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1 developer prior to issuance of the loan and com2 mencement of construction. 

3 (2) The project developer shall purchase the 

4 joint venture partnership’s interest in the project 

5 after the start of the eligible project’s commercial 

6 operation pursuant to the conditions of the loan with 

7 the proceeds of refinancing from non-Federal fund8 ing sources. 

9 (3) The value of the joint venture partnership’s 

10 interest in the eligible project shall be determined in 

11 negotiations prior to issuance of a secured loan 

12 under the subtitle. 

13 (4) The interest rate on loans made under this 

14 subtitle shall not be less than the yield on United 

15 States Treasury securities of a similar maturity to 

16 the maturity of the loan on the date of execution of 

17 the loan agreement. 

18 (5) A secured loan for an eligible project under 

19 this subtitle shall be non-recourse to the joint ven20 ture partnership in the event of bankruptcy, insol21 vency, liquidation, or failure of the project to start 

22 commercial operation when the project is ready for 

23 commercial operation. 

24 (c) LOAN GUARANTEES.— 
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1 (1) IN GENERAL.—A loan guarantee shall apply 

2 only when a project developer defaults on a loan 

3 solely as a result of the regulatory actions, directly 

4 applied to the project, of a State, Federal or local 

5 government. 

6 (2) LIMITATION.—Nothing in this subsection 

7 shall obligate the Corporation or Secretary to pro8 vide payments in the event of a default that results 

9 from a project developer’s malfeasance, misfeasance, 

10 or mismanagement of the construction or operation 

11 of the project, or from conduct or circumstances un12 related to the regulatory actions of any govern13 mental entity. 

14 SEC. 484. SOURCE OF FUNDING FOR PROGRAMS. 

15 Notwithstanding any other provision of law, or any 

16 other provision of this Act, authorizing or appropriating 

17 funds to carry out the provisions of this Act, no funds 

18 may be made available to carry out any activity under this 

19 subtitle except proceeds from the auction authorized by 

20 section 333(g) of this Act, subject to the limitation in sec21 tion 333(g)(3). 

22 PART III—DEFINITIONS

23 SEC. 486. DEFINITIONS. 

24 In this subtitle: 

25 (1) ADVANCED REACTOR DESIGN.—The term 

26 ‘‘advanced reactor design’’ means any reactor design 
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1 approved and certified by the Nuclear Regulatory 

2 Commission. 

3 (2) CELLULOSIC ETHANOL.—The term ‘‘cel4 lulosic ethanol’’ means ethanol produced from fi5 brous or woody plant materials. 

6 (3) COMMERCIAL OPERATION.— 

7 (A) NUCLEAR POWER FACILITY.—With re8 spect to a nuclear power plant, the term ‘‘com9 mercial operation’’ means the date— 

10 (i) on which a new nuclear power 

11 plant has received a full power 40-year op12 erating license from the Nuclear Regu13 latory Commission; and 

14 (ii) by which all Federal, State, and 

15 local appeals and legal challenges to such 

16 operating license have become final. 

17 (B) ADVANCED COAL POWER PLANTS.— 

18 With respect to an advanced coal power plant, 

19 the term ‘‘commercial operation’’ means the 

20 date— 

21 (i) on which a new power plant has 

22 received a full power rating; and 

23 (ii) by which all Federal, State, and 

24 local appeals and legal challenges to the 
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1 operating license for the power plant have 

2 become final. 

3 (4) CORPORATION.—The term ‘‘Corporation’’ 

4 means the Climate Change Credit Corporation. 

5 (5) ELIGIBLE PROJECT.—The term ‘‘eligible 

6 project’’ means— 

7 (A) any commercial nuclear power facility 

8 for the production of electricity that uses one or 

9 more advanced reactor designs; 

10 (B) any advanced coal power plant uti11 lizing the integrated gasification combined cycle 

12 technology with carbon capture and geological 

13 storage of greenhouse gases; 

14 (C) any biofuels production facility which 

15 uses cellulosic feedstock; or 

16 (D) any power facility which uses solar en17 ergy for the production of more than 75 percent 

18 of its annual output, which output capacity 

19 shall not be less than 10 megawatts as deter20 mined by common engineering practice. 

21 (6) ELIGIBLE PROJECT COSTS.—The term ‘‘eli22 gible project costs’’ means all costs related to the de23 velopment and construction of an eligible project 

24 under this subtitle, including, without limitation, the 

25 cost of— 
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1 (A) development phase activities, including 

2 site acquisition and related real property agree3 ments, environmental reviews, licensing and 

4 permitting, engineering and design work, off5 taker agreements and arrangements, and other 

6 preconstruction activities; 

7 (B) fabrication and acquisition of equip8 ment, project construction activities and con9 struction contingencies, project overheads, 

10 project management costs, and labor and engi11 neering costs incurred during construction; 

12 (C) capitalized interest necessary to meet 

13 market requirements, reasonably required re14 serve funds, capital issuance expenses, and 

15 other carrying costs during construction; and 

16 (D) any other costs that the Climate Tech17 nology Financing Board deems reasonable and 

18 appropriate as eligible project costs. 

19 (7) FEDERAL FINANCIAL ASSISTANCE.—The 

20 term ‘‘Federal financial assistance’’ means project 

21 construction financing of up to 80 percent of a 

22 project’s eligible project costs in the form of a non23 recourse secured loan or loan guarantee. 

24 (8) FIRST-OF-A-KIND ENGINEERING COSTS.— 

25 The term ‘‘first-of-a-kind engineering costs’’ means 
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1 the extra costs associated with the first units of a 

2 design category for engineering work that develops 

3 the design details that finish plant standardization 

4 up to a complete plant design and that can be re5 used for building subsequent units. 

6 (9) JOINT VENTURE PARTNERSHIP.—The term 

7 ‘‘joint venture partnership’’ means a special purpose 

8 entity, including corporations, partnerships, or other 

9 legal entities established to develop, construct, and 

10 finance an eligible project and to receive financing 

11 proceeds in the form of non-recourse secured loans 

12 provided by the Secretary and private equity pro13 vided by project developers. 

14 (10) LOAN.—The term ‘‘loan’’ means a direct 

15 non-recourse loan issued to a joint venture partner16 ship engaged in developing an eligible project and 

17 funded by the Secretary under this subtitle, which is 

18 subject to repayment by the joint venture partner19 ship under terms and conditions to be negotiated 

20 among the project developer, joint venture partner21 ship, and the Secretary before the start of construc22 tion on the project. 

23 (11) LOAN GUARANTEE.—The term ‘‘loan guar24 antee’’ means any guarantee or other pledge by the 

25 Secretary to pay all or part of the principle and in-
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1 terest on a loan or other debt obligation issued by 

2 a project developer related to its equity investment 

3 and funded by a lender. 

4 (12) PROJECT DEVELOPER.—The term ‘‘project 

5 developer’’ means a corporation, partnership, or lim6 ited liability company that— 

7 (A) provides reasonable assurance to the 

8 Secretary that the project developer can suc9 cessfully manage plant operations; 

10 (B) has the financial capability to con11 tribute 20 percent equity to the development of 

12 the project; and 

13 (C) upon commercial operation, will pur14 chase the project from the joint venture part15 nership. 

16 (13) SECRETARY.—The term ‘‘Secretary’’ 

17 means the Secretary of Energy. 

18 (14) SUBSIDY AMOUNT.—The term ‘‘subsidy 

19 amount’’ means the amount of budget authority suf20 ficient to cover the estimated long-term cost to the 

21 Federal government of a loan, calculated on a net 

22 present value basis, excluding administrative costs 

23 and any incidental effects on governmental receipts 

24 or outlays, in accordance with the provisions of the 
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1 Federal Credit Reform Act of 1990 (2 U.S.C. 661 

2 et seq.). 

3 SUBTITLE D—REVERSE AUCTION FOR TECHNOLOGY

4 DISSEMINATION

5 SEC. 491. CLIMATE TECHNOLOGY CHALLENGE PROGRAM. 

6 (a) IN GENERAL.—The Secretary of Energy, in co7 ordination with the Climate Change Credit Corporation, 

8 shall develop and carry out a program in fiscal years 2006 

9 through 2009, to be known as the ‘‘Climate Technology 

10 Challenge Program’’. The Secretary shall award funding 

11 through the program to stimulate innovation in develop12 ment, demonstration, and deployment of technologies that 

13 have the greatest potential for reducing greenhouse gas 

14 emissions. The program shall be conducted as follows: 

15 (1) The Secretary shall post a request for zero 

16 or low greenhouse gas energy services or products 

17 along with a suggested level of funding for each 

18 competition. 

19 (2) The Secretary shall award the funding to 

20 the lowest bidder in each competition who meets all 

21 other qualifications in a form of a production incen22 tive to supply— 

23 (A) the requested services for a specified 

24 period of time; or 
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1 (B) the requested product within a speci2 fied period of time. 

3 (b) FUNDING.— 

4 (1) SOURCE.—Notwithstanding any other provi5 sion of law, or any other provision of this Act, au6 thorizing or appropriating funds to carry out the 

7 provisions of this Act, no funds may be made avail8 able to carry out any activity under this subtitle ex9 cept proceeds from the auction authorized by section 

10 333(g) of this Act, subject to the limitation in sec11 tion 333(g)(3). 

12 (2) OPERATING FUNDS.—Beginning with fiscal 

13 year 2010, the Climate Change Credit Corporation 

14 shall administer the Climate Technology Challenge 

15 Program using funds generated under section 352 of 

16 this Act. 

17 (c) PROGRAM REQUIREMENTS.— 

18 (1) COMPETITIVE PROCESS.—Recipients of 

19 awards under the program shall be selected through 

20 competitions conducted by the Secretary. 

21 (2) ADVERTISEMENT OF COMPETITIONS.—The 

22 Secretary shall widely advertise any competitions 

23 conducted under the program. 

24 (3) CATEGORIES OF COMPETITIONS.—The Sec25 retary shall conduct separate competitions in the fol-
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1 lowing areas of energy and fuel production and serv2 ices: 

3 (A) Advanced coal (including integrated 

4 gasification combined cycle) with carbon cap5 ture and storage. 

6 (B) Renewable electricity. 

7 (C) Energy efficiency (including transpor8 tation). 

9 (D) Advanced technology vehicles. 

10 (E) Transportation fuels. 

11 (F) Carbon sequestration and storage. 

12 (G) Zero and low emissions technologies. 

13 (H) Adaptation technologies. 

14 (I) The Secretary may also conduct com15 petition for a general category to stimulate ad16 ditional, unanticipated advances in technology. 

17 (4) EVALUATIONS AND CRITERIA FOR COMPETI18 TIONS.— 

19 (A) PANEL OF EXPERTS.—The Secretary 

20 shall establish a separate panel of experts to 

21 evaluate proposals submitted under each com22 petition. 

23 (B) COMPETITION CRITERIA.—The Sec24 retary, in consultation with other relevant Fed25 eral agency heads, shall set minimum criteria, 
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1 including performance and safety criteria, for 

2 each competition. Proposals shall be evaluated 

3 on their ability to reduce, avoid, or sequester 

4 greenhouse gas emissions at a given price. 

5 (C) FULL LIFE CYCLE.—All proposals 

6 within a competition shall compete on full life 

7 cycle avoided greenhouse gas emissions (as 

8 weighted by global warming potential) per dol9 lar of incentive. 

10 (5) REPORT OF AWARDS.—In 2009 and every 5 

11 years thereafter the Secretary shall issue a report on 

12 the awards granted by the program, funding pro13 vided, and greenhouse gas emissions avoided or se14 questered. 

15 (6) PROGRAM EVALUATION.—The Secretary, in 

16 coordination with the National Academies of 

17 Science, shall evaluate the continued necessity of the 

18 program and future funding needs after fiscal year 

19 2009. The evaluation shall be submitted 3 months 

20 before the end of fiscal year 2009 to the Congress 

21 and the Climate Change Credit Corporation. 

22 (7) REVIEW AND REVISION BY CORPORATION.— 

23 The Climate Change Credit Corporation shall review 

24 and revise the awards program every 5 years start25 ing in 2009, issuing new guidelines for the next 5 
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1 years of Climate Technology Challenge Program by 

2 the end of the fiscal year in which the evaluation in 

3 paragraph (6) is reported. The Climate Change 

4 Credit Corporation shall assess and adjust the cat5 egories of competitions as described in paragraph 

6 (3) to ensure new developing technologies that re7 duce, avoid, or sequester greenhouse gases and are 

8 in need of financial assistance for further develop9 ment and deployment are the focus of the awards 

10 program. 

11 (d) BUDGETING AND AWARDING OF FUNDS.— 

12 (1) AVAILABILITY OF FUNDS.—Any funds ap13 propriated to carry out this section shall remain 

14 available until expended, but for not more than 4 

15 fiscal years. 

16 (2) DEPOSIT AND WITHDRAWAL OF FUNDS.— 

17 When an award is offered, the Secretary shall de18 posit the total amount of funding made available for 

19 that award in the Climate Technology Challenge 

20 Trust Fund. If funding expires before an award is 

21 granted, the Secretary shall deposit additional funds 

22 in the account to ensure the availability of funding 

23 for all awards. If an award competition expires be24 fore its goals are met, the Secretary may redesignate 

25 those funds for a new challenge, but any redesig-
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1 nated funds will be considered as newly deposited for 

2 the purposes of paragraph (3). All cash awards 

3 made under this section shall be paid from that ac4 count. 

5 (3) MAXIMUM AWARD.—No competition under 

6 the program may result in the award of more than 

7 $100,000,000 without the approval of the Secretary. 

8 (4) POST-2010 FUNDING.—Funding for the 

9 competitions after fiscal year 2010 shall be taken 

10 from the Climate Change Credit Corporation. 

11 (e) REGISTRATION; ASSUMPTION OF RISK.— 

12 (1) REGISTRATION.—Each potential recipient of 

13 an award in a competition under the program under 

14 this section shall register for the competition. 

15 (2) ASSUMPTION OF RISK.—In registering for a 

16 competition under paragraph (1), a potential recipi17 ent of a prize shall assume any and all risks, and 

18 waive claims against the United States Government 

19 and its related entities (including contractors and 

20 subcontractors at any tier, suppliers, users, cus21 tomers, cooperating parties, grantees, investigators, 

22 and detailees), for any injury, death, damage, or loss 

23 of property, revenue, or profits, whether direct, indi24 rect, or consequential, arising from participation in 

25 the competition, whether such injury, death, dam-
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1 age, or loss arises through negligence or otherwise, 

2 except in the case of willful misconduct. 

3 (f) RELATIONSHIP TO OTHER AUTHORITY.—The 

4 Secretary may exercise the authority in this section in con5 junction with or in addition to any other authority of the 

6 Secretary to acquire, support, or stimulate basic and ap7 plied research, technology development, or prototype dem8 onstration projects that promote reduced greenhouse gas 

9 emissions. 

Æ