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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 2146 Introduced in Senate (IS)]

112th CONGRESS
  2d Session
                                S. 2146

To amend the Public Utility Regulatory Policies Act of 1978 to create a 
market-oriented standard for clean electric energy generation, and for 
                            other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             March 1, 2012

    Mr. Bingaman (for himself, Mr. Wyden, Mr. Sanders, Mr. Udall of 
 Colorado, Mr. Franken, Mr. Coons, Mr. Kerry, Mr. Whitehouse, and Mr. 
  Udall of New Mexico) introduced the following bill; which was read 
  twice and referred to the Committee on Energy and Natural Resources

_______________________________________________________________________

                                 A BILL

 
To amend the Public Utility Regulatory Policies Act of 1978 to create a 
market-oriented standard for clean electric energy generation, and for 
                            other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Clean Energy Standard Act of 2012''.

SEC. 2. FEDERAL CLEAN ENERGY STANDARD.

    Title VI of the Public Utility Regulatory Policies Act of 1978 (16 
U.S.C. 2601 et seq.) is amended by adding at the end the following:

``SEC. 610. FEDERAL CLEAN ENERGY STANDARD.

    ``(a) Purpose.--The purpose of this section is to create a market-
oriented standard for electric energy generation that stimulates clean 
energy innovation and promotes a diverse set of low- and zero-carbon 
generation solutions in the United States at the lowest incremental 
cost to electric consumers.
    ``(b) Definitions.--In this section:
            ``(1) Clean energy.--The term `clean energy' means electric 
        energy that is generated--
                    ``(A) at a facility placed in service after 
                December 31, 1991, using--
                            ``(i) renewable energy;
                            ``(ii) qualified renewable biomass;
                            ``(iii) natural gas;
                            ``(iv) hydropower;
                            ``(v) nuclear power; or
                            ``(vi) qualified waste-to-energy;
                    ``(B) at a facility placed in service after the 
                date of enactment of this section, using--
                            ``(i) qualified combined heat and power; or
                            ``(ii) a source of energy, other than 
                        biomass, with lower annual carbon intensity 
                        than 0.82 metric tons of carbon dioxide 
                        equivalent per megawatt-hour;
                    ``(C) as a result of qualified efficiency 
                improvements or capacity additions; or
                    ``(D) at a facility that captures carbon dioxide 
                and prevents the release of the carbon dioxide into the 
                atmosphere.
            ``(2) Natural gas.--
                    ``(A) Inclusion.--The term `natural gas' includes 
                coal mine methane.
                    ``(B) Exclusions.--The term `natural gas' excludes 
                landfill methane and biogas.
            ``(3) Qualified combined heat and power.--
                    ``(A) In general.--The term `qualified combined 
                heat and power' means a system that--
                            ``(i) uses the same energy source for the 
                        simultaneous or sequential generation of 
                        electrical energy and thermal energy;
                            ``(ii) produces at least--
                                    ``(I) 20 percent of the useful 
                                energy of the system in the form of 
                                electricity; and
                                    ``(II) 20 percent of the useful 
                                energy in the form of useful thermal 
                                energy;
                            ``(iii) to the extent the system uses 
                        biomass, uses only qualified renewable biomass; 
                        and
                            ``(iv) operates with an energy efficiency 
                        percentage that is greater than 50 percent.
                    ``(B) Determination of energy efficiency.--For 
                purposes of subparagraph (A), the energy efficiency 
                percentage of a combined heat and power system shall be 
                determined in accordance with section 48(c)(3)(C)(i) of 
                the Internal Revenue Code of 1986.
            ``(4) Qualified efficiency improvements or capacity 
        additions.--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (C), the term `qualified efficiency improvements or 
                capacity additions' means efficiency improvements or 
                capacity additions made after December 31, 1991, to--
                            ``(i) a nuclear facility placed in service 
                        on or before December 31, 1991; or
                            ``(ii) a hydropower facility placed in 
                        service on or before December 31, 1991.
                    ``(B) Exclusion.--The term `qualified efficiency 
                improvements or capacity additions' does not include 
                additional electric energy generated as a result of 
                operational changes not directly associated with 
                efficiency improvements or capacity additions.
                    ``(C) Measurement and certification.--In the case 
                of hydropower, efficiency improvements and capacity 
                additions under this paragraph shall be--
                            ``(i) measured on the basis of the same 
                        water flow information that is used to 
                        determine the historic average annual 
                        generation for the applicable hydroelectric 
                        facility; and
                            ``(ii) certified by the Secretary or the 
                        Commission.
            ``(5) Qualified renewable biomass.--The term `qualified 
        renewable biomass' means renewable biomass produced and 
        harvested through land management practices that maintain or 
        restore the composition, structure, and processes of 
        ecosystems, including the diversity of plant and animal 
        communities, water quality, and the productive capacity of soil 
        and the ecological systems.
            ``(6) Qualified waste-to-energy.--The term `qualified 
        waste-to-energy' means energy produced--
                    ``(A) from the combustion of--
                            ``(i) post-recycled municipal solid waste;
                            ``(ii) gas produced from the gasification 
                        or pyrolization of post-recycled municipal 
                        solid waste;
                            ``(iii) biogas;
                            ``(iv) landfill methane;
                            ``(v) animal waste or animal byproducts; or
                            ``(vi) wood, paper products that are not 
                        commonly recyclable, and vegetation (including 
                        trees and trimmings, yard waste, pallets, 
                        railroad ties, crates, and solid-wood 
                        manufacturing and construction debris), if 
                        diverted from or separated from other waste out 
                        of a municipal waste stream; and
                    ``(B) at a facility that the Commission has 
                certified, on an annual basis, is in compliance with 
                all applicable Federal and State environmental permits, 
                including--
                            ``(i) in the case of a facility that 
                        commences operation before the date of 
                        enactment of this section, compliance with 
                        emission standards under sections 112 and 129 
                        of the Clean Air Act (42 U.S.C. 7412, 7429) 
                        that apply as of the date of enactment of this 
                        section to new facilities within the applicable 
                        source category; and
                            ``(ii) in the case of a facility that 
                        produces electric energy from the combustion, 
                        pyrolization, or gasification of municipal 
                        solid waste, certification that each local 
                        government unit from which the waste originates 
                        operates, participates in the operation of, 
                        contracts for, or otherwise provides for 
                        recycling services for residents of the local 
                        government unit.
            ``(7) Renewable energy.--The term `renewable energy' means 
        solar, wind, ocean, current, wave, tidal, or geothermal energy.
    ``(c) Clean Energy Requirement.--
            ``(1) In general.--Effective beginning in calendar year 
        2015, each electric utility that sells electric energy to 
        electric consumers in a State shall obtain a percentage of the 
        electric energy the electric utility sells to electric 
        consumers during a calendar year from clean energy.
            ``(2) Percentage required.--The percentage of electric 
        energy sold during a calendar year that is required to be clean 
        energy under paragraph (1) shall be determined in accordance 
        with the following table:

------------------------------------------------------------------------
                                                               Minimum
                      ``Calendar year                           annual
                                                              percentage
------------------------------------------------------------------------
2015.......................................................           24
2016.......................................................           27
2017.......................................................           30
2018.......................................................           33
2019.......................................................           36
2020.......................................................           39
2021.......................................................           42
2022.......................................................           45
2023.......................................................           48
2024.......................................................           51
2025.......................................................           54
2026.......................................................           57
2027.......................................................           60
2028.......................................................           63
2029.......................................................           66
2030.......................................................           69
2031.......................................................           72
2032.......................................................           75
2033.......................................................           78
2034.......................................................           81
2035.......................................................          84.
------------------------------------------------------------------------

            ``(3) Deduction for electric energy generated from 
        hydropower or nuclear power.--An electric utility that sells 
        electric energy to electric consumers from a facility placed in 
        service in the United States on or before December 31, 1991, 
        using hydropower or nuclear power may deduct the quantity of 
        the electric energy from the quantity to which the percentage 
        in paragraph (2) applies.
    ``(d) Means of Compliance.--An electric utility shall meet the 
requirements of subsection (c) by--
            ``(1) submitting to the Secretary clean energy credits 
        issued under subsection (e);
            ``(2) making alternative compliance payments of 3 cents per 
        kilowatt hour in accordance with subsection (i); or
            ``(3) taking a combination of actions described in 
        paragraphs (1) and (2).
    ``(e) Federal Clean Energy Trading Program.--
            ``(1) Establishment.--Not later than 180 days after the 
        date of enactment of this section, the Secretary shall 
        establish a Federal clean energy credit trading program under 
        which electric utilities may submit to the Secretary clean 
        energy credits to certify compliance by the electric utilities 
        with subsection (c).
            ``(2) Clean energy credits.--Except as provided in 
        paragraph (3)(B), the Secretary shall issue to each generator 
        of electric energy a quantity of clean energy credits 
        determined in accordance with subsections (f) and (g).
            ``(3) Administration.--In carrying out the program under 
        this subsection, the Secretary shall ensure that--
                    ``(A) a clean energy credit shall be used only once 
                for purposes of compliance with this section; and
                    ``(B) a clean energy credit issued for clean energy 
                generated and sold for resale under a contract in 
                effect on the date of enactment of this section shall 
                be issued to the purchasing electric utility, unless 
                otherwise provided by the contract.
            ``(4) Delegation of market function.--
                    ``(A) In general.--In carrying out the program 
                under this subsection, the Secretary may delegate--
                            ``(i) to 1 or more appropriate market-
                        making entities, the administration of a 
                        national clean energy credit market for 
                        purposes of establishing a transparent national 
                        market for the sale or trade of clean energy 
                        credits; and
                            ``(ii) to appropriate entities, the 
                        tracking of dispatch of clean generation.
                    ``(B) Administration.--In making a delegation under 
                subparagraph (A)(ii), the Secretary shall ensure that 
                the tracking and reporting of information concerning 
                the dispatch of clean generation is transparent, 
                verifiable, and independent of any generation or load 
                interests subject to an obligation under this section.
            ``(5) Banking of clean energy credits.--Clean energy 
        credits to be used for compliance purposes under subsection (c) 
        shall be valid for the year in which the clean energy credits 
        are issued or in any subsequent calendar year.
    ``(f) Determination of Quantity of Credit.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the quantity of clean energy credits issued to each 
        electric utility generating electric energy in the United 
        States from clean energy shall be equal to the product of--
                    ``(A) for each generator owned by a utility, the 
                number of megawatt-hours of electric energy sold from 
                that generator by the utility; and
                    ``(B) the difference between--
                            ``(i) 1.0; and
                            ``(ii) the quotient obtained by dividing--
                                    ``(I) the annual carbon intensity 
                                of the generator, as determined in 
                                accordance with subsection (g), 
                                expressed in metric tons per megawatt-
                                hour; by
                                    ``(II) 0.82.
            ``(2) Negative credits.--Notwithstanding any other 
        provision of this subsection, the Secretary shall not issue a 
        negative quantity of clean energy credits to any generator.
            ``(3) Qualified combined heat and power.--
                    ``(A) In general.--The quantity of clean energy 
                credits issued to an owner of a qualified combined heat 
                and power system in the United States shall be equal to 
                the difference between--
                            ``(i) the product obtained by multiplying--
                                    ``(I) the number of megawatt-hours 
                                of electric energy generated by the 
                                system; and
                                    ``(II) the difference between--
                                            ``(aa) 1.0; and
                                            ``(bb) the quotient 
                                        obtained by dividing--

                                                    ``(AA) the annual 
                                                carbon intensity of the 
                                                generator, as 
                                                determined in 
                                                accordance with 
                                                subsection (g), 
                                                expressed in metric 
                                                tons per megawatt-hour; 
                                                by

                                                    ``(BB) 0.82; and

                            ``(ii) the product obtained by 
                        multiplying--
                                    ``(I) the number of megawatt-hours 
                                of electric energy generated by the 
                                system that are consumed onsite by the 
                                facility; and
                                    ``(II) the annual target for 
                                electric energy sold during a calendar 
                                year that is required to be clean 
                                energy under subsection (c)(2).
                    ``(B) Additional credits.--In addition to credits 
                issued under subparagraph (A), the Secretary shall 
                award clean energy credits to an owner of a qualified 
                heat and power system in the United States for 
                greenhouse gas emissions avoided as a result of the use 
                of a qualified combined heat and power system, rather 
                than a separate thermal source, to meet onsite thermal 
                needs.
            ``(4) Qualified waste-to-energy.--The quantity of clean 
        energy credits issued to an electric utility generating 
        electric energy in the United States from a qualified waste-to-
        energy facility shall be equal to the product obtained by 
        multiplying--
                    ``(A) the number of megawatt-hours of electric 
                energy generated by the facility and sold by the 
                utility; and
                    ``(B) 1.0.
    ``(g) Determination of Annual Carbon Intensity of Generating 
Facilities.--
            ``(1) In general.--For purposes of determining the quantity 
        of credits under subsection (f), except as provided in 
        paragraph (2), the Secretary shall determine the annual carbon 
        intensity of each generator by dividing--
                    ``(A) the net annual carbon dioxide equivalent 
                emissions of the generator; by
                    ``(B) the annual quantity of electricity generated 
                by the generator.
            ``(2) Biomass.--The Secretary shall--
                    ``(A) not later than 180 days after the date of 
                enactment of this section, issue interim regulations 
                for determining the carbon intensity based on an 
                initial consideration of the issues to be reported on 
                under subparagraph (B);
                    ``(B) not later than 180 days after the date of 
                enactment of this section, enter into an agreement with 
                the National Academy of Sciences under which the 
                Academy shall--
                            ``(i) evaluate models and methodologies for 
                        quantifying net changes in greenhouse gas 
                        emissions associated with generating electric 
                        energy from each significant source of 
                        qualified renewable biomass, including 
                        evaluation of additional sequestration or 
                        emissions associated with changes in land use 
                        by the production of the biomass; and
                            ``(ii) not later than 1 year after the date 
                        of enactment of this section, publish a report 
                        that includes--
                                    ``(I) a description of the 
                                evaluation required by clause (i); and
                                    ``(II) recommendations for 
                                determining the carbon intensity of 
                                electric energy generated from 
                                qualified renewable biomass under this 
                                section; and
                    ``(C) not later than 180 days after the publication 
                of the report under subparagraph (B)(ii), issue 
                regulations for determining the carbon intensity of 
                electric energy generated from qualified renewable 
                biomass that take into account the report.
            ``(3) Consultation.--The Secretary shall consult with--
                    ``(A) the Administrator of the Environmental 
                Protection Agency in determining the annual carbon 
                intensity of generating facilities under paragraph (1); 
                and
                    ``(B) the Administrator of the Environmental 
                Protection Agency, the Secretary of the Interior, and 
                the Secretary of Agriculture in issuing regulations for 
                determining the carbon intensity of electric energy 
                generated by biomass under paragraph (2)(C).
    ``(h) Civil Penalties.--
            ``(1) In general.--Subject to paragraph (2), an electric 
        utility that fails to meet the requirements of this section 
        shall be subject to a civil penalty in an amount equal to the 
        product obtained by multiplying--
                    ``(A) the number of kilowatt-hours of electric 
                energy sold by the utility to electric consumers in 
                violation of subsection (c); and
                    ``(B) 200 percent of the value of the alternative 
                compliance payment, as adjusted under subsection (m).
            ``(2) Waivers and mitigation.--
                    ``(A) Force majeure.--The Secretary may mitigate or 
                waive a civil penalty under this subsection if the 
                electric utility was unable to comply with an 
                applicable requirement of this section for reasons 
                outside of the reasonable control of the utility.
                    ``(B) Reduction for state penalties.--The Secretary 
                shall reduce the amount of a penalty determined under 
                paragraph (1) by the amount paid by the electric 
                utility to a State for failure to comply with the 
                requirement of a State renewable energy program, if the 
                State requirement is more stringent than the applicable 
                requirement of this section.
            ``(3) Procedure for assessing penalty.--The Secretary shall 
        assess a civil penalty under this subsection in accordance with 
        section 333(d) of the Energy Policy and Conservation Act (42 
        U.S.C. 6303(d)).
    ``(i) Alternative Compliance Payments.--An electric utility may 
satisfy the requirements of subsection (c), in whole or in part, by 
submitting in lieu of a clean energy credit issued under this section a 
payment equal to the amount required under subsection (d)(2), in 
accordance with such regulations as the Secretary may promulgate.
    ``(j) State Energy Efficiency Funding Program.--
            ``(1) Establishment.--Not later than December 31, 2015, the 
        Secretary shall establish a State energy efficiency funding 
        program.
            ``(2) Funding.--All funds collected by the Secretary as 
        alternative compliance payments under subsection (i), or as 
        civil penalties under subsection (h), shall be used solely to 
        carry out the program under this subsection.
            ``(3) Distribution to states.--
                    ``(A) In general.--An amount equal to 75 percent of 
                the funds described in paragraph (2) shall be used by 
                the Secretary, without further appropriation or fiscal 
                year limitation, to provide funds to States for the 
                implementation of State energy efficiency plans under 
                section 362 of the Energy Policy and Conservation Act 
                (42 U.S.C. 6322), in accordance with the proportion of 
                those amounts collected by the Secretary from each 
                State.
                    ``(B) Action by states.--A State that receives 
                funds under this paragraph shall maintain such records 
                and evidence of compliance as the Secretary may 
                require.
            ``(4) Guidelines and criteria.--The Secretary may issue 
        such additional guidelines and criteria for the program under 
        this subsection as the Secretary determines to be appropriate.
    ``(k) Exemptions.--
            ``(1) In general.--This section shall not apply during any 
        calendar year to an electric utility that sold less than the 
        applicable quantity described in paragraph (2) of megawatt-
        hours of electric energy to electric consumers during the 
        preceding calendar year.
            ``(2) Applicable quantity.--For purposes of paragraph (1), 
        the applicable quantity is--
                    ``(A) in the case of calendar year 2015, 2,000,000;
                    ``(B) in the case of calendar year 2016, 1,900,000;
                    ``(C) in the case of calendar year 2017, 1,800,000;
                    ``(D) in the case of calendar year 2018, 1,700,000;
                    ``(E) in the case of calendar year 2019, 1,600,000;
                    ``(F) in the case of calendar year 2020, 1,500,000;
                    ``(G) in the case of calendar year 2021, 1,400,000;
                    ``(H) in the case of calendar year 2022, 1,300,000;
                    ``(I) in the case of calendar year 2023, 1,200,000;
                    ``(J) in the case of calendar year 2024, 1,100,000; 
                and
                    ``(K) in the case of calendar year 2025 and each 
                calendar year thereafter, 1,000,000.
            ``(3) Calculation of electric energy sold.--
                    ``(A) Definitions.--In this subsection, the terms 
                `affiliate' and `associate company' have the meanings 
                given the terms in section 1262 of the Energy Policy 
                Act of 2005 (42 U.S.C. 16451).
                    ``(B) Inclusion.--For purposes of calculating the 
                quantity of electric energy sold by an electric utility 
                under this subsection, the quantity of electric energy 
                sold by an affiliate of the electric utility or an 
                associate company shall be treated as sold by the 
                electric utility.
    ``(l) State Programs.--
            ``(1) Savings provision.--
                    ``(A) In general.--Subject to paragraph (2), 
                nothing in this section affects the authority of a 
                State or a political subdivision of a State to adopt or 
                enforce any law or regulation relating to--
                            ``(i) clean or renewable energy; or
                            ``(ii) the regulation of an electric 
                        utility.
                    ``(B) Federal law.--No law or regulation of a State 
                or a political subdivision of a State may relieve an 
                electric utility from compliance with an applicable 
                requirement of this section.
            ``(2) Coordination.--The Secretary, in consultation with 
        States that have clean and renewable energy programs in effect, 
        shall facilitate, to the maximum extent practicable, 
        coordination between the Federal clean energy program under 
        this section and the relevant State clean and renewable energy 
        programs.
    ``(m) Adjustment of Alternative Compliance Payment.--Not later than 
December 31, 2016, and annually thereafter, the Secretary shall--
            ``(1) increase by 5 percent the rate of the alternative 
        compliance payment under subsection (d)(2); and
            ``(2) additionally adjust that rate for inflation, as the 
        Secretary determines to be necessary.
    ``(n) Report on Clean Energy Resources That Do Not Generate 
Electric Energy.--
            ``(1) In general.--Not later than 3 years after the date of 
        enactment of this section, the Secretary shall submit to 
        Congress a report examining mechanisms to supplement the 
        standard under this section by addressing clean energy 
        resources that do not generate electric energy but that may 
        substantially reduce electric energy loads, including energy 
        efficiency, biomass converted to thermal energy, geothermal 
        energy collected using heat pumps, thermal energy delivered 
        through district heating systems, and waste heat used as 
        industrial process heat.
            ``(2) Potential integration.--The report under paragraph 
        (1) shall examine the benefits and challenges of integrating 
        the additional clean energy resources into the standard 
        established by this section, including--
                    ``(A) the extent to which such an integration would 
                achieve the purposes of this section;
                    ``(B) the manner in which a baseline describing the 
                use of the resources could be developed that would 
                ensure that only incremental action that increased the 
                use of the resources received credit; and
                    ``(C) the challenges of pricing the resources in a 
                comparable manner between organized markets and 
                vertically integrated markets, including options for 
                the pricing.
            ``(3) Complementary policies.--The report under paragraph 
        (1) shall examine the benefits and challenges of using 
        complementary policies or standards, other than the standard 
        established under this section, to provide effective incentives 
        for using the additional clean energy resources.
            ``(4) Legislative recommendations.--As part of the report 
        under paragraph (1), the Secretary may provide legislative 
        recommendations for changes to the standard established under 
        this section or new complementary policies that would provide 
        effective incentives for using the additional clean energy 
        resources.
    ``(o) Exclusions.--This section does not apply to an electric 
utility located in the State of Alaska or Hawaii.
    ``(p) Regulations.--Not later than 1 year after the date of 
enactment of this section, the Secretary shall promulgate regulations 
to implement this section.

``SEC. 611. REPORT ON NATURAL GAS CONSERVATION.

    ``Not later than 2 years after the date of enactment of this 
section, the Secretary shall submit to Congress a report that--
            ``(1) quantifies the losses of natural gas during the 
        production and transportation of the natural gas; and
            ``(2) makes recommendations, as appropriate, for programs 
        and policies to promote conservation of natural gas for 
        beneficial use.''.
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