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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 1766 Introduced in Senate (IS)]

110th CONGRESS
  1st Session
                                S. 1766

   To reduce greenhouse gas emissions from the production and use of 
                    energy, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             July 11, 2007

 Mr. Bingaman (for himself, Mr. Specter, Mr. Harkin, Mr. Stevens, Ms. 
Murkowski, and Mr. Akaka) introduced the following bill; which was read 
  twice and referred to the Committee on Environment and Public Works

_______________________________________________________________________

                                 A BILL

 
   To reduce greenhouse gas emissions from the production and use of 
                    energy, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Low Carbon Economy 
Act of 2007''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.
     TITLE I--STRATEGIC REDUCTION TARGETS, COMPLIANCE, AND TRADING

Sec. 101. Quantity of annual allowances.
Sec. 102. Submission of allowances, credits, and payments.
Sec. 103. Trading system for allowances and credits.
             TITLE II--ALLOCATION AND AUCTION OF ALLOWANCES

Sec. 201. General allocation and auction rules.
Sec. 202. Allocation to industry sectors other than carbon-intensive 
                            manufacturing.
Sec. 203. Allocation to carbon-intensive manufacturing.
Sec. 204. Allocation to States.
Sec. 205. Allocation for agricultural projects.
Sec. 206. Allocation for early reductions.
Sec. 207. Allocation of carbon capture and sequestration bonus 
                            allowances.
Sec. 208. Auction of allowances for technology, adaptation, and 
                            assistance programs.
                    TITLE III--PROVISION OF CREDITS

Sec. 301. Credits for activities that take greenhouse gas precursors 
                            out of commerce in the United States.
Sec. 302. Credits for carbon dioxide sequestration.
Sec. 303. Credits for projects that offset other greenhouse gas 
                            emissions.
       TITLE IV--TECHNOLOGY, ADAPTATION, AND ASSISTANCE PROGRAMS

Sec. 401. Early technology deployment programs.
Sec. 402. Adaptation programs.
Sec. 403. Assistance programs.
         TITLE V--PERIODIC REVIEW AND INTERNATIONAL LEADERSHIP

Sec. 501. Executive branch and congressional review of program.
Sec. 502. International reserve allowance requirement.
                      TITLE VI--GENERAL PROVISIONS

Sec. 601. Monitoring and reporting.
Sec. 602. Enforcement.
Sec. 603. Administrative provisions.
Sec. 604. Judicial review.
Sec. 605. Savings provision.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) under the United Nations Framework Convention on 
        Climate Change, done at New York on May 9, 1992, the United 
        States is committed to stabilizing greenhouse gas 
        concentrations in the atmosphere at a level that would prevent 
        dangerous anthropogenic interference with the climate system;
            (2) according to the Fourth Assessment of the 
        Intergovernmental Panel on Climate Change, protecting the 
        climate system could require reductions of global greenhouse 
        gas emissions equivalent to 50 to 85 percent below 2000 levels 
        by 2050;
            (3) meeting the commitment to stabilize greenhouse gas 
        emissions at appropriate levels will require a long-term global 
        effort; and
            (4) it is possible and desirable to implement, in the 
        United States, an economy-wide annual limit on greenhouse gas 
        emissions for calendar year 2012 and each subsequent calendar 
        year, with the limit declining to 2006 levels by 2020, 1990 
        levels by 2030, and at least 60 percent below 2006 levels by 
        2050 (contingent on sufficient international effort), if the 
        system includes--
                    (A) cost mitigation measures, including a 
                technology accelerator payment mechanism, banking, and 
                offsets;
                    (B) requirements for periodic Presidential reports 
                and recommendations and expedited congressional 
                procedures to adjust the stringency of the regulatory 
                program on consideration of new scientific information 
                and the efforts of other countries to reduce their 
                emissions;
                    (C) an aggressive advanced energy technology 
                deployment program to lower costs of compliance and to 
                improve use of fuels;
                    (D) a program to fund activities to address 
                adaptation to a warming climate; and
                    (E) a program to provide assistance to low-income 
                persons who may be hardest hit by the costs of climate 
                change and mitigation measures.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Allocation period.--
                    (A) Allocation period.--The term ``allocation 
                period'' means the initial allocation period or a 
                subsequent allocation period, as appropriate.
                    (B) Initial allocation period.--The term ``initial 
                allocation period'' means the period beginning January 
                1, 2012, and ending December 31, 2021.
                    (C) Subsequent allocation period.--The term 
                ``subsequent allocation period'' means--
                            (i) the 5-year period beginning January 1, 
                        2022, and ending December 31, 2026; and
                            (ii) each subsequent 5-year period.
            (2) Carbon dioxide equivalent.--The term ``carbon dioxide 
        equivalent'' means--
                    (A) for each covered fuel, the quantity of carbon 
                dioxide that would be emitted into the atmosphere as a 
                result of complete combustion of a unit of the covered 
                fuel, to be determined for the type of covered fuel by 
                the President; and
                    (B) for each greenhouse gas (other than carbon 
                dioxide), the quantity of carbon dioxide that would 
                have an effect on global warming equal to the effect of 
                a unit of the greenhouse gas, as determined by the 
                President, taking into consideration global warming 
                potentials.
            (3) Climate adaptation fund.--The term ``Climate Adaptation 
        Fund'' means the Climate Adaptation Fund established under 
        section 208(f)(1)(B).
            (4) Coal.--The term ``coal'' means any of the recognized 
        classifications and ranks of coal, including anthracite, 
        bituminous, semibituminous, subbituminous, lignite, peat, and 
        fuel derivatives of coal.
            (5) Covered fuel.--The term ``covered fuel'' means--
                    (A) coal;
                    (B) petroleum products;
                    (C) natural gas, including liquefied natural gas;
                    (D) natural gas liquids; and
                    (E) any other fuel derived from fossil hydrocarbons 
                (including bitumen, kerogen, and coalbed methane).
            (6) Covered greenhouse gas emissions.--
                    (A) In general.--The term ``covered greenhouse gas 
                emissions'' means--
                            (i) for a regulated coal facility in the 
                        United States, the emissions associated with 
                        coal consumed or converted to synthetic fuels 
                        by the facility;
                            (ii) for a petroleum refinery located in 
                        the United States, the emissions associated 
                        with petroleum products, that are refined, 
                        produced, or consumed at the refinery;
                            (iii) for a natural gas processing plant in 
                        the United States, a quantity of emissions 
                        equal to the sum of--
                                    (I) the emissions associated with 
                                natural gas liquids produced or 
                                consumed at the plant; and
                                    (II) the emissions associated with 
                                natural gas delivered into commerce 
                                from, or consumed at, the plant;
                            (iv) for an importer of petroleum products, 
                        coke, or natural gas (including liquefied 
                        natural gas) into the United States, the 
                        emissions associated with the petroleum 
                        products, coke, or natural gas imported;
                            (v) for a manufacturer or importer of 
                        hydrofluorocarbons, perfluorocarbons, sulfur 
                        hexafluoride, or nitrous oxide or an importer 
                        of a product containing hydrofluorocarbons, 
                        perfluorocarbons, sulfur hexafluoride, or 
                        nitrous oxide, the quantity of 
                        hydrofluorocarbons, perfluorocarbons, sulfur 
                        hexafluoride, or nitrous oxide produced in the 
                        United States or imported by, or contained in 
                        products imported by, the manufacturer or 
                        importer;
                            (vi) for a facility in the United States 
                        that manufactures adipic acid or nitric acid, 
                        the quantity of nitrous oxide emitted by the 
                        facility;
                            (vii) for an aluminum smelter in the United 
                        States, the quantity of perfluorocarbons 
                        emitted by the smelter;
                            (viii) for a facility in the United States 
                        that produces hydrochlorofluorocarbon-22, the 
                        quantity of hydrofluorocarbon-23 emitted by the 
                        facility; and
                            (ix) such other emissions of greenhouse 
                        gases from facilities in the United States that 
                        the President, by rule under section 102(g), 
                        determines is necessary to ensure that 
                        allowances are submitted for each covered fuel.
                    (B) Units.--Quantities of covered greenhouse gas 
                emissions shall be measured and expressed in units of 
                metric tons of carbon dioxide equivalent.
            (7) Eligible coal mine.--The term ``eligible coal mine'' 
        means a coal mine located in the United States.
            (8) Eligible electric generation facility.--
                    (A) In general.--The term ``eligible electric 
                generation facility'' means a fossil-fuel-fired 
                facility for the generation of electric energy located 
                in the United States.
                    (B) Exclusion.--The term ``eligible electric 
                generation facility'' does not include any facility 
                described in subparagraph (A) that--
                            (i) began operations after December 31, 
                        2006; and
                            (ii) does not satisfy the criteria 
                        established in section 202(c).
            (9) Eligible facility.--The term ``eligible facility'' 
        means--
                    (A) an eligible coal mine;
                    (B) an eligible electric generation facility;
                    (C) an eligible natural gas processing plant;
                    (D) an eligible nonfuel regulated facility; or
                    (E) an eligible refinery.
            (10) Eligible natural gas processing plant.--The term 
        ``eligible natural gas processing plant'' means a natural gas 
        processing plant located in the United States.
            (11) Eligible nonfuel regulated facility.--The term 
        ``eligible nonfuel regulated facility'' means a nonfuel 
        regulated facility located in the United States.
            (12) Eligible refinery.--The term ``eligible refinery'' 
        means a petroleum refinery located in the United States.
            (13) Energy assistance fund.--The term ``Energy Assistance 
        Fund'' means the Energy Assistance Fund established under 
        section 208(f)(1)(C).
            (14) Energy technology deployment fund.--The term ``Energy 
        Technology Deployment Fund'' means the Energy Technology 
        Deployment Fund established under section 208(f)(1)(A).
            (15) Greenhouse gas.--The term ``greenhouse gas'' means--
                    (A) carbon dioxide;
                    (B) methane;
                    (C) nitrous oxide;
                    (D) hydrofluorocarbons;
                    (E) perfluorocarbons; and
                    (F) sulfur hexafluoride.
            (16) Natural gas processing plant.--The term ``natural gas 
        processing plant'' means a facility in the United States 
        designed to separate natural gas liquids from natural gas.
            (17) Natural gas processor.--The term ``natural gas 
        processor'' means the owner or operator of a natural gas 
        processing plant.
            (18) Nonfuel regulated entity.--The term ``nonfuel 
        regulated entity'' means--
                    (A) the owner or operator of a nonfuel regulated 
                facility; and
                    (B) an importer of--
                            (i) hydrofluorocarbons, perfluorocarbons, 
                        sulfur hexafluoride, or nitrous oxide; or
                            (ii) a product containing 
                        hydrofluorocarbons, perfluorocarbons, sulfur 
                        hexafluoride, or nitrous oxide.
            (19) Nonfuel regulated facility.--The term ``nonfuel 
        regulated facility'' means a facility that--
                    (A) manufactures hydrofluorocarbons, 
                perfluorocarbons, sulfur hexafluoride, or nitrous 
                oxide;
                    (B) emits nitrous oxide associated with the 
                manufacture of adipic acid or nitric acid;
                    (C) is an aluminum smelter; or
                    (D) emits hydrofluorocarbon-23 as a byproduct of 
                hydrochlorofluorocarbon-22 production.
            (20) Offset project.--The term ``offset project'' means any 
        project to--
                    (A) reduce greenhouse gas emissions; or
                    (B) sequester or destroy a greenhouse gas.
            (21) Petroleum product.--The term ``petroleum product'' 
        means--
                    (A) a refined petroleum product;
                    (B) residual fuel oil;
                    (C) petroleum coke; or
                    (D) a liquefied petroleum gas.
            (22) Regulated coal facility.--The term ``regulated coal 
        facility'' means a facility that uses more than 5,000 tons of 
        coal in a calendar year.
            (23) Regulated entity.--The term ``regulated entity'' 
        means--
                    (A) a regulated fuel distributor;
                    (B) the owner or operator of a regulated coal 
                facility;
                    (C) a nonfuel regulated entity; or
                    (D) an entity designated by the President under 
                section 102(g)(2).
            (24) Regulated fuel distributor.--The term ``regulated fuel 
        distributor'' means--
                    (A) the owner or operator of--
                            (i) a petroleum refinery; or
                            (ii) a natural gas processing plant; or
                    (B) an importer of--
                            (i) petroleum products;
                            (ii) coke; or
                            (iii) natural gas (including liquefied 
                        natural gas).
            (25) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.
            (26) State.--The term ``State'' means--
                    (A) each of the several States of the United 
                States;
                    (B) the District of Columbia;
                    (C) the Commonwealth of Puerto Rico;
                    (D) Guam;
                    (E) American Samoa;
                    (F) the Commonwealth of the Northern Mariana 
                Islands;
                    (G) the Federated States of Micronesia;
                    (H) the Republic of the Marshall Islands;
                    (I) the Republic of Palau; and
                    (J) the United States Virgin Islands.
            (27) TAP.--The term ``TAP'' means the technology 
        accelerator payment determined under section 102.
            (28) United states.--The term ``United States'', when used 
        in the geographic sense, means all of the States.

     TITLE I--STRATEGIC REDUCTION TARGETS, COMPLIANCE, AND TRADING

SEC. 101. QUANTITY OF ANNUAL ALLOWANCES.

    The President shall issue a total quantity of allowances for 
covered greenhouse gas emissions for each calendar year in accordance 
with the following table:

------------------------------------------------------------------------
                                                             Millions of
                                                             Metric Tons
                                                              of Covered
                       Calendar Year                          Greenhouse
                                                                 Gas
                                                              Emissions
------------------------------------------------------------------------
2012.......................................................        6,652
2013.......................................................        6,592
2014.......................................................        6,533
2015.......................................................        6,474
2016.......................................................        6,416
2017.......................................................        6,358
2018.......................................................        6,301
2019.......................................................        6,245
2020.......................................................        6,188
2021.......................................................        6,097
2022.......................................................        6,006
2023.......................................................        5,915
2024.......................................................        5,823
2025.......................................................        5,732
2026.......................................................        5,550
2027.......................................................        5,367
2028.......................................................        5,184
2029.......................................................        5,002
2030 and each calendar year thereafter.....................       4,819.
------------------------------------------------------------------------

SEC. 102. SUBMISSION OF ALLOWANCES, CREDITS, AND PAYMENTS.

    (a) Requirement.--For calendar year 2012 and each calendar year 
thereafter, each regulated entity shall submit to the President--
            (1) the number of allowances or credits equal to the 
        covered greenhouse gas emissions of the regulated entity; or
            (2) a payment equal to the amount of the applicable TAP 
        price in lieu of submission of 1 or more required allowances.
    (b) Deadline for Submission.--Each regulated entity required to 
submit an allowance under this section shall submit the allowance, 
credit, or payment under subsection (a) not later than March 31 of the 
calendar year following the calendar year for which the allowance is 
required to be submitted.
    (c) Rules.--The President shall promulgate such rules as the 
President determines to be necessary or appropriate to--
            (1) identify and register each regulated entity that is 
        required to submit an allowance under this section; and
            (2) require the submission of reports and otherwise obtain 
        any information the President determines to be necessary to 
        calculate or verify the compliance of a regulated entity with 
        any requirement under this section.
    (d) Determination of Applicable TAP Price.--The applicable TAP 
price per allowance shall be--
            (1) for calendar year 2012, $12 per metric ton of carbon 
        dioxide equivalent; and
            (2) for each subsequent calendar year, an amount equal to 
        the product obtained by multiplying--
                    (A) the TAP price established for the preceding 
                calendar year increased by 5 percent; and
                    (B) the ratio that--
                            (i) the implicit price deflator for the 
                        gross domestic product, as computed and 
                        published by the Department of Commerce for the 
                        most recent 4-calendar quarter period for which 
                        data is available; bears to
                            (ii) the implicit price deflator for the 
                        gross domestic product, as computed and 
                        published by the Department of Commerce for the 
                        4-calendar quarter period immediately preceding 
                        the period referred to in clause (i).
    (e) Disposition of Receipts.--The funds received under subsection 
(a)(2) shall be deposited into the Energy Technology Deployment Fund.
    (f) Exemption.--The President may exempt from the requirements of 
this Act a regulated entity for any period during which the President 
determines, after providing an opportunity for public comment, that 
measuring or estimating the quantity of covered greenhouse gas 
emissions by the entity is not feasible.
    (g) Adjustments.--
            (1) Modification.--The President may modify, by rule, the 
        quantity of covered greenhouse gas emissions attributable to a 
        regulated entity if the President determines that the 
        modification is necessary to ensure that--
                    (A) allowances are submitted for all quantities of 
                covered greenhouse gas emissions; and
                    (B) allowances are not submitted for the same 
                quantity of covered greenhouse gas emissions by more 
                than 1 regulated entity.
            (2) Extension.--The President may extend, by rule, the 
        requirement to submit allowances under this section to an 
        entity that is not otherwise a regulated entity if the 
        President determines that the extension is necessary to ensure 
        that allowances are submitted for all covered greenhouse gas 
        emissions.
            (3) Application to natural gas.--
                    (A) In general.--Rules under paragraphs (1) and (2) 
                shall ensure that--
                            (i) the requirements of subsection (a) are 
                        met for any natural gas that is not imported or 
                        processed by a natural gas processor; and
                            (ii) more than 1 allowance is not required 
                        to be submitted for a unit of natural gas that 
                        is imported and subsequently processed in the 
                        United States.
                    (B) Alaska natural gas.--In the case of natural gas 
                produced in Alaska and not reinjected in the field, the 
                producer of the natural gas and any associated natural 
                gas liquids shall be considered to be the natural gas 
                processor and the regulated fuel distributor of the 
                natural gas and natural gas liquids.
    (h) Study on Process Emissions.--Not later than 2 years after the 
date of enactment of this Act, the President shall--
            (1) carry out studies of the technical and economic 
        feasibility of requiring the submission of allowances for 
        process emissions not otherwise covered by this title; and
            (2) submit to Congress a report that describes the results 
        of the study (including recommendations of the President based 
        on those results).
    (i) Next Generation Methane Reduction and Use Technologies.--
            (1) Report.--Not later than 1 year after the date of 
        enactment of this Act, the President shall submit to Congress a 
        report that--
                    (A) assesses the potential for next generation 
                technologies that can reduce and use methane emissions 
                from natural sources and the energy, agricultural, and 
                waste sectors; and
                    (B) includes recommendations for funding research 
                and development and technology deployment programs for 
                the most promising technologies.
            (2) Demonstration projects.--The Secretary shall use a 
        portion of the funds provided under paragraph (3) to support 
        demonstration projects that use methane capture and use 
        technologies.
            (3) Funding.--Of the funds in the Energy Technology 
        Deployment Fund, the Secretary, in consultation with the 
        Administrator of the Environmental Protection Agency and the 
        Secretary of the Interior, shall use to carry out a methane 
        research and development program (including demonstration 
        projects), without further appropriation, $10,000,000 for each 
        of fiscal years 2010 through 2019.
    (j) Retirement of Allowances.--
            (1) In general.--Any person or entity that is not subject 
        to this Act may submit to the President an allowance for 
        retirement at any time.
            (2) Action by president.--On receipt of an allowance under 
        paragraph (1), the President--
                    (A) shall accept the allowance; and
                    (B) shall not allocate, auction, or otherwise 
                reissue the allowance.

SEC. 103. TRADING SYSTEM FOR ALLOWANCES AND CREDITS.

    (a) Administrative Requirements.--
            (1) Denomination.--Allowances and credits issued by the 
        President under this Act shall be denominated in units of 
        metric tons of carbon dioxide equivalent.
            (2) Period of use and banking.--An allowance or credit 
        issued by the President under this Act may be used during--
                    (A) the calendar year for which the allowance or 
                credit is issued; or
                    (B) any subsequent calendar year.
            (3) Serial numbers.--The President shall--
                    (A) assign a unique serial number to each allowance 
                or credit issued under this Act; and
                    (B) retire the serial number of an allowance or 
                credit on the date on which the allowance or credit is 
                submitted.
    (b) Trading System.--
            (1) In general.--The President shall--
                    (A) establish, by rule, a trading system under 
                which allowances and credits may be sold, exchanged, 
                purchased, or transferred by any person or entity, 
                including a registry for issuing, recording, and 
                tracking allowances and credits; and
                    (B) specify all procedures and requirements 
                required for orderly functioning of the trading system.
            (2) Transparency.--
                    (A) In general.--The trading system under paragraph 
                (1) shall include such provisions as the President 
                considers to be appropriate to--
                            (i) facilitate price transparency and 
                        participation in the market for allowances and 
                        credits; and
                            (ii) protect buyers and sellers of 
                        allowances and credits, and the public, from 
                        the adverse effects of collusion and other 
                        anticompetitive behaviors.
                    (B) Authority to obtain information.--The President 
                may obtain any information the President considers to 
                be necessary to carry out this subsection from any 
                person or entity that buys, sells, exchanges, or 
                otherwise transfers an allowance or credit.
    (c) Nature of Allowances and Credits.--An allowance or credit that 
is allocated or distributed under this Act shall not constitute a 
security or property right.

             TITLE II--ALLOCATION AND AUCTION OF ALLOWANCES

SEC. 201. GENERAL ALLOCATION AND AUCTION RULES.

    (a) Percentage of Allowances Available for Allocation and 
Auction.--
            (1) Calendar years 2012 through 2030.--For each of calendar 
        years 2012 through 2030, the percentage of the total quantity 
        of allowances issued and available for allocation, 
        sequestration and early reduction projects, and auction shall 
        be determined in accordance with the following table:

 
----------------------------------------------------------------------------------------------------------------
                             Auction                Allocation            Set-Aside Programs
               -----------------------------------  to Industry -------------------------------------
                                                      Sectors
     Year                                           (Regulated                                        Allocation
                Technology   Adaption  Low-Income       and       Agriculture     Early    CCS Bonus   to States
                                       Assistance  Nonregulated  Sequestration  Reduction  Allowance
                                                     Entities)
----------------------------------------------------------------------------------------------------------------
2012                   12          8           4           53             5            1          8          9
----------------------------------------------------------------------------------------------------------------
2013                   12          8           4           53             5            1          8          9
----------------------------------------------------------------------------------------------------------------
2014                   12          8           4           53             5            1          8          9
----------------------------------------------------------------------------------------------------------------
2015                   12          8           4           53             5            1          8          9
----------------------------------------------------------------------------------------------------------------
2016                   12          8           4           53             5            1          8          9
----------------------------------------------------------------------------------------------------------------
2017                   13          9           4           51             5            1          8          9
----------------------------------------------------------------------------------------------------------------
2018                   14         10           4           49             5            1          8          9
----------------------------------------------------------------------------------------------------------------
2019                   15         11           4           47             5            1          8          9
----------------------------------------------------------------------------------------------------------------
2020                   16         12           4           45             5            1          8          9
----------------------------------------------------------------------------------------------------------------
2021                   17         13           5           43             5            0          8          9
----------------------------------------------------------------------------------------------------------------
2022                   18         14           5           41             5            0          8          9
----------------------------------------------------------------------------------------------------------------
2023                   19         15           5           39             5            0          8          9
----------------------------------------------------------------------------------------------------------------
2024                   20         16           5           37             5            0          8          9
----------------------------------------------------------------------------------------------------------------
2025                   21         17           5           35             5            0          8          9
----------------------------------------------------------------------------------------------------------------
2026                   22         18           5           33             5            0          8          9
----------------------------------------------------------------------------------------------------------------
2027                   23         19           5           31             5            0          8          9
----------------------------------------------------------------------------------------------------------------
2028                   24         20           5           29             5            0          8          9
----------------------------------------------------------------------------------------------------------------
2029                   25         21           5           27             5            0          8          9
----------------------------------------------------------------------------------------------------------------
2030                   26         22           5           25             5            0          8          9
----------------------------------------------------------------------------------------------------------------

            (2) Calendar year 2031 and subsequent calendar years.--For 
        calendar year 2031 and each subsequent calendar year, the 
        percentage of the total quantity of allowances issued shall be 
        equal to the percentages allocated under paragraph (1) for 
        calendar year 2030, as adjusted as follows:
                    (A) The percentages allocated to technology and 
                adaptation shall each increase by 1 percentage point 
                for each of calendar years 2031 through 2043.
                    (B) The percentage allocated to industry sectors 
                shall decrease by 2 percentage points for each of 
                calendar years 2031 through 2043.
                    (C) For calendar year 2043 and each subsequent 
                calendar year, the percentages for technology, 
                adaptation, and industry sectors shall be established 
                at 39, 36, and 0, respectively.
    (b) Allocation of Allowances.--
            (1) Allocations.--Except as otherwise specifically provided 
        in this Act, not later than the date that is 2 years before the 
        beginning of the initial allocation period, and each subsequent 
        allocation period, the President shall, by rule, allocate for 
        each calendar year during the allocation period a quantity of 
        allowances in accordance with this subsection.
            (2) Quantity.--The total quantity of allowances available 
        to be allocated for each calendar year of an allocation period 
        shall be the product obtained by multiplying--
                    (A) the total quantity of allowances issued for the 
                calendar year under section 101; and
                    (B) the allocation percentage for the calendar year 
                under subsection (a).
            (3) Allowance allocation rulemaking.--Not later than 18 
        months after the date of enactment of this Act, the President 
        shall establish, by rule, procedures for allocating allowances 
        in accordance with the criteria established under this 
        subsection, including forms, schedules for submission, and 
        other requirements for the reporting of information necessary 
        for the allocation of allowances under this section.
            (4) Cost of allowances.--The President shall distribute 
        allowances under this title at no cost to the recipient of the 
        allowance.
    (c) Allocation Within Industry Sectors.--The allowances available 
for allocation to industry under subsection (b)(2) shall be distributed 
to industry sectors as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                                      Percentage
                                                                                                          of
                     Industry Sector                           Facilities within Industry Sector      Allowances
                                                                                                      Allocated
                                                                                                     to Industry
----------------------------------------------------------------------------------------------------------------
Coal                                                       Eligible Coal Mine                                 12
----------------------------------------------------------------------------------------------------------------
Refining                                                   Eligible Petroleum Refineries                       7
----------------------------------------------------------------------------------------------------------------
Natural Gas                                                Eligible Natural Gas Processing Plants              4
----------------------------------------------------------------------------------------------------------------
Electric Power                                             Eligible Electric Generation Facilities            54
----------------------------------------------------------------------------------------------------------------
Nonfuel Entities                                           Eligible Nonfuel Regulated Facilities               4
----------------------------------------------------------------------------------------------------------------
Carbon-intensive Manufacturing                             Eligible Manufacturing Facilities                  19
----------------------------------------------------------------------------------------------------------------

SEC. 202. ALLOCATION TO INDUSTRY SECTORS OTHER THAN CARBON-INTENSIVE 
              MANUFACTURING.

    (a) Definitions.--In this section:
            (1) Calculated baseline emissions.--The term ``calculated 
        baseline emissions'' means, for an eligible electric generation 
        facility that is a new eligible facility or a new entrant 
        facility, the product obtained by multiplying--
                    (A) the nameplate capacity of the facility;
                    (B) the national average capacity factor for the 
                type of generation facility during the most recent 3-
                year period for which data are available; and
                    (C) the applicable emission rate established by the 
                President pursuant to subsection (c), as determined as 
                of the date on which the facility is first eligible to 
                receive allowances.
            (2) Carbon content allocation factor.--The term ``carbon 
        content allocation factor'' means--
                    (A) in the case of an eligible coal mine, the 
                carbon dioxide equivalent of the coal produced at the 
                coal mine;
                    (B) in the case of an eligible electric generation 
                facility--
                            (i) if the eligible electric generation 
                        facility is an existing eligible facility, the 
                        carbon dioxide emissions of the facility; or
                            (ii) if the eligible electric generation 
                        facility is a new eligible facility or a new 
                        entrant facility, the calculated baseline 
                        emissions of the facility; and
                    (C) in the case of an eligible petroleum refinery, 
                an eligible gas processing facility, or an eligible 
                nonfuel regulated facility, the covered greenhouse gas 
                emissions of the facility.
            (3) Existing eligible facility.--The term ``existing 
        eligible facility'' means an eligible facility that began 
        operation prior to January 1, 2007.
            (4) New eligible facility.--The term ``new eligible 
        facility'' means an eligible facility that began operation 
        after December 31, 2006, and before the allocation is made for 
        an allocation period.
            (5) New entrant facility.--The term ``new entrant 
        facility'', with respect to an allocation period, means an 
        eligible facility that began operation during or after the 
        calendar year in which the allocation rule was promulgated 
        under section 201(b)(1) for that allocation period.
    (b) Allocation.--
            (1) Total allocation.--For each calendar year, eligible 
        facilities (other than new entrant facilities) within an 
        industry sector shall be allocated 92 percent of the total 
        quantity of allowances available for allocation to that 
        industry sector under section 201(c).
            (2) General rule for allocation to individual facilities.--
        For each calendar year, the quantity of allowances allocated to 
        each eligible facility (other than a new entrant facility) 
        within an industry sector shall be the quantity equal to the 
        product obtained by multiplying--
                    (A) the total allocation to eligible facilities 
                (other than new entrant facilities) in that sector 
                under paragraph (1); and
                    (B) the ratio that--
                            (i) the carbon content allocation factor 
                        for that facility during the 3-year period 
                        beginning on January 1, 2004 (or, in the case 
                        of a new eligible facility, during the first 3 
                        years of operation); bears to
                            (ii) the sum of the carbon content 
                        allocation factors for all eligible facilities 
                        (other than new entrant facilities) in that 
                        sector, as determined pursuant to clause (i).
            (3) Allocation for new entrants.--
                    (A) In general.--For each calendar year, 8 percent 
                of the total quantity of allowances available for 
                allocation to an industry sector under section 201(c) 
                shall be available for allocation to new entrant 
                facilities in that sector, as determined under 
                subparagraphs (B) and (C).
                    (B) Individual allocations.--Each calendar year, 
                the President shall allocate allowances to any new 
                entrant facility for that calendar year equal to the 
                product obtained by multiplying--
                            (i) the carbon content allocation factor 
                        for that facility for the prior calendar year; 
                        and
                            (ii) the ratio that (for that calendar 
                        year)--
                                    (I) the allowances allocated under 
                                paragraph (1) to the applicable 
                                industry sector; bears to
                                    (II) the sum of the carbon content 
                                allocation factors for all eligible 
                                facilities (other than new entrant 
                                facilities) in that sector.
                    (C) Relationship to auction.--
                            (i) Insufficient allocations.--If the 
                        allowances available for allocation to new 
                        entrant facilities under subparagraph (A) are 
                        insufficient to enable the allocations required 
                        under subparagraph (B) to be made, the 
                        additional required allowances shall be 
                        deducted from the allowances available for 
                        auction under section 208.
                            (ii) Surplus allocations.--If the President 
                        does not allocate under subparagraph (B) all 
                        the allowances available for new entrants under 
                        subparagraph (A), any unallocated allowances 
                        shall be added to the allowances available for 
                        auction.
    (c) Eligibility Criteria for Post-2006 Electric Generation 
Facilities.--
            (1) Criteria.--The President shall establish, by rule, 
        emissions rate criteria for--
                    (A) natural gas-fired generation facilities for 
                electric energy, based on the carbon dioxide per 
                kilowatt hour emission rate of new natural gas combined 
                cycle facilities; and
                    (B) coal-fired generation facilities for electric 
                energy that commence operation after December 31, 2006, 
                based on the lowest economically achievable carbon 
                dioxide per kilowatt hour emission rate for a facility 
                of that type.
            (2) Review and revision.--The President--
                    (A) shall review the criteria in advance of the 
                allocation for each subsequent allocation period; and
                    (B) may revise the criteria by rule.
            (3) Effective date of revisions.--Any revision of the 
        criteria shall apply only with respect to eligible electricity 
        generation facilities beginning operation after the effective 
        date of the revised criterion.

SEC. 203. ALLOCATION TO CARBON-INTENSIVE MANUFACTURING.

    (a) Definitions.--In this section:
            (1) Currently operating facility.--The term ``currently 
        operating facility'' means an eligible manufacturing facility 
        that had significant operations during the calendar year 
        preceding the calendar year for which the allocation rule is 
        promulgated under section 201(b) for an allocation period.
            (2) Eligible manufacturing facility.--
                    (A) In general.--The term ``eligible manufacturing 
                facility'' means a manufacturing facility located in 
                the United States that principally manufactures iron, 
                steel, aluminum, pulp, paper, cement, chemicals, or 
                such other products as the President may determine, by 
                rule, are likely to be significantly disadvantaged in 
                competitive international markets as a result of 
                indirect costs of the program established under this 
                Act.
                    (B) Exclusion.--The term ``eligible manufacturing 
                facility'' does not include a facility eligible to 
                receive allowances under section 202 or any electric 
                generator.
            (3) Indirect carbon dioxide emissions.--The term ``indirect 
        carbon dioxide emissions'' means the product obtained by 
        multiplying (as determined by the President)--
                    (A) the quantity of electricity consumption at an 
                eligible manufacturing facility; and
                    (B) the rate of carbon dioxide emission per 
                kilowatt-hour output for the region in which the 
                manufacturer is located.
            (4) New entrant manufacturing facility.--The term ``new 
        entrant manufacturing facility'', with respect to an allocation 
        period, means an eligible manufacturing facility that began 
        operation during or after the calendar year for which the 
        allocation rule was promulgated under subsection 201(b) for 
        that allocation period.
    (b) Total Allocation for Currently-Operating Facilities.--For each 
calendar year, currently-operating facilities shall be allocated 96 
percent of the total quantity of allowances available for allocation to 
carbon-intensive manufacturing under section 201(c).
    (c) Total Allocation for Currently-Operating Facilities in Each 
Category of Manufacturing Facilities.--The quantity of allowances 
available for allocation to facilities in each category of currently-
operating facilities shall be equal to the product obtained by 
multiplying--
            (1) the total quantity of allowances available for 
        allocation under subsection (b); and
            (2) the ratio that (during the year preceding the calendar 
        year for which the allocation rule is promulgated for the 
        allocation period)--
                    (A) the sum of the direct and indirect carbon 
                dioxide emissions by currently-operating facilities in 
                the category; bears to
                    (B) the sum of the direct and indirect carbon 
                dioxide emissions by all currently-operating 
                facilities.
    (d) Individual Allocations to Currently-Operating Facilities.--For 
each calendar year of the allocation period, the quantity of allowances 
allocated to a currently-operating facility shall be the quantity equal 
to the product obtained by multiplying--
            (1) the total quantity of allowances available for 
        allocation to currently-operating facilities in the appropriate 
        category, as determined under subsection (c); and
            (2) the ratio that (during the 3 calendar years preceding 
        the year for which the allocation rule is promulgated for the 
        allocation period)--
                    (A) the average number of production employees 
                employed at the facility; bears to
                    (B) the average number of production employees 
                employed at all existing eligible manufacturing 
                facilities in the appropriate category.
    (e) Revocation of Allowances on Facility Shut Down.--If an eligible 
manufacturing facility received an allocation of allowances under this 
section for an allocation period and is subsequently permanently shut 
down during the allocation period, the facility shall promptly return 
to the President allowances equal to the allowances received for 
calendar years after the calendar year of the shut down.
    (f) New Entrant Manufacturing Facilities.--
            (1) In general.--For each calendar year, 4 percent of the 
        total quantity of allowances available for allocation to carbon 
        intensive manufacturing under section 201(c) shall be allocated 
        to new entrant manufacturing facilities.
            (2) Individual allocations.--Each calendar year, the 
        President shall allocate allowances to any new entrant 
        manufacturing facility for that calendar year in a quantity 
        equal to the product obtained by multiplying--
                    (A) the average number of production employees 
                employed at the new entrant manufacturing facility 
                during the prior calendar year; and
                    (B) the rate (in allowances per production 
                employee) at which allowances were allocated to 
                currently-operating facilities in the appropriate 
                category for the calendar year, as determined under 
                subsection (d).
            (3) Relationship to auction.--Section 202(b)(3)(C) shall be 
        applicable to allowances for new entrant manufacturing 
        facilities to the same extent that section 202(b)(3)(C) applies 
        to allowances for other new entrant facilities.

SEC. 204. ALLOCATION TO STATES.

    (a) Distribution.--Not later than the date that is 2 years before 
the 5-year period beginning January 1, 2012 and ending December 31, 
2017, and each subsequent 5-year period, the President shall, by rule, 
allocate for each calendar year during the relevant 5-year period a 
quantity of allowances in accordance with this section.
    (b) Distribution.--The allowances available for allocation to 
States under section 201(b) for an allocation period shall be 
distributed as follows:
            (1) For each calendar year of the period, \1/2\ of the 
        quantity of allowances available for allocation to States under 
        section 201(b) shall be allocated to individual States based on 
        the ratio that--
                    (A) the greenhouse gas emissions of the State 
                during the 3 calendar years preceding the calendar year 
                for which the allocation rule is promulgated for the 
                period; bears to
                    (B) the greenhouse gas emissions of all States for 
                that period.
            (2) For each calendar year of the period, \1/2\ of the 
        quantity of allowances available for allocation to States under 
        section 201(b) shall be allocated among the States based on the 
        ratio that--
                    (A) the population of the State, as determined by 
                the most recent decennial census preceding the calendar 
                year for which the allocation rule is promulgated for 
                the allocation period; bears to
                    (B) the population of all States as determined by 
                that census.
    (c) Use.--
            (1) In general.--During any calendar year, a State shall 
        use not less than 90 percent of the allowances allocated to the 
        State (or proceeds of sale of those allowances) for that 
        calendar year--
                    (A) to mitigate impacts on low-income energy 
                consumers;
                    (B) to promote energy efficiency (including support 
                of electricity demand reduction, waste minimization, 
                and recycling programs);
                    (C) to promote investment in nonemitting 
                electricity generation technology;
                    (D) to encourage advances in energy technology that 
                reduce or sequester greenhouse gas emissions;
                    (E) to avoid distortions in competitive electricity 
                markets;
                    (F) to mitigate obstacles to investment by new 
                entrants in electricity generation markets and energy-
                intensive manufacturing sectors;
                    (G) to address local or regional impacts of climate 
                change policy, including providing assistance to 
                displaced workers;
                    (H) to mitigate impacts on energy-intensive 
                industries in internationally competitive markets; or
                    (I) to enhance energy security.
            (2) Deadline.--A State shall distribute or sell allowances 
        for use in accordance with paragraph (1) by not later than 1 
        year before the beginning of each allowance allocation period.
            (3) Return of allowances.--Not later than 330 days before 
        the beginning of each period, a State shall return to the 
        President any allowances not distributed by the deadline in 
        paragraph (2).

SEC. 205. ALLOCATION FOR AGRICULTURAL PROJECTS.

    (a) Agricultural Greenhouse Gas Management Research.--
            (1) Report.--Not later than 1 year after the date of 
        enactment of this Act, the Secretary of Agriculture, in 
        consultation with scientific and agricultural experts, shall 
        prepare and submit to Congress a report that describes the 
        status of research on agricultural greenhouse gas management, 
        including a description of--
                    (A) research on soil carbon sequestration and other 
                agricultural greenhouse gas management that has been 
                carried out;
                    (B) any additional research that is necessary;
                    (C) the proposed priority for additional research;
                    (D) the most appropriate approaches for conducting 
                the additional research; and
                    (E) the manner is which carbon credits that are 
                specific to agricultural operations should be valued 
                and allotted.
            (2) Standardized system of soil carbon measurement and 
        certification for the agricultural sector.--
                    (A) In general.--As soon as practicable after the 
                date of enactment of this Act, the Secretary of 
                Agriculture shall establish a standardized system of 
                soil carbon measurement and certification for the 
                agricultural sector.
                    (B) Administration.--In establishing the system, 
                the Secretary shall--
                            (i) create a standardized system of 
                        measurements for agricultural greenhouse gases 
                        that takes into account crop type, fertilizer 
                        and water inputs, soil type, region or weather, 
                        tilling practices, and other relevant factors; 
                        and
                            (ii) delineate the most appropriate system 
                        of certification of credit by public or private 
                        entities.
            (3) Research.--After the date of submission of the report 
        described in paragraph (1), the President and the Secretary of 
        Agriculture (in collaboration with the member institutions of 
        higher education of the Consortium for Agricultural Soil 
        Mitigation of Greenhouse Gases, institutions of higher 
        education, and research entities) shall initiate a program to 
        conduct any additional research that is necessary relating to 
        soil carbon sequestration and other agricultural sector 
        greenhouse gas emissions for all agricultural sectors, 
        including trees and grassland.
    (b) Agricultural Sequestration Allowances.--Taking into account the 
report prepared under subsection (a)(1), the Secretary of Agriculture 
shall establish, by rule, a program under which agricultural 
sequestration allowances may be distributed to entities that carry out 
sequestration projects on agricultural land that achieve long-term 
greenhouse gas emission mitigation benefits.
    (c) Quantity.--During a calendar year, the Secretary of Agriculture 
shall distribute agricultural sequestration allowances in a quantity 
not greater than the product obtained by multiplying--
            (1) the total number of allowances issued for the calendar 
        year under section 101(a); and
            (2) the percentage of allowances available for agricultural 
        sequestration under section 201(a).
    (d) Relationship to Auction.--
            (1) Insufficient allowances.--If the allowances available 
        for agricultural sequestration under subsection (c) are 
        insufficient to enable the allocations required under the 
        program established under subsection (b) to be made, the 
        additional required allowances shall be deducted from 
        allowances available for auction under section 208.
            (2) Surplus allowances.--If the Secretary of Agriculture 
        does not allocate under this subsection all of the allowances 
        available for agricultural sequestration, any unallocated 
        allowances shall be added to the allowances available for 
        auction under section 208.
    (e) Education and Outreach Services.--The Secretary of Agriculture, 
acting through the Cooperative State Research, Education, and Extension 
Service, shall carry out a program to provide--
            (1) education and outreach services to agricultural 
        producers relating to--
                    (A) the carbon sequestering ability of soil by 
                region, plant type, soil type, cropping practice, and 
                water availability;
                    (B) the soil and environmental benefits of carbon 
                sequestration;
                    (C) the transition to carbon sequestering soil 
                techniques;
                    (D) other agricultural sector greenhouse gas 
                emission reduction activities; and
                    (E) the rules and earning potential of 
                participating in private and public carbon trading 
                systems; and
            (2) education and outreach services to aggregators relating 
        to--
                    (A) the management of carbon credits for 
                agricultural producers; and
                    (B) the assistance provided to agricultural 
                producers for the management required for carbon 
                trading systems.
    (f) Competitive Grants.--
            (1) In general.--The Secretary of Agriculture shall carry 
        out a program to provide competitive grants to conduct 
        research, education, and outreach service projects under this 
        section within and outside of the Department of Agriculture.
            (2) Priority.--In making grants under paragraph (1), the 
        Secretary of Agriculture shall give priority to community 
        organizations and producer groups.
            (3) Limitations.--
                    (A) Research projects.--The maximum amount of a 
                grant awarded for a research project under this 
                subsection shall be $500,000.
                    (B) Educational and outreach projects.--The maximum 
                amount of a grant awarded for an education or outreach 
                project under this subsection shall be $50,000.
            (4) Funding.--Of the funds of the Energy Technology 
        Deployment Fund, the Secretary of Agriculture shall use to 
        carry out this subsection, without further appropriation, 
        $10,000,000 for each of fiscal years 2008 through 2013, to 
        remain available until expended.

SEC. 206. ALLOCATION FOR EARLY REDUCTIONS.

    (a) Establishment.--
            (1) In general.--The President shall establish, by rule, a 
        program under which the President may distribute to any entity 
        that carries out a project to reduce or sequester greenhouse 
        gas emissions before the initial allocation period a quantity 
        of allowances that reflects the actual emissions reductions or 
        net sequestration of the project, as determined by the 
        President.
            (2) Insufficient allowances.--The President shall establish 
        procedures for distribution of allowances if the total quantity 
        of eligible early reductions exceeds the quantity of allowances 
        available under subsection (b).
    (b) Available Allowances.--The total quantity of allowances 
distributed under subsection (a) may not exceed the product obtained by 
multiplying--
            (1) the total number of allowances issued for the calendar 
        year under section 101(a); and
            (2) the percentage available for early reduction allowances 
        for the calendar year under section 201(a).
    (c) Eligibility.--The President may distribute allowances only for 
early reduction projects that--
            (1) are consistent with maintaining the environmental 
        integrity of the program under this Act; and
            (2) were reported under--
                    (A) the Voluntary Reporting of Greenhouse Gases 
                Program of the Energy Information Administration under 
                section 1605(b) of the Energy Policy Act of 1992 (42 
                U.S.C. 13385(b));
                    (B) the Climate Leaders Program of the 
                Environmental Protection Agency; or
                    (C) a State-administered or privately administered 
                registry that includes early reduction actions not 
                covered under the programs described in subparagraph 
                (A) or (B).

SEC. 207. ALLOCATION OF CARBON CAPTURE AND SEQUESTRATION BONUS 
              ALLOWANCES.

    (a) Bonus Allowances for Near-Term Geological Sequestration 
Projects.--
            (1) Establishment.--
                    (A) In general.--The President shall establish, by 
                rule, a demonstration program under which the President 
                shall encourage near-term development of certain 
                geological sequestration projects by distributing bonus 
                allowances to entities that implement the projects.
                    (B) Additional allowances.--The distribution of 
                bonus allowances shall be in addition to any credits 
                distributed for the projects under section 302.
            (2) Qualifying projects.--To be eligible for bonus 
        allowances under this subsection, a project shall--
                    (A) comply with such procedures as the President 
                may establish for crediting geological sequestration 
                projects under sections 302 and 303;
                    (B) sequester carbon dioxide emissions resulting 
                from electric power generation; and
                    (C) have begun operation during the period 
                beginning January 1, 2008, and ending December 31, 
                2030.
            (3) Allocation of bonus allowances.--Each calendar year, 
        the President shall distribute bonus allowances to each 
        qualifying project under this subsection in a quantity equal to 
        the product obtained by multiplying the number of tons 
        sequestered by the project and the bonus allowance rate for 
        that calendar year as provided in the following table:

----------------------------------------------------------------------------------------------------------------
                                                                                                        Bonus
                                           Calendar Year                                              Allowance
                                                                                                         Rate
----------------------------------------------------------------------------------------------------------------
2012                                                                                                         3.5
----------------------------------------------------------------------------------------------------------------
2013                                                                                                         3.5
----------------------------------------------------------------------------------------------------------------
2014                                                                                                         3.5
----------------------------------------------------------------------------------------------------------------
2015                                                                                                         3.5
----------------------------------------------------------------------------------------------------------------
2016                                                                                                         3.5
----------------------------------------------------------------------------------------------------------------
2017                                                                                                         3.5
----------------------------------------------------------------------------------------------------------------
2018                                                                                                         3.3
----------------------------------------------------------------------------------------------------------------
2019                                                                                                         3.1
----------------------------------------------------------------------------------------------------------------
2020                                                                                                         2.9
----------------------------------------------------------------------------------------------------------------
2021                                                                                                         2.7
----------------------------------------------------------------------------------------------------------------
2022                                                                                                         2.5
----------------------------------------------------------------------------------------------------------------
2023                                                                                                         2.3
----------------------------------------------------------------------------------------------------------------
2024                                                                                                         2.1
----------------------------------------------------------------------------------------------------------------
2025                                                                                                         1.9
----------------------------------------------------------------------------------------------------------------
2026                                                                                                         1.7
----------------------------------------------------------------------------------------------------------------
2027                                                                                                         1.5
----------------------------------------------------------------------------------------------------------------
2028                                                                                                         1.3
----------------------------------------------------------------------------------------------------------------
2029                                                                                                         1.1
----------------------------------------------------------------------------------------------------------------
2030                                                                                                         0.9
----------------------------------------------------------------------------------------------------------------
2031                                                                                                         0.7
----------------------------------------------------------------------------------------------------------------
2032                                                                                                         0.5
----------------------------------------------------------------------------------------------------------------
2033                                                                                                         0.5
----------------------------------------------------------------------------------------------------------------
2034                                                                                                         0.5
----------------------------------------------------------------------------------------------------------------
2035                                                                                                         0.5
----------------------------------------------------------------------------------------------------------------
2036                                                                                                         0.5
----------------------------------------------------------------------------------------------------------------
2037                                                                                                         0.5
----------------------------------------------------------------------------------------------------------------
2038                                                                                                         0.5
----------------------------------------------------------------------------------------------------------------
2039                                                                                                         0.5
----------------------------------------------------------------------------------------------------------------
2040                                                                                                         0.0
----------------------------------------------------------------------------------------------------------------

            (4) 10-year limit.--A qualifying project may receive annual 
        bonus allowances under this subsection only for the first 10 
        years of operation.
            (5) Relationship to auction.--
                    (A) Insufficient bonus allowances.--If the bonus 
                allowances available for geological sequestration (as 
                determined by multiplying the total number of 
                allowances issued for a calendar year under section 
                101(a) and the percentage for geological sequestration 
                under section 201(a)) are insufficient to enable the 
                allocations required under paragraph (3) to be made, 
                the additional required allowances shall be deducted 
                from allowances available for auction under section 
                208.
                    (B) Surplus bonus allowances.--If the President 
                does not allocate under this subsection all of the 
                allowances available for geological sequestration, any 
                unallocated allowances shall be added to the allowances 
                available for auction under section 208.
    (b) Report on Geological Sequestration Projects.--Not later than 1 
year after the date of enactment of this Act, the President shall 
submit to Congress a report on the environmental, health, and safety 
issues surrounding the long-term storage of large quantities of carbon 
dioxide emissions in geological formations, including any legislative 
recommendations to address liability for releases of carbon dioxide 
emissions from the formations.

SEC. 208. AUCTION OF ALLOWANCES FOR TECHNOLOGY, ADAPTATION, AND 
              ASSISTANCE PROGRAMS.

    (a) Procedure.--The President shall establish, by rule, a procedure 
for the auction of allowances for each calendar year in accordance with 
this section.
    (b) Base Quantity.--Subject to subsection (c), the base quantity of 
allowances to be auctioned for a calendar year shall be the product 
obtained by multiplying--
            (1) the total number of allowances issued for the calendar 
        year under section 101(a); and
            (2) the percentage for technology, adaptation, and low-
        income household assistance for the calendar year under section 
        201(a).
    (c) Adjustments to Number of Allowances Auctioned.--For any 
calendar year, the quantity of allowances shall be equal to the base 
quantity of allowances determined pursuant to subsection (b)--
            (1) minus any excess allowances needed to--
                    (A) allocate allowances to a new entrant facility 
                under section 202(b)(3);
                    (B) allocate allowances to a new entrant 
                manufacturing facility under section 203(f);
                    (C) allocate allowances for an agricultural 
                sequestration project under section 205; or
                    (D) allocate carbon capture and sequestration bonus 
                allowances under section 207(a); and
            (2) plus any allowances that were--
                    (A) available for allocation by the President under 
                section 201(b) for the calendar year but not 
                distributed;
                    (B) available for allocation for the proceeding 
                calendar year for new entrant facilities under section 
                202(b)(3) but not distributed during that calendar 
                year;
                    (C) returned to the President by the owner or 
                operator of a shut down eligible manufacturing facility 
                under section 203(e);
                    (D) available for allocation for the preceding 
                calendar year for new entrant manufacturing facilities 
                under section 203(f) but not distributed during that 
                calendar year;
                    (E) returned to the President by a State under 
                section 204(b)(3);
                    (F) available during the preceding calendar year 
                for allocation to an agricultural project under section 
                205 but not distributed during that calendar year; or
                    (G) available during the preceding calendar year 
                for allocation as a carbon capture and sequestration 
                bonus allowance under section 207(a) but not 
                distributed during that calendar year.
    (d) Allocation of Reduction or Increase.--Any reduction or increase 
in auction allowances under subsection (c) shall be allocated among 
technology, adaptation, and low-income household assistance in the same 
ratio as the base quantity of allowances is allocated between 
technology, adaptation, and low-income household assistance under 
section 201(a).
    (e) Schedule.--The auction of allowances shall be held on the 
following schedule:
            (1) In 2009, the President shall auction--
                    (A) \1/2\ of the allowances available for auction 
                for 2012; and
                    (B) \1/2\ of the allowances available for auction 
                for 2013.
            (2) In 2010, the President shall auction \1/2\ of the 
        allowances available for auction for 2014.
            (3) In 2011, the President shall auction \1/2\ of the 
        allowances available for auction for 2015.
            (4) In 2012 and each subsequent calendar year, the 
        President shall auction--
                    (A) \1/2\ of the allowances available for auction 
                for that calendar year; and
                    (B) \1/2\ of the allowances available for auction 
                for the calendar year that is 4 calendar years after 
                that calendar year.
    (f) Auction Proceeds.--
            (1) Establishment of funds.--There are established in the 
        Treasury the following funds:
                    (A) The Energy Technology Deployment Fund.
                    (B) The Climate Adaptation Fund.
                    (C) The Energy Assistance Fund.
            (2) Deposit of funds.--Subject to paragraph (3), the 
        President shall deposit into the funds under paragraph (1) the 
        proceeds of auctions of allowances under this section, in the 
        same ratio as the base quantity of allowances for the 
        applicable year for technology, adaptation, and low-income 
        household assistance, respectively, under section 201(a).
            (3) Limitation.--Any auction proceeds that would otherwise 
        be deposited into the funds established under subparagraphs (A) 
        and (B) of paragraph (1) shall be treated as miscellaneous 
        receipts of the United States and deposited into the general 
        fund of the Treasury to the extent that the funds exceed--
                    (A) for calendar year 2009, $25,000,000,000; and
                    (B) for each subsequent year, the product obtained 
                by multiplying--
                            (i) the amount of the limitation 
                        established for the preceding year; by
                            (ii) the ratio described in section 
                        102(d)(2)(B).

                    TITLE III--PROVISION OF CREDITS

SEC. 301. CREDITS FOR ACTIVITIES THAT TAKE GREENHOUSE GAS PRECURSORS 
              OUT OF COMMERCE IN THE UNITED STATES.

    (a) In General.--The President shall establish, by rule, a program 
under which the President distributes credits to United States entities 
for certain downstream activities in accordance with this section.
    (b) Use of Fuels as Feedstocks.--If the President determines that 
an entity has used a covered fuel (other than coal) as a feedstock in 
calendar year 2012 or any calendar year thereafter, so that the carbon 
dioxide associated with the covered fuel will not be emitted, the 
President shall distribute to that entity a quantity of credits equal 
to the quantity of covered fuel used as feedstock by the entity during 
that calendar year, measured in carbon dioxide equivalents.
    (c) Exporters of Covered Fuel.--If the President determines that an 
entity has exported covered fuel (other than coal) (including exports 
of natural gas from Alaska to Canada for reimportation into the United 
States) in calendar year 2012 or any calendar year thereafter, the 
President shall distribute to that entity a quantity of credits equal 
to the quantity of covered fuel exported by the entity during that 
calendar year, measured in carbon dioxide equivalents.
    (d) Other Exporters.--If the President determines that an entity 
has exported hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, 
or nitrous oxide in calendar year 2012 or any calendar year thereafter, 
the President shall distribute to that entity a quantity of credits 
equal to the volume of hydrofluorocarbons, perfluorocarbons, sulfur 
hexafluoride, or nitrous oxide exported by the entity during that 
calendar year, measured in carbon dioxide equivalents.
    (e) Hydrofluorocarbon Destruction.--If the President determines 
that an entity has destroyed hydrofluorocarbons in calendar year 2012 
or any calendar year thereafter, the President shall distribute to that 
entity a quantity of credits equal to the volume of hydrofluorocarbons 
destroyed by the entity during that calendar year, measured in carbon 
dioxide equivalents.

SEC. 302. CREDITS FOR CARBON DIOXIDE SEQUESTRATION.

    If the President determines that an entity has sequestered in 
calendar year 2012 or any calendar year thereafter carbon dioxide 
emissions in a geological formation in a manner the President 
determines will achieve long-term greenhouse gas mitigation benefits, 
the President shall distribute to that entity a quantity of credits 
equal to the quantity of carbon dioxide sequestered by the entity 
during that calendar year.

SEC. 303. CREDITS FOR PROJECTS THAT OFFSET OTHER GREENHOUSE GAS 
              EMISSIONS.

    (a) Establishment.--The President shall establish, by rule, a 
program under which the President shall distribute credits to entities 
that carry out offset projects in the United States that--
            (1)(A) reduce any greenhouse gas emissions that are not 
        covered greenhouse gas emissions in calendar year 2012 or any 
        calendar year thereafter; or
            (B) sequester a greenhouse gas in calendar year 2012 or any 
        calendar year thereafter;
            (2) meet the requirements of section 601(c); and
            (3) are consistent with maintaining the environmental 
        integrity of the program under this Act.
    (b) Categories of Offset Projects Eligible for Streamlined 
Procedures.--
            (1) In general.--The program established under this section 
        shall include the use of streamlined procedures for 
        distributing credits to categories of projects for which the 
        President determines there are broadly accepted standards or 
        methodologies for quantifying and verifying the long-term 
        greenhouse gas emission mitigation benefits of the projects.
            (2) Categories of projects.--The streamlined procedures 
        described in paragraph (1) shall apply to--
                    (A) landfill methane use projects;
                    (B) animal waste or municipal wastewater methane 
                use projects;
                    (C) projects to reduce sulfur hexafluoride 
                emissions from transformers;
                    (D) coal mine methane use projects; and
                    (E) such other categories of projects as the 
                President may specify by rule.
    (c) Distribution of Credits.--
            (1) In general.--If the President determines that an entity 
        has carried out an offset project in calendar year 2012 or any 
        calendar year thereafter that is eligible under this section, 
        the President shall distribute to that entity a quantity of 
        credits equal to the volume of greenhouse gas emissions reduced 
        or sequestered during that calendar year, measured in carbon 
        dioxide equivalents.
            (2) Unclassified projects.--With respect to an offset 
        project that is not classified within any project category 
        described in subsection (b), the President may distribute less 
        than 1 credit for each ton of greenhouse gas emissions reduced 
        or sequestered, measured in carbon dioxide equivalents.
    (d) Ineligible Offset Projects.--An offset project shall not be 
eligible to receive a credit under this section if the offset project 
is eligible to receive credits or allowances under section 205, 206, 
207, 301, or 302.

       TITLE IV--TECHNOLOGY, ADAPTATION, AND ASSISTANCE PROGRAMS

SEC. 401. EARLY TECHNOLOGY DEPLOYMENT PROGRAMS.

    (a) In General.--
            (1) Allocation.--Beginning in fiscal year 2010, the 
        Secretary shall use 80 percent of the funds deposited in the 
        Energy Technology Deployment Fund (other than funds used under 
        sections 102(i)(3) and 205(f)(4)), without further 
        appropriation or fiscal year limitation, as follows:
                    (A) 45 percent of the funds shall be used to carry 
                out the zero- or low-carbon energy technologies program 
                under subsection (b).
                    (B) 35 percent of the funds shall be used as 
                follows:
                            (i) 28 percent shall be used to carry out 
                        the advanced coal and sequestration 
                        technologies program under subsection (c).
                            (ii) 7 percent shall be used to carry out 
                        the cellulosic biomass ethanol and municipal 
                        solid waste technology deployment programs.
                    (C) 20 percent shall be used to carry out the 
                advanced technology vehicles manufacturing incentive 
                program under subsection (e).
            (2) Adjustment of program funding proportions.--
                    (A) Review.--Not later than September 30, 2013, the 
                Secretary shall enter into appropriate arrangements 
                with the National Academy of Sciences to review, every 
                10 years, the funding categories and percentages under 
                this subsection to determine if the categories and 
                percentages are responsive to the greatest needs and 
                opportunities for deployment of advanced energy 
                technology to mitigate climate change.
                    (B) Adjustment.--On receipt of the report by the 
                National Academy of Sciences, the Secretary may, by 
                rule, adjust the funding categories and percentages 
                under this subsection to implement the recommendations 
                by the National Academy of Sciences.
    (b) Zero- or Low-Carbon Energy Technologies Deployment.--
            (1) Definitions.--In this subsection:
                    (A) Energy savings.--The term ``energy savings'' 
                means megawatt-hours of electricity or million British 
                thermal units of natural gas saved by a product, in 
                comparison to projected energy consumption under the 
                energy efficiency standard applicable to the product.
                    (B) High-efficiency consumer product.--The term 
                ``high-efficiency consumer product'' means a covered 
                product to which an energy conservation standard 
                applies under section 325 of the Energy Policy and 
                Conservation Act (42 U.S.C. 6295), if the energy 
                efficiency of the product exceeds the energy efficiency 
                required under the standard.
                    (C) Zero- or low-carbon generation.--The term 
                ``zero- or low-carbon generation'' means generation of 
                electricity by an electric generation unit that--
                            (i) emits no carbon dioxide into the 
                        atmosphere, or is fossil-fuel fired and emits 
                        into the atmosphere not more than 250 pounds of 
                        carbon dioxide per megawatt-hour (after 
                        adjustment for any carbon dioxide from the unit 
                        that is geologically sequestered); and
                            (ii) was placed into commercial service 
                        after the date of enactment of this Act.
            (2) Financial incentives program.--During each fiscal year 
        beginning on or after October 1, 2008, the Secretary shall 
        competitively award financial incentives under this subsection 
        in the following technology categories:
                    (A) Production of electricity from new zero- or 
                low-carbon generation.
                    (B) Manufacture of high-efficiency consumer 
                products.
            (3) Requirements.--
                    (A) In general.--The Secretary shall make awards 
                under this subsection to producers of new zero- or low-
                carbon generation and to manufacturers of high-
                efficiency consumer products--
                            (i) in the case of producers of new zero- 
                        or low-carbon generation, based on the bid of 
                        each producer in terms of dollars per megawatt-
                        hour of electricity generated; and
                            (ii) in the case of manufacturers of high-
                        efficiency consumer products, based on the bid 
                        of each manufacturer in terms of dollars per 
                        megawatt-hour or million British thermal units 
                        saved.
                    (B) Acceptance of bids.--
                            (i) In general.--In making awards under 
                        this subsection, the Secretary shall--
                                    (I) solicit bids for reverse 
                                auction from appropriate producers and 
                                manufacturers, as determined by the 
                                Secretary; and
                                    (II) award financial incentives to 
                                the producers and manufacturers that 
                                submit the lowest bids that meet the 
                                requirements established by the 
                                Secretary.
                            (ii) Factors for conversion.--
                                    (I) In general.--For the purpose of 
                                assessing bids under clause (i), the 
                                Secretary shall specify a factor for 
                                converting megawatt-hours of 
                                electricity and million British thermal 
                                units of natural gas to common units.
                                    (II) Requirement.--The conversion 
                                factor shall be based on the relative 
                                greenhouse gas emission benefits of 
                                electricity and natural gas 
                                conservation.
                    (C) Ineligible units.--A new unit for the 
                generation of electricity that uses renewable energy 
                resources shall not be eligible to receive an award 
                under this subsection if the unit receives renewable 
                energy credits under a Federal renewable portfolio 
                standard.
            (4) Forms of awards.--
                    (A) Zero- and low-carbon generators.--An award for 
                zero- or low-carbon generation under this subsection 
                shall be in the form of a contract to provide a 
                production payment for each year during the first 10 
                years of commercial service of the generation unit in 
                an amount equal to the product obtained by 
                multiplying--
                            (i) the amount bid by the producer of the 
                        zero- or low-carbon generation; and
                            (ii) the megawatt-hours estimated to be 
                        generated by the zero- or low-carbon generation 
                        unit each year.
                    (B) High-efficiency consumer products.--An award 
                for a high-efficiency consumer product under this 
                subsection shall be in the form of a lump sum payment 
                in an amount equal to the product obtained by 
                multiplying--
                            (i) the amount bid by the manufacturer of 
                        the high-efficiency consumer product; and
                            (ii) the energy savings during the 
                        projected useful life of the high-efficiency 
                        consumer product, not to exceed 10 years, as 
                        determined under rules issued by the Secretary.
    (c) Advanced Coal and Sequestration Technologies Program.--
            (1) Advanced coal technologies.--
                    (A) Definition of advanced coal generation 
                technology.--In this paragraph, the term ``advanced 
                coal generation technology'' means advanced coal-fueled 
                power plant technologies that--
                            (i) achieve a minimum efficiency of 30 
                        percent with respect to higher heating value of 
                        the feedstock after all parasitic requirements 
                        for carbon dioxide capture and compression to 
                        2,000 psia have been subtracted; and
                            (ii) provide for capture of a significant 
                        quantity of carbon dioxide emissions, as 
                        determined by the Secretary.
                    (B) Demonstration projects.--The Secretary shall 
                use \1/4\ of the funds provided to carry out this 
                subsection during each year to support demonstration 
                projects using advanced coal generation technology, 
                including retrofit technology that could be deployed on 
                existing coal generation facilities.
                    (C) Deployment incentives.--
                            (i) In general.--The Secretary shall use 
                        \1/4\ of the funds provided to carry out this 
                        subsection during each fiscal year to provide 
                        Federal financial incentives to facilitate the 
                        deployment of not more than 20 gigawatts of 
                        advanced coal generation technologies.
                            (ii) Administration.--In providing 
                        incentives under this subparagraph, the 
                        Secretary shall--
                                    (I) provide appropriate incentives 
                                for regulated investor-owned utilities, 
                                municipal utilities, electric 
                                cooperatives, and independent power 
                                producers, as determined by the 
                                Secretary; and
                                    (II) ensure that a range of the 
                                domestic coal types is employed in the 
                                facilities that receive incentives 
                                under this subparagraph.
                            (iii) Funding requirements.--
                                    (I) Sequestration activities.--The 
                                Secretary shall provide incentives only 
                                to projects that will capture and 
                                sequester emissions of carbon dioxide.
                                    (II) Storage agreement required.--
                                The Secretary shall require a binding 
                                storage agreement for the carbon 
                                dioxide captured in a project under 
                                this subsection, in a geologic storage 
                                project approved by the Secretary.
                                    (III) Projects using certain 
                                coals.--In providing incentives under 
                                this subparagraph, the Secretary shall 
                                set aside not less than 25 percent of 
                                any funds made available to carry out 
                                this paragraph for projects using lower 
                                rank coals, such as subbituminous coal 
                                and lignite.
                            (iv) Distribution of funds.--A project that 
                        receives an award under this subparagraph may 
                        elect 1 of the following Federal financial 
                        incentives:
                                    (I) A loan guarantee.
                                    (II) A cost-sharing grant for not 
                                more than 50 percent of the cost of the 
                                project.
                                    (III) Production payments of not 
                                more than 1.5 cents per kilowatt-hour 
                                of electric output during the first 10 
                                years of commercial service of the 
                                project.
                            (v) Limitation.--A project may not receive 
                        an award under this subsection if the project 
                        receives an award under subsection (d).
            (2) Sequestration.--
                    (A) In general.--The Secretary shall use \1/2\ of 
                the funds provided to carry out this subsection during 
                each fiscal year for large-scale geologic carbon 
                storage demonstration projects that use carbon dioxide 
                captured from facilities for the generation of 
                electricity using coal gasification or other advanced 
                coal combustion processes, including facilities that 
                receive assistance under paragraph (1).
                    (B) Project capital and operating costs.--The 
                Secretary shall provide assistance under this paragraph 
                to reimburse the project owner for a percentage of the 
                incremental project capital and operating costs of the 
                project that are attributable to carbon capture and 
                sequestration, as the Secretary determines to be 
                appropriate.
    (d) Fuel From Cellulosic Biomass.--
            (1) In general.--The Secretary shall provide deployment 
        incentives under this subsection to encourage a variety of 
        projects to produce transportation fuels from cellulosic 
        biomass, relying on different feedstocks in different regions 
        of the United States.
            (2) Project eligibility.--Incentives under this subsection 
        shall be provided on a competitive basis to projects that 
        produce fuels that--
                    (A) meet United States fuel and emissions 
                specifications;
                    (B) help diversify domestic transportation energy 
                supplies; and
                    (C) improve or maintain air, water, soil, and 
                habitat quality.
            (3) Incentives.--Incentives under this subsection may 
        consist of--
                    (A) loan guarantees for the construction of 
                production facilities and supporting infrastructure; or
                    (B) production payments through a reverse auction 
                in accordance with paragraph (4).
            (4) Reverse auction.--
                    (A) In general.--In providing incentives under this 
                subsection, the Secretary shall--
                            (i) prescribe rules under which producers 
                        of fuel from cellulosic biomass may bid for 
                        production payments under paragraph (3)(B); and
                            (ii) solicit bids from producers of 
                        different classes of transportation fuel, as 
                        the Secretary determines to be appropriate.
                    (B) Requirement.--The rules under subparagraph (A) 
                shall require that incentives shall be provided to the 
                producers that submit the lowest bid (in terms of cents 
                per gallon) for each class of transportation fuel from 
                which the Secretary solicits a bid.
    (e) Advanced Technology Vehicles Manufacturing Incentive Program.--
            (1) Definitions.--In this subsection:
                    (A) Advanced technology vehicle.--The term 
                ``advanced technology vehicle'' means a light duty 
                motor vehicle that meets--
                            (i) the Tier II Bin 5 emission standard 
                        established in rules prescribed by the 
                        Administrator of the Environmental Protection 
                        Agency under section 202(i) of the Clean Air 
                        Act (42 U.S.C. 7521(i)), or a lower numbered 
                        Bin emission standard;
                            (ii) any new emission standard for fine 
                        particulate matter prescribed by the 
                        Administrator under that Act; and
                            (iii) at least 125 percent of the average 
                        base year combined fuel economy, calculated on 
                        an energy-equivalent basis, for vehicles of a 
                        substantially similar footprint.
                    (B) Combined fuel economy.--The term ``combined 
                fuel economy'' means--
                            (i) the combined city-highway miles per 
                        gallon values, as reported in accordance with 
                        section 32908 of title 49, United States Code; 
                        and
                            (ii) in the case of an electric drive 
                        vehicle with the ability to recharge from an 
                        off-board source, the reported mileage, as 
                        determined in a manner consistent with the 
                        Society of Automotive Engineers recommended 
                        practice for that configuration, or a similar 
                        practice recommended by the Secretary, using a 
                        petroleum equivalence factor for the off-board 
                        electricity (as defined by the Secretary).
                    (C) Engineering integration costs.--The term 
                ``engineering integration costs'' includes the cost of 
                engineering tasks relating to--
                            (i) incorporating qualifying components 
                        into the design of advanced technology 
                        vehicles; and
                            (ii) designing new tooling and equipment 
                        for production facilities that produce 
                        qualifying components or advanced technology 
                        vehicles.
                    (D) Qualifying component.--The term ``qualifying 
                component'' means a component that the Secretary 
                determines to be--
                            (i) specially designed for advanced 
                        technology vehicles; and
                            (ii) installed for the purpose of meeting 
                        the performance requirements of advanced 
                        technology vehicles.
            (2) Manufacturer facility conversion awards.--The Secretary 
        shall provide facility conversion funding awards under this 
        subsection to automobile manufacturers and component suppliers 
        to pay 30 percent of the cost of--
                    (A) re-equipping or expanding an existing 
                manufacturing facility to produce--
                            (i) qualifying advanced technology 
                        vehicles; or
                            (ii) qualifying components; and
                    (B) engineering integration of qualifying vehicles 
                and qualifying components.
            (3) Period of availability.--
                    (A) In general.--An award under paragraph (2) shall 
                apply to--
                            (i) facilities and equipment placed in 
                        service after the date of enactment of this Act 
                        and before January 1, 2016; and
                            (ii) engineering integration costs incurred 
                        after the date of enactment of this Act.
    (f) International Technology Development.--
            (1) Funding.--Beginning in fiscal year 2010, the Secretary 
        of State shall, without further appropriation or fiscal year 
        limitation, use 20 percent of the funds deposited in the Energy 
        Technology Deployment Fund and any funds in the International 
        Technology Deployment Fund from the sale of international 
        reserve allowances under section 502(f)(4)(A), for purposes of 
        carrying out an international technology development program 
        under this subsection.
            (2) Report.--
                    (A) In general.--Not later than 1 year after the 
                date of enactment of this Act, the President shall 
                submit to Congress--
                            (i) a report on a strategy for leveraging 
                        funds available under this subsection to 
                        encourage the deployment of energy technology 
                        with low or no greenhouse gas emissions in key 
                        developing countries; and
                            (ii) legislative recommendations for 
                        carrying out the strategy.
                    (B) Targeting.--
                            (i) In general.--The report shall recommend 
                        targeted countries, priority technologies, and 
                        sectors.
                            (ii) Priority.--Priority shall be given to 
                        countries that the President determines are 
                        making substantial efforts to reduce the 
                        greenhouse gas emissions of the countries.
                    (C) Goals.--The recommendations in the report shall 
                be based on the dual goals of export promotion and 
                greenhouse gas reduction.
                    (D) Components.--Components of the strategy 
                described in the report may include--
                            (i) loan guarantees and other funding 
                        mechanisms;
                            (ii) cost sharing for demonstration 
                        projects;
                            (iii) information sharing and capacity 
                        building;
                            (iv) cooperative benchmarking efforts;
                            (v) joint research and development 
                        initiatives;
                            (vi) elimination of financing and market 
                        barriers; and
                            (vii) pursuing carbon reduction strategies 
                        that align with general development plans (such 
                        as using nuclear power, employing efficiency or 
                        fuel switching to reduce conventional 
                        pollution, or avoiding deforestation).
            (3) Implementation.--The program under this subsection, if 
        the program is approved by Congress by law, shall be 
        administered by the Secretary of State, in consultation with--
                    (A) the Secretary of Energy;
                    (B) the Secretary of Commerce;
                    (C) the Administrator of the United States Agency 
                for International Development;
                    (D) the United States Trade Representative; and
                    (E) the Administrator of the Environmental 
                Protection Agency.

SEC. 402. ADAPTATION PROGRAMS.

    (a) In General.--
            (1) Auction proceeds.--All proceeds from auctions deposited 
        into the Climate Adaptation Fund shall be made available, 
        without further appropriation or fiscal year limitation, for 
        the adaptation programs under this section.
            (2) Uses of funds.--Funds for adaptation shall be used as 
        follows:
                    (A) 25 percent shall be used by the President to 
                address climate change impacts on coastal regions of 
                the United States (other than regions for which funding 
                is received under subparagraph (B)).
                    (B) 25 percent shall be to address climate change 
                impacts on regions in the United States above 50 
                degrees North latitude, in accordance with a plan 
                submitted by such a region to the President, with up to 
                5 percent of the funds for those regions made available 
                for research on impacts of climate change on those 
                regions.
                    (C) 20 percent shall be used by the President to 
                address climate change impacts on natural resources in 
                the contiguous United States (other than in areas 
                described in subparagraphs (A) and (B)), with a 
                priority given to--
                            (i) studies or research within the Climate 
                        Change Science Program, including basic data 
                        acquisition and enhanced modeling systems, 
                        intended to better understand and predict the 
                        impacts to water supply of global climate 
                        change;
                            (ii) research and development of new 
                        technologies to reclaim impaired and 
                        nontraditional water supplies, including 
                        desalination technologies; and
                            (iii) providing an appropriate Federal 
                        cost-share through existing Federal programs to 
                        facilitate the planning, design, and 
                        construction of projects to conserve water or 
                        otherwise enhance water use efficiency, 
                        including facilities to reclaim and reuse 
                        wastewater.
                    (D) 30 percent shall be used for fish and wildlife 
                conservation programs, with the total funding under 
                this subparagraph divided as follows:
                            (i) 18 percent shall be transferred to the 
                        subaccount of the Treasury known as the 
                        Wildlife Conservation and Restoration Account 
                        established by section 3(a)(2) of the Pittman-
                        Robertson Wildlife Restoration Act (16 U.S.C. 
                        669b(a)(2)) in accordance with subsection (b).
                            (ii) 18 percent shall be made available to 
                        States through the Federal aid to wildlife 
                        restoration fund established under section 
                        3(a)(1) of the Pittman-Robertson Wildlife 
                        Restoration Act (16 U.S.C. 669b(a)(1))) and the 
                        Dingell-Johnson Sport Fish Restoration Act 
                        (commonly known as the ``Wallop-Breaux Act'') 
                        (16 U.S.C. 777 et seq.) in accordance with 
                        subsection (c).
                            (iii) 28 percent shall be available for 
                        obligation or expenditure in accordance with 
                        section 5 of the Land and Water Conservation 
                        Fund Act of 1965 (16 U.S.C. 460l-7) in 
                        accordance with subsection (d).
                            (iv) 36 percent shall be transferred to the 
                        Treasury subaccount described in subsection 
                        (e)(2) for the purposes specified in subsection 
                        (e)(3).
            (3) Distribution rules.--The President shall establish, by 
        rule, a procedure to distribute the adaptation assistance 
        available for each calendar year under subparagraphs (A) and 
        (C) of paragraph (2).
            (4) Use of funds.--Adaptation assistance available for each 
        calendar year under subparagraphs (A) and (B) of paragraph (2) 
        shall be used only for--
                    (A) coastal and estuarine land protection;
                    (B) mitigation, restoration, protection, and 
                relocation of threatened coastal communities;
                    (C) coastal damage prevention and restoration, 
                including infrastructure replacement and construction;
                    (D) research and deployment of technologies 
                designed to address climate impacts; or
                    (E) construction of energy or transportation 
                infrastructure capable of reducing carbon emissions.
            (5) Report.--
                    (A) In general.--Not later than September 30, 2008, 
                and annually thereafter, a State receiving adaptation 
                assistance under this subsection shall submit to the 
                appropriate congressional committees, the Department of 
                Commerce, Department of the Interior, Environmental 
                Protection Agency, and the Council on Environmental 
                Quality a report that describes actions taken to carry 
                out this subsection.
                    (B) Content.--The report shall include--
                            (i) the amount of obligations and 
                        expenditures to carry out this subsection;
                            (ii) a list of research questions and the 
                        results of research undertaken; and
                            (iii) a description of any project 
                        undertaken with the use of funds under this 
                        subsection.
    (b) State Wildlife Plans.--
            (1) In general.--Funds made available under subsection 
        (a)(2)(D)(i) shall be used by States to improve the ability of 
        fish and wildlife to survive the effects of climate change by--
                    (A) developing assessment information, conducting 
                research, and undertaking monitoring of fish and 
                wildlife and the habitat of fish and wildlife;
                    (B) developing and undertaking projects to manage, 
                conserve, and restore individual species of fish and 
                wildlife and populations; and
                    (C) implementing actions to manage, conserve, and 
                restore fish and wildlife habitat.
            (2) Integrating climate change considerations into state 
        comprehensive wildlife conservation strategies.--Effective 
        beginning on the date of enactment of this Act, each State 
        shall account for anticipated changes in climate and 
        anticipated changes in the natural environment in any revisions 
        and updates to the comprehensive wildlife conservation strategy 
        required by section 4(d)(1)(D) of the Pittman-Robertson 
        Wildlife Restoration Act (16 U.S.C. 669c(d)(1)(D)) undertaken 
        after the date of enactment of this Act.
            (3) State matching requirement.--Notwithstanding any other 
        provision of law, the State matching requirement for use of 
        funds made available under subsection (a)(2)(D)(i) shall be 10 
        percent of the cost of the projects carried out under this 
        subsection.
    (c) State Wildlife Conservation Programs.--
            (1) In general.--Funds made available under subsection 
        (a)(2)(D)(ii) shall be used by States to improve the ability of 
        game and other species of fish and wildlife to survive the 
        effects of climate change by--
                    (A) developing assessment information, conducting 
                research, and undertaking monitoring of game and other 
                species of fish and wildlife and the habitat of the 
                game and other species of fish and wildlife;
                    (B) developing and undertaking projects to manage, 
                conserve, and restore individual game and other species 
                of fish and wildlife and populations; and
                    (C) implementing actions to manage, conserve, and 
                restore fish and wildlife habitat.
            (2) Coordinating game species climate change conservation 
        efforts with state comprehensive wildlife conservation 
        strategies.--A State shall coordinate, to the maximum extent 
        practicable, the efforts of the State under this section to 
        conserve game species in light of climate change impacts on the 
        natural environment with work carried out under the 
        comprehensive wildlife conservation strategy of the State 
        required under section 4(d)(1)(D) of the Pittman-Robertson 
        Wildlife Restoration Act (16 U.S.C. 669c(d)(1)(D)).
            (3) Matching requirement.--Notwithstanding any other 
        provision of law, the State matching requirement for use of 
        funds made available under subsection (a)(2)(D)(ii) shall be 10 
        percent of the cost of the projects carried out under this 
        subsection.
            (4) Savings clause.--Nothing in this Act diminishes or 
        affects the authorization by Congress to appropriate funds to 
        carry out the purposes of the Pittman-Robertson Wildlife 
        Restoration Act (16 U.S.C. 669 et seq.) and the Dingell-Johnson 
        Sport Fish Restoration Act (commonly known as the ``Wallop-
        Breaux Act'') (16 U.S.C. 777 et seq.).
    (d) Land and Water Conservation Fund.--
            (1) In general.--Funds made available under subsection 
        (a)(2)(D)(iii) shall--
                    (A) be available without further appropriation;
                    (B) remain available until expended; and
                    (C) be in addition to any other funds made 
                available from the land and water conservation fund 
                established under section 2 of the Land and Water 
                Conservation Fund Act of 1965 (16 U.S.C. 460l-5).
            (2) Allocation of funds.--Of funds made available under 
        subsection (a)(2)(D)(iii)--
                    (A) 50 percent shall be used for Federal land 
                acquisition purposes as provided in section 7 of the 
                Land and Water Conservation Fund Act of 1965 (16 U.S.C. 
                460l-9); and
                    (B) 50 percent shall be used for financial 
                assistance to States as provided in section 6 of the 
                Land and Water Conservation Fund Act of 1965 (16 U.S.C. 
                460l-8).
            (3) Federal land acquisition projects.--
                    (A) Priority list.--The President shall transmit, 
                as part of the annual budget proposal, a priority list 
                for Federal land acquisition projects to be funded 
                under this section.
                    (B) Availability.--Funds for Federal land 
                acquisition provided under paragraph (2) shall be made 
                available, without further appropriation, 15 days after 
                the date Congress adjourns sine die for each year, for 
                the projects identified on the priority list of the 
                President, unless prior to that date, legislation is 
                enacted establishing a different priority list.
                    (C) Sites under jurisdiction of secretary of the 
                interior and secretary of agriculture.--
                            (i) In general.--In developing the annual 
                        land acquisition priority list, the President 
                        shall require the Secretary of the Interior and 
                        the Secretary of Agriculture to develop the 
                        priority list for the sites under the 
                        jurisdiction of each Secretary.
                            (ii) Consultation.--The Secretaries shall 
                        prepare the lists in consultation with the head 
                        of each affected bureau or agency, taking into 
                        account the best professional judgment 
                        regarding the land acquisition priorities and 
                        policies of each bureau or agency.
                    (D) Areas.--Acquisition of land or interests in 
                land under this section shall be limited to 
                acquisitions within the external boundaries of--
                            (i) a unit of the National Park System;
                            (ii) a unit of the National Wildlife Refuge 
                        System;
                            (iii) a federally administered component of 
                        the National Wild and Scenic Rivers System;
                            (iv) a component of the National Trails 
                        System;
                            (v) a component of the National Wilderness 
                        Preservation System;
                            (vi) a National Monument;
                            (vii) any part of the National Landscape 
                        Conservation System established by Congress or 
                        if the boundary has been approved by Congress;
                            (viii) a National Conservation Area; or
                            (ix) a National Recreation Area 
                        administered by the Secretary of Agriculture.
    (e) National Climate Change Conservation Wildlife Strategy.--
            (1) Development of strategy.--
                    (A) In general.--Not later than 2 years of the date 
                of enactment of this Act, the Secretary of the 
                Interior, in consultation and coordination with the 
                Secretaries of Agriculture and Commerce, the National 
                Research Council Science Advisory Board, State fish and 
                wildlife agencies, Indian tribes, conservation 
                organizations, and the public, shall develop a National 
                Climate Change Conservation Wildlife Strategy.
                    (B) Contents.--The strategy shall--
                            (i) be updated at least once every 5 years;
                            (ii) be based on the best available 
                        science, as identified by the Science Advisory 
                        Board of the National Research Council;
                            (iii) identify roles and actions for each 
                        participating Federal agency and how that 
                        strategy will work to complement State efforts, 
                        including coordination with State Comprehensive 
                        Wildlife Conservation Strategies and other 
                        wildlife conservation plans;
                            (iv) identify and provide for monitoring of 
                        all fish and wildlife populations affected by 
                        climate change, including game and nongame 
                        species, habitat at risk, and wildlife 
                        mitigation strategies;
                            (v) establish priorities for the 
                        conservation of game and nongame fish and 
                        wildlife, based on which actions will have the 
                        greatest long-term benefit to the species and 
                        the ecosystem, considering the likely effects 
                        of climate change, including sea level rise and 
                        coastal inundation, and shifts in local and 
                        regional climate regimes;
                            (vi) provide for the national climate 
                        change and wildlife science centers of the 
                        United States Geological Survey to research 
                        impacts on wildlife and mechanisms for 
                        adaptation, and to support Federal land 
                        management agencies;
                            (vii) be implemented on Federal land and on 
                        private land through Department of Agriculture 
                        land conservation programs; and
                            (viii) be implemented through existing 
                        Federal wildlife programs.
            (2) Wildlife conservation treasury subaccount.--
                    (A) Establishment.--There is established a Climate 
                Change Wildlife Conservation subaccount in the Treasury 
                to receive transfers of adaptation funds under 
                subsection (a)(2)(D)(iv).
                    (B) Use.--The Secretary of the Interior shall have 
                exclusive use of the funds in the Wildlife Conservation 
                subaccount for the purposes specified in paragraph (3).
            (3) Implementation of the climate change wildlife 
        conservation strategy.--The Secretary of the Interior shall use 
        funds in the Climate Change Wildlife Conservation subaccount as 
        follows:
                    (A) 4 percent for development of the National 
                Climate Change Conservation Wildlife Strategy, except 
                that if the Secretary of the Interior needs less than 2 
                percent for that purpose, the Secretary may reallocate 
                unneeded funds to implement the Strategy.
                    (B) 8 percent for monitoring under the National 
                Climate Change Conservation Wildlife Strategy, except 
                that if the Secretary of the Interior needs less than 4 
                percent for that purpose, the Secretary may reallocate 
                unneeded funds to implement the Strategy.
                    (C) 88 percent for implementation of the National 
                Climate Change Conservation Wildlife Strategy through 
                existing Federal programs, including not less than--
                            (i) 16 percent to the Secretary of the 
                        Interior for--
                                    (I) implementation of the North 
                                American Wetlands Conservation Act (16 
                                U.S.C. 4401 et seq.);
                                    (II) acquisition of easements by 
                                the Fish and Wildlife Service; and
                                    (III) implementation of a migratory 
                                bird climate change-related strategy;
                            (ii) 26 percent to the Secretary of 
                        Agriculture--
                                    (I) for implementation of the 
                                climate change mitigation strategy of 
                                the Secretary on National Forest land; 
                                and
                                    (II) to supplement funding for 
                                private land conservation programs;
                            (iii) 26 percent to the Secretary of the 
                        Interior for implementation of the climate 
                        mitigation strategy of the Secretary--
                                    (I) on Bureau of Land Management 
                                land;
                                    (II) in units of the National 
                                Wildlife Refuge System;
                                    (III) in units of the National Park 
                                System; and
                                    (IV) in areas to improve fish 
                                passage and dam removal.
                            (iv) 10 percent to the Secretary of the 
                        Interior for--
                                    (I) the National Fish Habitat Plan;
                                    (II) endangered species program of 
                                the Fish and Wildlife Services; and
                                    (III) multinational species 
                                conservation funds.
                            (v) 10 percent to the Secretary of Commerce 
                        for conservation programs of the National 
                        Marine Fisheries Service for programs to--
                                    (I) sustain fisheries;
                                    (II) protect marine species; and
                                    (III) conserve marine habitat.

SEC. 403. ASSISTANCE PROGRAMS.

    (a) Auction Proceeds.--In addition to any other amounts that are 
made available for the programs, all proceeds from auctions deposited 
into the Energy Assistance Fund shall be made available, without 
further appropriation or fiscal year limitation, to the following 
programs in the following ratios:
            (1) \1/2\ of the funds to the low-income home energy 
        assistance program established under the Low-Income Home Energy 
        Assistance Act of 1981 (42 U.S.C. 8621 et seq.);
            (2) \1/4\ of the funds to the Weatherization Assistance 
        Program for Low-Income Persons established under part A of 
        title IV of the Energy Conservation and Production Act (42 
        U.S.C. 6861 et seq.); and
            (3) \1/4\ of the funds to the rural energy assistance 
        program established under subsection (b).
    (b) Rural Energy Assistance Program.--The Secretary shall use funds 
made available under subsection (a)(3) to provide financial assistance 
to promote the availability of reasonably priced electricity in off-
grid rural regions in which electricity prices exceed 150 percent of 
the national average.

         TITLE V--PERIODIC REVIEW AND INTERNATIONAL LEADERSHIP

SEC. 501. EXECUTIVE BRANCH AND CONGRESSIONAL REVIEW OF PROGRAM.

    (a) Interagency Review.--
            (1) In general.--Not later than January 1, 2013, the 
        President shall establish an interagency group--
                    (A) to conduct the annual review described in 
                section 502(d) regarding comparable action by foreign 
                countries;
                    (B) not later than January 1, 2014, to make any 
                recommendations with respect to foreign credits and 
                international offset projects under subsections (d) and 
                (e); and
                    (C) to conduct 5-year reviews under paragraph (2).
            (2) 5-year review.--
                    (A) In general.--Not later than January 1, 2016, 
                and every 5 years thereafter, the interagency group 
                shall submit to the President the results of the 
                applicable review conducted under paragraph (1)(C).
                    (B) Required contents.--Each 5-year review shall 
                include--
                            (i) an analysis of whether each of the 5 
                        largest trading partners of the United States, 
                        as of the date on which the review is 
                        conducted, has taken comparable action (as 
                        defined in section 502(a));
                            (ii) an analysis of whether the programs 
                        established under this Act have contributed to 
                        an increase in electricity imports from Canada 
                        or Mexico;
                            (iii) an analysis of the status of the best 
                        available science and the status of 
                        technologies to reduce, sequester, or avoid 
                        greenhouse gas emissions based on reports 
                        provided by the National Academy of Sciences 
                        under paragraph (3); and
                            (iv) an analysis of the energy security 
                        implications of this Act, including the impact 
                        on fuel diversity, energy infrastructure, and 
                        other relevant factors.
                    (C) Permitted contents.--Each 5-year review may 
                include an analysis of--
                            (i) the feasibility of regulating owners or 
                        operators of entities that--
                                    (I) emit nonfuel-related greenhouse 
                                gases; and
                                    (II) that are not subject to this 
                                Act;
                            (ii) whether the percentage of allowances 
                        for any calendar year that are auctioned, 
                        allocated, or devoted to other purposes under 
                        title II should be modified;
                            (iii) whether regulated entities should be 
                        allowed to submit credits issued under foreign 
                        greenhouse gas regulatory programs in lieu of 
                        allowances under section 102;
                            (iv) whether the President should 
                        distribute credits for offset projects carried 
                        out outside the United States that do not 
                        receive credit under a foreign greenhouse gas 
                        program;
                            (v) whether and how the value of allowances 
                        or credits banked for use during a future 
                        calendar year should be discounted if the TAP 
                        price increases or the elimination of the TAP 
                        provision are recommended under subsection 
                        (b)(2)(C)(ii); and
                            (vi) such other issues as the President may 
                        direct.
            (3) National academy of sciences reports.--As soon as 
        practicable after the date of enactment of this Act, the 
        President shall offer to enter into an agreement with the 
        National Academy of Sciences to develop periodic and timely 
        reports on the status of the best available science and the 
        status of technologies to reduce, sequester, or avoid 
        greenhouse gas emissions.
            (4) Study of energy security implications of greenhouse gas 
        program.--Before making any recommendations under subsection 
        (b), the President shall--
                    (A) conduct a comprehensive study of the energy 
                security implications of the greenhouse gas program 
                established under this Act, including a study of the 
                impact of the program on fuel diversity, energy 
                infrastructure, and other relevant factors; and
                    (B) submit to Congress a report on the results of 
                the study.
    (b) Presidential Recommendations to Congress.--
            (1) Recommendations to achieve long-term emission 
        reductions.--If the President determines (based on the 
        interagency review conducted under subsection (a)(1)(C)) that 
        the 5 largest trading partners of the United States are taking 
        comparable actions (as defined in section 502(a)) with respect 
        to greenhouse gas emissions, based on consideration of the best 
        available science and technology information provided under 
        subsection (a)(3), the President shall submit to Congress (in 
        accordance with paragraph (2)) a report that recommends such 
        changes to the quantity of greenhouse gas allowances to be 
        issued in future allocation periods as the President determines 
        are necessary--
                    (A) to ensure that the United States is undertaking 
                an equitable share of the responsibility for reducing 
                atmospheric greenhouse gas concentrations; and
                    (B) to reasonably lead the United States to reduce 
                the annual emissions of the United States to levels 
                that are at least 60 percent below 2006 levels by 2050 
                or to levels consistent with the most recent 
                assessments of the National Academy of Sciences.
            (2) Reports to congress.--
                    (A) 5-year review report.--
                            (i) In general.--During the period 
                        beginning April 15, 2017, and ending May 31, 
                        2017, and every 5 years thereafter, the 
                        President shall submit to Congress a report 
                        describing any recommendation of the President 
                        with respect to amendments to this Act.
                            (ii) Recommendations.--The recommendations 
                        of each report shall take into account--
                                    (I) the results of the review 
                                conducted under subsection (a)(1)(C); 
                                and
                                    (II) any determinations made under 
                                paragraph (1).
                    (B) Other reports.--During the period beginning on 
                April 15 and ending on May 31 of any calendar year, the 
                President may submit to Congress a report describing 
                any recommendation of the President with respect to 
                amendments to this Act.
                    (C) Areas.--In any report submitted under 
                subparagraph (A) or (B), the President shall make 
                recommendations with respect to whether, and the extent 
                to which--
                            (i) the quantity of greenhouse gas 
                        allowances issued for future allocation periods 
                        under section 101 should be reduced; and
                            (ii) the TAP prices under section 102(d) 
                        for future calendar years should be increased 
                        or the TAP mechanism should be eliminated.
            (3) Report to congress on additional measures.--If, in any 
        calendar year, TAPs made in lieu of allowance submissions under 
        section 102 are substantial, not later than April 30 of the 
        following calendar year, the President shall submit to Congress 
        a report describing the additional actions the President is 
        taking, and the recommendations the President has for 
        additional congressional action, to ensure that TAPs in future 
        years will not interfere with achieving the principal purposes 
        of this Act over the long term.
    (c) Expedited Congressional Action on Certain Presidential 
Recommendations.--
            (1) Consideration.--Not later than September 30 of any 
        calendar year during which a report is submitted under 
        subsection (b)(2), the Senate and the House of Representatives 
        may consider a joint resolution, in accordance with paragraph 
        (2), that--
                    (A) amends section 101 to decrease the number of 
                allowances to be issued, if and to the extent 
                specifically recommended by the President pursuant to 
                subsection (b)(2); or
                    (B) amends section 102(d) to increase the TAP 
                price, or to eliminate the TAP mechanism, if and to the 
                extent specifically recommended by the President 
                pursuant to subsection (b)(2).
            (2) Requirements.--A joint resolution considered under 
        paragraph (1) shall--
                    (A) be introduced during the 45-day period 
                beginning on the date on which a report is submitted 
                under subsection (b); and
                    (B) after the resolving clause and ``That'', 
                contain only 1 or more of the following:
                            ``(i) Effective beginning ________, the 
                        table in section 101 of the Low Carbon Economy 
                        Act of 2007 is amended _____.'';
                            ``(ii) Effective beginning ________, 
                        section 102(d) of the Low Carbon Economy Act of 
                        2007 is amended _____.''; or
                            ``(iii) Effective beginning ________, no 
                        TAP may be accepted by the President in lieu of 
                        an allowance under section 102 of the Low 
                        Carbon Economy Act of 2007.'';
                the blanks being filled in with the effective dates, 
                reductions in the quantity of greenhouse gas allowances 
                to be issued, or increases in the TAP price that were 
                specifically recommended by the President under 
                subsection (b)(2).
            (3) Applicable law.--Subsections (b) through (g) of section 
        802 of title 5, United States Code, shall apply to any joint 
        resolution under this subsection.
    (d) Foreign Credits.--
            (1) Rules.--After taking into consideration the initial 
        interagency review under subsection (a)(1)(B), the President 
        may promulgate rules that authorize regulated entities to 
        submit credits issued under foreign greenhouse gas regulatory 
        programs in lieu of allowances under section 102.
            (2) Comparable programs.--Rules promulgated by the 
        President under paragraph (1) shall ensure that foreign credits 
        submitted in lieu of allowances are from foreign greenhouse gas 
        regulatory programs that the President determines to have a 
        level of environmental integrity that is not less than the 
        level of environmental integrity of the programs under this 
        Act.
    (e) International Offset Project Credits.--
            (1) Action by the president.--After taking into 
        consideration the results of the interagency review under 
        subsection (a)(1)(B), the President may promulgate rules 
        establishing a program under which the President distributes 
        credits for the greenhouse gas mitigation benefits of offset 
        projects outside the United States that--
                    (A) meet the requirements of section 601(c); and
                    (B) maintain the environment integrity of the 
                program under this Act.
            (2) Streamlined procedures.--Rules promulgated by the 
        President under paragraph (1) shall have streamlined procedures 
        for distributing credits for the greenhouse gas emission 
        mitigation benefits of projects for which the President 
        determines there are broadly accepted standards or 
        methodologies for quantifying and verifying those benefits.
    (f) Limit on International Credits.--Rules promulgated by the 
President under subsection (d) or (e) shall ensure that--
            (1) foreign credits or greenhouse gas mitigation benefits 
        of international offset projects have not been and cannot be 
        used in the future for compliance purposes under any foreign 
        greenhouse gas regulatory program; and
            (2) a regulated entity does not use international offset 
        project credits to meet more than 10 percent of the compliance 
        obligations of the regulated entity under this Act.

SEC. 502. INTERNATIONAL RESERVE ALLOWANCE REQUIREMENT.

    (a) Definitions.--In this section:
            (1) Baseline emissions levels.--The term ``baseline 
        emissions levels'' means the historic greenhouse gas emissions 
        attributed to a category of covered goods of a specific covered 
        foreign country, as determined under subsection (e)(2).
            (2) Comparable action.--The term ``comparable action'' 
        means greenhouse gas regulatory programs, requirements, and 
        other measures adopted by a foreign country that are determined 
        by the President to be, in combination, comparable in effect to 
        the action taken by the United States to limit greenhouse gas 
        emissions pursuant to this Act, after taking into account the 
        level of economic development of the foreign country.
            (3) Compliance year.--The term ``compliance year'' means 
        each calendar year for which the international reserve 
        allowance requirements of subsection (f) apply to a category of 
        covered goods of a covered foreign country that is imported 
        into the United States.
            (4) Covered foreign country.--The term ``covered foreign 
        country'' means a foreign country that is included on the 
        covered list prepared under subsection (f)(3)(B)(ii).
            (5) Covered good.--The term ``covered good'' means each 
        good that the President identifies, by rule, as a greenhouse 
        gas intensive good that is closely related to goods, the cost 
        of production of which in the United States is affected by this 
        Act.
            (6) Foreign country.--The term ``foreign country'' means a 
        Member of, or observer government to, the World Trade 
        Organization, other than the United States.
            (7) Good of a covered foreign country.--The term ``good of 
        a covered foreign country'' means a good originating in a 
        specific covered foreign country, as determined in accordance 
        with rules of origin generally used by the United States.
            (8) Greenhouse gas intensive good.--The term ``greenhouse 
        gas intensive good'' means a good that--
                    (A) is a primary product; and
                    (B) generates, in the course of the manufacture of 
                the good, a substantial quantity of direct and indirect 
                greenhouse gas emissions.
            (9) Indirect greenhouse gas emissions.--The term ``indirect 
        greenhouse gas emissions'' means greenhouse gases emitted from 
        the generation of electricity that is consumed during the 
        manufacture of a good.
            (10) International agreement.--The term ``international 
        agreement'' means any international agreement to which the 
        United States is a party, including the Marrakesh agreement 
        establishing the World Trade Organization (WTO), done at 
        Marrakesh on April 15, 1994.
            (11) International reserve allowance.--The term 
        ``international reserve allowance'' means an allowance 
        (denominated in units of metric tons of carbon dioxide 
        equivalent) that is--
                    (A) purchased from a special reserve of allowances 
                pursuant to subsection (f)(4)(A); and
                    (B) used for purposes of meeting the import 
                allowance requirements of subsection (f).
            (12) Primary product.--The term ``primary product'' means--
                    (A) iron, steel, aluminum, cement, bulk glass, or 
                paper; or
                    (B) any other manufactured product that--
                            (i) is sold in bulk for purposes of further 
                        manufacture; and
                            (ii) generates, in the course of the 
                        manufacture of the product, direct and indirect 
                        greenhouse gas emissions that are comparable 
                        (on an emissions per dollar basis) to emissions 
                        generated in the manufacture of products 
                        described in subparagraph (A).
    (b) Purposes.--The purposes of this section are--
            (1) to ensure that greenhouse gas emissions occurring 
        outside the United States do not undermine the objectives of 
        the United States to address global climate change (as 
        described in section 2(1)); and
            (2) to encourage effective international action to achieve 
        those objectives through--
                    (A) procedures negotiated between the United States 
                and other countries; or
                    (B) measures taken by the United States that comply 
                with applicable international agreements.
    (c) International Negotiations.--
            (1) Finding.--Congress finds that the purposes described in 
        subsection (b) can be most effectively addressed and achieved 
        through procedures negotiated between the United States and 
        other countries.
            (2) Negotiating objective.--To the extent that the 
        procedures described in paragraph (1) involve measures 
        affecting international trade in goods or services, the climate 
        change negotiating objective of the United States shall be to 
        conclude multilateral or bilateral agreements on the reduction 
        of greenhouse gas emissions that will help to achieve the 
        purposes described in subsection (b).
    (d) Interagency Review.--
            (1) In general.--The interagency group established under 
        section 501(a)(1) shall determine whether, and the extent to 
        which, each foreign country has taken comparable action to 
        limit the greenhouse gas emissions of the foreign country.
            (2) Report to the president.--Not later than January 1, 
        2018, and every year thereafter, the interagency group shall 
        report the findings of the group to the President relating to 
        the review under paragraph (1).
            (3) Exclusion of certain countries.--The interagency group 
        may exclude from review and report to the President those 
        foreign countries that are identified in clauses (ii) and (iii) 
        of subsection (f)(3)(A).
    (e) Presidential Determinations.--
            (1) Comparable action.--
                    (A) In general.--Not later than January 1, 2019, 
                and every year thereafter, the President shall 
                determine whether or not each foreign country that is 
                subject to the interagency review under subsection (d) 
                has taken comparable action to limit the greenhouse gas 
                emissions of the foreign country.
                    (B) Publication.--The President shall--
                            (i) report to Congress the determinations 
                        of the President under subparagraph (A); and
                            (ii) publish the determinations in the 
                        Federal Register.
            (2) Baseline emission levels.--
                    (A) In general.--The President shall determine 
                baseline emissions levels under this section by 
                determining the total annual average greenhouse gas 
                emissions attributed to each category of covered goods 
                of a covered foreign country during the 3-year period 
                consisting of calendar years 2012 through 2014, based 
                on the emissions, production, and other relevant data 
                that are available for that 3-year period.
                    (B) Other factors.--To the extent necessary, the 
                President may also use economic and engineering models 
                and the best available information on technology 
                performance levels for the manufacture of specific 
                categories of covered goods in order to establish 
                representative baseline emissions levels for a specific 
                category of covered goods of a covered foreign country.
    (f) International Reserve Allowance Requirements.--
            (1) In general.--
                    (A) Requirement for declaration.--Effective 
                beginning January 1, 2020, a United States importer of 
                covered goods shall be required, as a condition of 
                importation or withdrawal for consumption from a 
                warehouse, to make a written declaration with respect 
                to each entry of imported covered goods.
                    (B) Contents.--The declaration shall provide that--
                            (i) the goods subject to the entry are 
                        accompanied by a sufficient number of 
                        international reserve allowances, as determined 
                        under paragraph (6); or
                            (ii) the goods are not subject to the 
                        requirement to submit international reserve 
                        allowances pursuant to the exclusion that is 
                        provided under paragraph (3).
            (2) Consequences of failure to make declaration.--An 
        imported covered good that is not accompanied by a written 
        declaration pursuant to paragraph (1) shall not be permitted to 
        enter the customs territory of the United States.
            (3) Exclusion for certain imports.--
                    (A) Determination.--The requirement set forth in 
                paragraph (1)(B)(i) shall not apply to the covered 
                goods of any foreign country if the President 
                determines that--
                            (i) the foreign country has taken 
                        comparable action to limit the greenhouse gas 
                        emissions of the foreign country, as provided 
                        under subsection (e)(1);
                            (ii) the United Nations has identified the 
                        foreign country as among the least-developed 
                        developing countries; or
                            (iii) the share of the foreign country of 
                        total global greenhouse gas emissions is below 
                        a de minimis percentage described in 
                        subparagraph (C).
                    (B) Country lists.--Not later than January 1, 2020, 
                and every year thereafter, the President shall develop 
                and publish in the Federal Register the following 2 
                lists of foreign countries:
                            (i) Excluded list.--In the excluded list, 
                        the President shall identify those foreign 
                        countries the covered goods of which the 
                        President has determined under subparagraph (A) 
                        are not subject to the international reserve 
                        allowance requirements of this subsection.
                            (ii) Covered list.--
                                    (I) In general.--In the covered 
                                list, the President shall identify 
                                those foreign countries the covered 
                                goods of which are subject to the 
                                international reserve allowance 
                                requirements of this subsection.
                                    (II) Content.--The list shall 
                                consist of the names of those foreign 
                                countries that are not included on the 
                                excluded list prepared under clause 
                                (i).
                    (C) De minimis threshold.--
                            (i) In general.--For purposes of this 
                        paragraph, a de minimis percentage shall not be 
                        greater than 0.5 percent of total global 
                        greenhouse gas emissions, as determined by the 
                        President, for the most recent calendar year 
                        for which emissions and other relevant data is 
                        available.
                            (ii) Deforestation rate.--To the extent 
                        that the President determines to be necessary 
                        to achieve the purposes of this section, the 
                        President may consider the annual average 
                        deforestation rate of a developing country 
                        during a representative period in determining 
                        that the share of the country of total global 
                        greenhouse gas emissions.
            (4) Source of allowances.--
                    (A) International reserve allowances.--
                            (i) In general.--A United States importer 
                        may meet the obligations of the importer under 
                        this subsection by submitting international 
                        reserve allowances that are issued in 
                        accordance with this subparagraph.
                            (ii) Offer for sale.--
                                    (I) In general.--During the 1-year 
                                period ending on January 1 of the first 
                                calendar year for which compliance with 
                                this Act is required, the President 
                                shall offer for sale international 
                                reserve allowances.
                                    (II) Source.--The international 
                                reserve allowances shall be issued from 
                                a special reserve of allowances that 
                                are separate from, and in addition to, 
                                the allowances issued under section 
                                201(b).
                            (iii) Price.--
                                    (I) In general.--Subject to 
                                subclause (II), the President shall 
                                determine, by rule, the methodology for 
                                setting the price of international 
                                reserve allowances for each compliance 
                                year at a level that does not exceed 
                                the market price of allowances issued 
                                under section 201(b) for the same year.
                                    (II) Maximum price.--The price for 
                                international reserve allowances shall 
                                not exceed--
                                            (aa) the TAP price (as 
                                        determined under section 
                                        102(d)); or
                                            (bb) the clearing price for 
                                        current year allowances 
                                        established in the most recent 
                                        auction of allowances by the 
                                        President under section 208.
                            (iv) Serial number.--The President shall 
                        assign a unique serial number to each 
                        international reserve allowance issued under 
                        this subparagraph.
                            (v) Trading system.--The President may 
                        establish, by rule, a trading system for the 
                        sale, exchange, purchase, transfer, and banking 
                        of international reserve allowances.
                            (vi) Regulated entities.--International 
                        reserve allowances may not be submitted by 
                        regulated entities to comply with the allowance 
                        submission requirements of section 102.
                            (vii) Proceeds.--All proceeds from the sale 
                        of international reserve allowances under this 
                        subparagraph shall be--
                                    (I) deposited into a special fund 
                                in the Treasury known as the 
                                ``International Energy Technology 
                                Deployment Fund''; and
                                    (II) available for expenditure only 
                                for international technology 
                                development under section 401(f).
                    (B) Foreign allowances.--
                            (i) In general.--A United States importer 
                        may submit, in lieu of international reserve 
                        allowances issued under this subsection, 
                        foreign allowances or similar compliance 
                        instruments that a foreign country has 
                        distributed under a comparable cap and trade 
                        program.
                            (ii) Comparable cap and trade program.--For 
                        purposes of clause (i), a comparable cap and 
                        trade program shall include any greenhouse gas 
                        regulatory program that a foreign country has 
                        adopted to limit the greenhouse gas emissions 
                        of the foreign country, if the President 
                        certifies that the program--
                                    (I) places a quantitative 
                                limitation on the total quantity of 
                                greenhouse gas emissions of the foreign 
                                country (expressed in terms of tons per 
                                year) and achieves that limitation 
                                through an allowance trading system;
                                    (II) satisfies criteria that the 
                                President shall establish for key 
                                requirements related to the 
                                enforceability of the cap and trade 
                                program, including requirements for 
                                monitoring, reporting, verification 
                                procedures, and allowance tracking; and
                                    (III) is a comparable action.
                    (C) Foreign credits.--
                            (i) In general.--A United States importer 
                        may submit, in lieu of international reserve 
                        allowances issued under this subsection, 
                        foreign credits and credits for international 
                        offset projects that the President has 
                        authorized for use under subsections (d) and 
                        (e) of section 501.
                            (ii) Application.--The quantitative limit 
                        placed on the use of the allowances by a 
                        regulated entity under subsection 501(f)(2) 
                        shall not apply to a United States importer 
                        under this section.
            (5) Written declaration of importer.--
                    (A) Unique serial numbers.--A United States 
                importer shall include in each written declaration 
                subject to paragraph (1) the unique serial numbers of 
                the international reserve allowances, foreign 
                allowances, or foreign credits associated with the 
                covered goods subject to entry.
                    (B) Retirement of allowances.--The President shall 
                retire the international reserve allowances, foreign 
                allowances, or foreign credits that are included in a 
                written declaration subject to paragraph (1).
                    (C) Corrected declaration.--
                            (i) In general.--If, after making the 
                        declaration required under paragraph (1), the 
                        United States importer has reason to believe 
                        that a declaration contains information that is 
                        not correct, the importer shall, not later than 
                        30 calendar days after the date of discovery of 
                        the error, make a corrected declaration.
                            (ii) Method.--A corrected declaration shall 
                        be made by submission of a letter or other 
                        written statement to the Customs office where 
                        the original declaration was filed.
            (6) Calculation of sufficiency of allowances.--
                    (A) Methodology.--
                            (i) In general.--The President shall 
                        establish, by rule, the methodology for 
                        calculating the required number of 
                        international reserve allowances that a United 
                        States importer must submit with the written 
                        declaration under subsection (a) for each 
                        category of covered goods of each covered 
                        foreign country.
                            (ii) Formula.--The President shall develop 
                        a general formula for calculating the 
                        international reserve allowance requirement 
                        that applies, on a per unit basis, to each 
                        covered good of a covered foreign country that 
                        is imported during each compliance year.
                    (B) Initial compliance year.--Subject to 
                subparagraph (C), the formulas under subparagraphs (A) 
                and (C) shall establish an international reserve 
                allowance requirement (per unit imported into the 
                United States) for the first compliance year for each 
                category of covered goods of each covered foreign 
                country that is equal to the quotient obtained by 
                dividing--
                            (i) the excess, if any, of the total 
                        emissions from the foreign country that are 
                        attributable to the category of covered goods 
                        produced during the most recent year for which 
                        data are available, over the baseline emissions 
                        level of the foreign country determined for 
                        that category of covered goods; by
                            (ii) the total number of units of output of 
                        the covered good produced in the foreign 
                        country during the most recent year.
                    (C) Adjustments for initial compliance year.--The 
                President shall adjust the international reserve 
                allowance requirement applicable to the first 
                compliance year to--
                            (i) reflect the ratio that--
                                    (I) allowances that were allocated 
                                at no cost under title II to entities 
                                within the industry sector 
                                manufacturing the covered goods for the 
                                year when the covered goods were 
                                imported into the United States; bears 
                                to
                                    (II) the emissions of that industry 
                                sector; and
                            (ii) take into account the level of 
                        economic development of the foreign country of 
                        origin of the imported covered goods.
                    (D) Adjustments for subsequent compliance years.--
                For each subsequent compliance year, the President 
                shall revise, as appropriate, the international reserve 
                allowance requirement applicable to each category of 
                imported covered goods of each covered foreign country 
                to reflect changes in--
                            (i) the factors described in subparagraphs 
                        (B) and (C);
                            (ii) the total quantity of the annual 
                        greenhouse gas allowances issued under section 
                        201 and payments made in lieu of the submission 
                        of allowances pursuant to section 102(a)(2); 
                        and
                            (iii) other matters that the President 
                        considers to be relevant in revising the 
                        international reserve allowance requirement to 
                        achieve the purposes of this section.
                    (E) Publication.--Not later than 90 days before the 
                beginning of each applicable calendar year, the 
                President shall publish in the Federal Register a 
                schedule describing the required number of 
                international reserve allowances for each category of 
                imported covered goods of each covered foreign country, 
                as calculated under this paragraph.
            (7) Consistency with international agreements.--The 
        President shall adjust the international reserve allowance 
        requirements established under this subsection (including the 
        number of international reserve allowances required for each 
        category of covered goods of a covered foreign country) as 
        necessary to ensure that the United States complies with all 
        applicable international agreements.
            (8) Termination of international reserve allowance 
        requirement.--The international reserve allowance requirements 
        of this subsection shall not apply to the covered goods of a 
        covered foreign country on a determination made by the 
        President under paragraph (3)(A) with respect to covered goods 
        of that foreign country.
            (9) Implementing rules.--Not later than January 1, 2019, 
        the President shall issue, pursuant to notice and comment 
        rulemaking, final rules for implementing the international 
        reserve allowance requirements established under this 
        subsection.
    (g) Adjustment of International Reserve Allowance Requirements.--
            (1) In general.--Not later than January 1, 2023, and each 
        year thereafter, the President shall prepare and submit to 
        Congress a report that assesses the effectiveness of the 
        existing international reserve allowance requirements of 
        subsection (f) with respect to covered goods of each covered 
        foreign country.
            (2) Inadequate requirements.--If the President finds that 
        those international reserve allowance requirements are not 
        adequate to achieve the purposes of this section, the President 
        shall, simultaneously with the submission of the report under 
        paragraph (1), adjust the stringency of the existing 
        international reserve allowance requirements applicable to 
        imported covered goods or take other such actions for improving 
        the effectiveness of the international reserve allowance 
        requirements with respect to imported covered goods in any 
        manner that complies with all applicable international 
        agreements.
            (3) Effective date.--The revised international reserve 
        allowance requirements take effect beginning on January 1 of 
        the calendar year immediately following the date that the 
        President adjusts the requirements under this subsection.

                      TITLE VI--GENERAL PROVISIONS

SEC. 601. MONITORING AND REPORTING.

    (a) In General.--The President shall require, by rule, that a 
regulated entity shall perform such monitoring and submit such reports 
as the President determines to be necessary to carry out this Act.
    (b) Submission of Information.--The President shall establish, by 
rule, any procedure the President determines to be necessary to ensure 
the completeness, consistency, transparency, and accuracy of reports 
under subsection (a), including--
            (1) accounting and reporting standards for covered 
        greenhouse gas emissions;
            (2) standardized methods of calculating covered greenhouse 
        gas emissions in specific industries from other information the 
        President determines to be available and reliable, such as 
        energy consumption data, materials consumption data, production 
        data, or other relevant activity data;
            (3) if the President determines that a method described in 
        paragraph (2) is not feasible for a regulated entity, a 
        standardized method of estimating covered greenhouse gas 
        emissions of the regulated entity;
            (4) a method of avoiding double-counting of covered 
        greenhouse gas emissions;
            (5) a procedure to prevent a regulated entity from avoiding 
        the requirements of this Act by--
                    (A) reorganization into multiple entities; or
                    (B) outsourcing the operations or activities of the 
                regulated entity with respect to covered greenhouse gas 
                emissions; and
            (6) a procedure for the verification of data relating to 
        covered greenhouse gas emissions by--
                    (A) regulated entities; and
                    (B) independent verification organizations.
    (c) Determining Eligibility for Credits, Agricultural Sequestration 
Allowances, Bonus Allowances for Geological Sequestration, and Early 
Reduction Allowances.--
            (1) In general.--An entity shall provide the President with 
        the information described in paragraph (2) in connection with 
        any application to receive--
                    (A) an agricultural project allowance under section 
                205;
                    (B) an early reduction allowance under section 206 
                (unless, and to the extent that, the President 
                determines that providing the information would not be 
                feasible for the entity);
                    (C) a carbon capture and sequestration bonus 
                allowance under section 207; or
                    (D) a credit under section 301, 302, or 303.
            (2) Required information.--
                    (A) Greenhouse gas emissions reduction.--In the 
                case of a greenhouse gas emissions reduction, the 
                entity shall provide the President with information 
                verifying that, as determined by the President--
                            (i) the entity has achieved an actual 
                        reduction in greenhouse gas emissions--
                                    (I) relative to historic emissions 
                                levels of the entity; and
                                    (II) taking into consideration any 
                                increase in other greenhouse gas 
                                emissions of the entity; and
                            (ii) if the reduction exceeds the net 
                        reduction of direct greenhouse gas emissions of 
                        the entity, the entity reported a reduction 
                        that was adjusted so as not to exceed the net 
                        reduction.
                    (B) Greenhouse gas sequestration.--In the case of a 
                greenhouse gas sequestration, the entity shall provide 
                the President with information verifying that, as 
                determined by the President, the entity has achieved 
                actual increases in net sequestration, taking into 
                account the total use of materials and energy by the 
                entity in carrying out the sequestration.
    (d) Harmonization With International Standards.--The President 
shall, to the maximum extent practicable, harmonize the rules and 
procedures developed under this Act with the rules and procedures of 
other countries that have market-based greenhouse gas regulatory 
programs.

SEC. 602. ENFORCEMENT.

    (a) Failure To Submit Allowances.--
            (1) Payment to president.--A regulated entity that fails to 
        submit an allowance (or a credit or TAP in lieu of an 
        allowance) for a calendar year not later than March 31 of the 
        following calendar year shall pay to the President, for each 
        allowance the regulated entity failed to submit, an amount 
        equal to the product obtained by multiplying--
                    (A) the TAP price for that calendar year; and
                    (B) 3.
            (2) Failure to pay.--A regulated entity that fails to make 
        a payment to the President under paragraph (1) by December 31 
        of the calendar year following the calendar year for which the 
        payment is due shall be subject to subsection (b) or (c), or 
        both.
    (b) Civil Enforcement.--
            (1) Penalty.--A person that the President determines to be 
        in violation of this Act (including any rules promulgated under 
        this Act) shall be subject to a civil penalty of not more than 
        $25,000 for each day during which the entity is in violation, 
        in addition to any amount required under subsection (a)(1).
            (2) Injunction.--The President may bring a civil action for 
        a temporary or permanent injunction against any person 
        described in paragraph (1).
    (c) Criminal Penalties.--A person that willfully fails to comply 
with this Act (including any rules promulgated under this Act) shall be 
subject to a fine under title 18, United States Code, or imprisonment 
for not to exceed 5 years, or both.

SEC. 603. ADMINISTRATIVE PROVISIONS.

    (a) Delegation.--To carry out this Act, the President may--
            (1) delegate and assign any duties or powers imposed on or 
        assigned to the President; and
            (2) promulgate any rules necessary to carry out this Act.
    (b) Data.--
            (1) In general.--In carrying out this Act, the President 
        may use any authority provided under section 11 of the Energy 
        Supply and Environmental Coordination Act of 1974 (15 U.S.C. 
        796).
            (2) Definition of energy information.--For the purposes of 
        carrying out this Act, the definition of the term ``energy 
        information'' under section 11 of the Energy Supply and 
        Environmental Coordination Act of 1974 (15 U.S.C. 796) shall be 
        considered to include any information the President determines 
        to be necessary or appropriate to carry out this Act.

SEC. 604. JUDICIAL REVIEW.

    (a) In General.--Except as provided in subsection (b), section 
336(b) of the Energy Policy and Conservation Act (42 U.S.C. 6306(b)) 
shall apply to a review of any rule issued under this Act in the same 
manner, and to the same extent, that section applies to a rule issued 
under sections 323, 324, and 325 of that Act (42 U.S.C. 6293, 6294, 
6295).
    (b) Exception.--A petition for review of a rule under this Act 
shall be filed in the United States Court of Appeals for the District 
of Columbia.

SEC. 605. SAVINGS PROVISION.

    Nothing in this Act affects the authority of Congress to--
            (1) limit, terminate, or change the value of an allowance 
        or credit issued under this Act; or
            (2) modify allocations of allowances or the distribution of 
        proceeds of allowance auctions.
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