II 

111TH CONGRESS 

1ST SESSION S. 2877 

To direct the Secretary of the Treasury to establish a program to regulate 

the entry of fossil carbon into commerce in the United States to promote 

clean energy jobs and economic growth and avoid dangerous interference 

with the climate of the Earth, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 11, 2009 

Ms. CANTWELL (for herself and Ms. COLLINS) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To direct the Secretary of the Treasury to establish a program to regulate the entry of fossil carbon into commerce 

in the United States to promote clean energy jobs and 

economic growth and avoid dangerous interference with 

the climate of the Earth, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Carbon Limits and 

5 Energy for America’s Renewal (CLEAR) Act’’. 

6 SEC. 2. DEFINITIONS. 

7 In this Act: 


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1 (1) ADMINISTRATOR.—The term ‘‘Adminis2 trator’’ means the Administrator of the Environ3 mental Protection Agency. 

4 (2) CARBON DIOXIDE EQUIVALENT.—The term 

5 ‘‘carbon dioxide equivalent’’ means the equivalent 

6 weight of carbon dioxide obtained by multiplying— 

7 (A) the weight of fossil carbon; and 

8 (B) the quotient obtained by dividing— 

9 (i) the molecular weight of carbon di10 oxide; by 

11 (ii) the molecular weight of carbon. 

12 (3) CARBON REFUND TRUST FUND.—The term 

13 ‘‘Carbon Refund Trust Fund’’ means the Carbon 

14 Refund Trust Fund established by section 4(f). 

15 (4) CARBON SHARE.—The term ‘‘carbon share’’ 

16 means the right to sell or otherwise place into com17 merce in the United States 1 ton of fossil carbon. 

18 (5) CARBON SHARE DERIVATIVE.—The term 

19 ‘‘carbon share derivative’’ means any transaction or 

20 contract that derives the value of the transaction or 

21 contract in part or in whole from the value of a car22 bon share. 

23 (6) CERT FUND.—The term ‘‘CERT Fund’’ 

24 means the Clean Energy Reinvestment Trust Fund 

25 established by section 6(a). 


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1 (7) CLEAN ENERGY TECHNOLOGY.—The term 

2 ‘‘clean energy technology’’ means a technology relat3 ing to the production, use, transmission, storage, 

4 control, or conservation of energy that would— 

5 (A) reduce the need for additional energy 

6 supplies by— 

7 (i) using energy sources in existence 

8 as of the date of enactment of this Act 

9 with greater efficiency; or 

10 (ii) transmitting, distributing, or 

11 transporting energy with greater effective12 ness through the infrastructure of the 

13 United States; 

14 (B) diversify the sources of energy supply 

15 of the United States and reduce the dependence 

16 of the United States on imported energy; or 

17 (C) contribute to the reduction, avoidance, 

18 or sequestration of energy-related greenhouse 

19 gas emissions. 

20 (8) COVERED FOSSIL CARBON.—The term ‘‘cov21 ered fossil carbon’’ means fossil carbon that is— 

22 (A) introduced into domestic commerce; 

23 (B) combusted or released into the atmos24 phere by a first seller; or 

25 (C) transferred as a royalty-in-kind. 


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1 (9) ENERGY SECURITY DIVIDEND.—The term 

2 ‘‘energy security dividend’’ means, with respect to 

3 any month, a payment in an amount that is equal 

4 to the quotient obtained by dividing— 

5 (A) the amount of auction proceeds trans6 ferred into the Carbon Refund Trust Fund for 

7 the month preceding such month; by 

8 (B) the number of qualified individuals for 

9 the preceding month. 

10 (10) FIRST SELLER.—The term ‘‘first seller’’ 

11 means an entity in the business of producing or im12 porting fossil carbon or production process carbon, 

13 as determined by the Secretary. 

14 (11) FOSSIL CARBON.—The term ‘‘fossil car15 bon’’ means— 

16 (A) carbon in the form of a fossil fuel 

17 (such as coal, natural gas, and crude oil) in the 

18 raw state in which the fossil fuel exists at the 

19 time the fossil fuel is removed from the Earth; 

20 and 

21 (B) the carbon content of imported refined 

22 fuel products (such as gasoline, diesel, and jet 

23 fuels) derived from a fossil fuel. 

24 (12) GREENHOUSE GAS.—The term ‘‘green25 house gas’’ means— 


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1 (A) carbon dioxide; 

2 (B) methane; 

3 (C) nitrous oxide; 

4 (D) a hydrofluorocarbon; 

5 (E) a perfluorocarbon; 

6 (F) sulfur hexafluoride; and 

7 (G) any other anthropogenically emitted 

8 gas that the Administrator, after notice and 

9 comment, determines to contribute to climate 

10 change. 

11 (13) POINT-OF-ENTRY.— 

12 (A) IN GENERAL.—The term ‘‘point-of13 entry’’ means, with respect to the economy of 

14 the United States, the point at which fossil car15 bon is introduced into commerce. 

16 (B) INCLUSIONS.—The term ‘‘point-of17 entry’’ includes— 

18 (i) a wellhead; 

19 (ii) a mine entrance; and 

20 (iii) any port-of-entry, as determined 

21 by the Secretary. 

22 (14) PRODUCTION PROCESS CARBON.—The 

23 term ‘‘production process carbon’’ means the quan24 tity of fossil carbon used to manufacture an energy25 intensive commodity. 


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1 (15) PROGRAM.—The term ‘‘program’’ means 

2 the fossil carbon limitation program established 

3 under section 4(a)(1). 

4 (16) QUALIFIED INDIVIDUAL.—The term 

5 ‘‘qualified individual’’ means any individual who law6 fully resides in the United States. 

7 (17) RATE OF CAPITAL INVESTMENT RE8 TURN.—The term ‘‘rate of capital investment re9 turn’’ means an annual real rate of return on capital 

10 investment of 6 percent. 

11 (18) RATE OF INFLATION.—The term ‘‘rate of 

12 inflation’’ means the annual rate increase of the 

13 price of goods and services, as measured by the Con14 sumer Price Index for All Urban Consumers pub15 lished by the Bureau of Labor Statistics of the De16 partment of Labor. 

17 (19) SAFETY VALVE PRICE.—The term ‘‘safety 

18 valve price’’ means the maximum price per ton of 

19 carbon dioxide equivalent for any 1 calendar year es20 tablished under section 4(a)(4). 

21 (20) SECRETARY.—The term ‘‘Secretary’’ 

22 means the Secretary of the Treasury. 

23 (21) VOLUNTARY CARBON REDUCTION PUR24 CHASE.—The term ‘‘voluntary carbon reduction purVerDate Nov 24 2008 06:24 Dec 12, 2009 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2877.IS S2877

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1 chase’’ means the voluntary purchase of credits 

2 that— 

3 (A) are not used to meet any regulatory 

4 mandate (including any renewable energy 

5 standard required by the Federal Government 

6 or any State); 

7 (B) include Federal or State renewable en8 ergy certificates, energy efficiency certificates, 

9 and other eligible purchases as determined by 

10 the Secretary; and 

11 (C) are solely responsible for the reduction 

12 of domestic fossil carbon emissions. 

13 SEC. 3. GLOBAL WARMING EMISSIONS REDUCTION STAND14 ARDS. 

15 (a) IN GENERAL.—The President shall, through the 

16 program and the CERT Fund and in accordance with this 

17 Act, reduce steadily the quantity of United States green18 house gas emissions to achieve the emissions reduction 

19 standards described in subsection (b). 

20 (b) PERIODIC EMISSIONS REDUCTION STAND21 ARDS.— 

22 (1) CALENDAR YEAR 2020.—During calendar 

23 year 2020, the quantity of United States greenhouse 

24 gas emissions shall not exceed 80 percent of the 


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1 quantity of United States greenhouse gas emissions 

2 during calendar year 2005. 

3 (2) CALENDAR YEAR 2025.—During calendar 

4 year 2025, the quantity of United States greenhouse 

5 gas emissions shall not exceed 70 percent of the 

6 quantity of United States greenhouse gas emissions 

7 during calendar year 2005. 

8 (3) CALENDAR YEAR 2030.—During calendar 

9 year 2030, the quantity of United States greenhouse 

10 gas emissions shall not exceed 58 percent of the 

11 quantity of United States greenhouse gas emissions 

12 during calendar year 2005. 

13 (4) CALENDAR YEAR 2050.—During calendar 

14 year 2050, the quantity of United States greenhouse 

15 gas emissions shall not exceed 17 percent of the 

16 quantity of United States greenhouse gas emissions 

17 during calendar year 2005. 

18 SEC. 4. FOSSIL CARBON LIMITATION PROGRAM. 

19 (a) ESTABLISHMENT.— 

20 (1) IN GENERAL.—The Secretary shall by regu21 lation establish within the Department of the Treas22 ury a program to reduce the emission of greenhouse 

23 gases— 

24 (A) by placing a gradually declining limita25 tion on the quantity of fossil carbon permitted 


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1 to be sold into commerce in the United States; 

2 and 

3 (B) by requiring each first seller to sur4 render periodically to the Secretary a number of 

5 carbon shares equal to the quantity of covered 

6 fossil carbon produced or imported by the first 

7 seller by not later than 2 years after the date 

8 on which the fossil carbon becomes covered fos9 sil carbon. 

10 (2) ANNUAL QUANTITY OF CARBON SHARES.— 

11 (A) INITIAL QUANTITY.— 

12 (i) IN GENERAL.—Not later than Jan13 uary 1, 2011, to carry out the program, in 

14 accordance with clause (ii), the President, 

15 in consultation with the Secretary, the Ad16 ministrator, and the Secretary of Energy, 

17 shall establish and announce a maximum 

18 aggregate quantity of fossil carbon, and a 

19 corresponding number of carbon shares, 

20 permitted to be introduced through points21 of-entry for calendar year 2012. 

22 (ii) REQUIREMENT.—The maximum 

23 aggregate quantity of carbon shares for 

24 calendar year 2012 under clause (i) shall 

25 equal the approximate level of fossil carbon 


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1 likely to be required by the economy of the 

2 United States during calendar year 2012. 

3 (B) SUBSEQUENT QUANTITIES.— 

4 (i) CALENDAR YEARS 2013 AND

5 2014.—For each of calendar years 2013 

6 and 2014, the maximum aggregate quan7 tity of carbon shares permitted to be intro8 duced through points-of-entry shall be 

9 equal to the maximum aggregate quantity 

10 established under subparagraph (A)(i). 

11 (ii) CALENDAR YEAR 2015 AND SUBSE12 QUENT CALENDAR YEARS.—For calendar 

13 year 2015 and each calendar year there14 after, the maximum aggregate quantity of 

15 carbon shares shall be reduced from the 

16 quantity of the previous calendar year at a 

17 rate that— 

18 (I) for calendar year 2015, is 

19 equal to 0.25 percent; and 

20 (II) for each subsequent calendar 

21 year, increases by an additional 0.25 

22 percent. 

23 (C) MODIFICATION OF QUANTITY OF CAR24 BON SHARES AVAILABLE.—Subject to para25 graph (3), the President, in consultation with 


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1 the Secretary, the Administrator, and the Sec2 retary of Energy, may increase or decrease the 

3 number of carbon shares available for an auc4 tion to respond to— 

5 (i) changes in the scientific under6 standing of climate change; 

7 (ii) the need to stabilize atmospheric 

8 greenhouse gas concentrations to avoid 

9 dangerous interference with the climate of 

10 the Earth; 

11 (iii) any international obligations of 

12 the United States, including any commit13 ment of the United States under the 

14 United Nations Framework Convention on 

15 Climate Change; 

16 (iv) the need to maintain the inter17 national competitiveness of the United 

18 States; 

19 (v) the quantity of carbon that has, or 

20 is likely, to be permanently sequestered 

21 from release into the atmosphere or ocean; 

22 (vi) the need to provide a sufficient 

23 price signal to ensure private sector invest24 ment in clean energy technology research, 

25 development, and deployment; and 


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1 (vii) appropriations for the programs 

2 and initiatives described in section 6(c) 

3 that are insufficient to permit the Presi4 dent to meet the standards established by 

5 section 3(b). 

6 (3) EXPEDITED CONGRESSIONAL REVIEW.— 

7 (A) DEFINITION OF JOINT RESOLUTION.— 

8 In this paragraph, the term ‘‘joint resolution’’ 

9 means only a joint resolution introduced during 

10 the 30-day period beginning on the date on 

11 which the report referred to in subparagraph 

12 (B) is received by Congress (excluding days ei13 ther House of Congress is adjourned for more 

14 than 3 days during a session of Congress), the 

15 matter after the resolving clause of which is as 

16 follows: ‘‘That Congress approves the modifica17 tion of the number of shares available for auc18 tion described in the report required under sec19 tion 4(a)(3)(B) of the CLEAR Act submitted 

20 by the President to Congress on llll, and 

21 the modification shall take effect.’’ (The blank 

22 space being appropriately filled in). 

23 (B) REPORT.—Before any modification of 

24 the number of shares available for auction take 

25 effect under paragraph (2)(C), the President 


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1 shall submit to each House of Congress a re2 port that provides a notice of the modification. 

3 (C) APPROVAL.—The modification of the 

4 number of shares available for auction under 

5 paragraph (2)(C) shall take effect if Congress 

6 enacts a joint resolution of approval of the 

7 modification. 

8 (D) PROCEDURE.— 

9 (i) IN GENERAL.—Subject to clause 

10 (ii), the procedures described in sub11 sections (b) through (g) of section 802 of 

12 title 5, United States Code, shall apply to 

13 the consideration of a joint resolution 

14 under this paragraph. 

15 (ii) TERMS.—For purposes of this 

16 subparagraph— 

17 (I) the reference to ‘‘section 

18 801(a)(1)’’ in section 802(b)(2)(A) of 

19 that title shall be considered to refer 

20 to subparagraph (B); and 

21 (II) the reference to ‘‘section 

22 801(a)(1)(A)’’ in section 802(e)(2) of 

23 that title shall be considered to refer 

24 to subparagraph (B). 

25 (4) AUCTION PRICE SAFEGUARDS.— 


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1 (A) CALENDAR YEAR 2012.—The carbon 

2 share price shall be limited in a manner to en3 sure that the corresponding price per ton of 

4 carbon dioxide equivalent for calendar year 

5 2012 is— 

6 (i) not less than $7; and 

7 (ii) not more than $21. 

8 (B) SUBSEQUENT CALENDAR YEARS.—For 

9 calendar year 2013 and each calendar year 

10 thereafter— 

11 (i) subject to clause (ii), the minimum 

12 allowable carbon share price shall increase 

13 by the aggregate rate obtained by add14 ing— 

15 (I) the rate of inflation; and 

16 (II) the rate of capital invest17 ment return plus 0.5 percent; and 

18 (ii) the maximum allowable carbon 

19 share price shall increase by the aggregate 

20 rate obtained by adding— 

21 (I) the rate of inflation; and 

22 (II) the rate of capital invest23 ment return minus 0.5 percent. 

24 (5) PENALTY FOR NONCOMPLIANCE.— 


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1 (A) IN GENERAL.—Any first seller that 

2 fails to surrender a sufficient number of carbon 

3 shares for the fossil carbon that the first seller 

4 introduced to the United States market by not 

5 later than 2 years after the date on which the 

6 fossil carbon becomes covered fossil carbon shall 

7 be liable for payment to the Secretary of a pen8 alty in the amount described in subparagraph 

9 (B). 

10 (B) AMOUNT.—The amount of a penalty 

11 required to be paid under subparagraph (A) 

12 shall be equal to the product obtained by multi13 plying— 

14 (i) the number of carbon shares that 

15 the owner failed to surrender by the dead16 line; by 

17 (ii) 5 times the carbon share price set 

18 at an auction described in subsection (b), 

19 the date of which is closest to that of the 

20 sale of the fossil carbon subject to a non21 compliance penalty. 

22 (C) TIMING.—A penalty required under 

23 this paragraph shall be immediately due and 

24 payable to the Secretary. 


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1 (D) NO EFFECT ON LIABILITY.—A penalty 

2 due and payable by the owner of a covered enti3 ty under this paragraph shall not diminish the 

4 liability of the owner for any fine, penalty, or 

5 assessment against the owner for the same vio6 lation under any other provision of law. 

7 (E) USE OF PENALTIES.—Any penalties 

8 collected by the Secretary under this paragraph 

9 shall be transferred to the CERT Fund. 

10 (6) PRODUCTION PROCESS CARBON ADJUST11 MENT.— 

12 (A) IN GENERAL.—Not later than January 

13 1, 2013, the Secretary, in consultation with the 

14 Secretary of Commerce, the Secretary of En15 ergy, and the United States Trade Representa16 tive, shall impose fees on individuals and enti17 ties for the production process carbon associ18 ated with commodities imported for sale in the 

19 United States. 

20 (B) AMOUNT OF FEE.—To the maximum 

21 extent practicable, a fee described in subpara22 graph (A) shall be an amount commensurate 

23 with the carbon share value of the production 

24 process carbon that is the subject of the fee. 


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1 (C) APPLICABILITY.—A fee described in 

2 subparagraph (A) shall only apply to imported 

3 commodities if— 

4 (i) the fee is compatible with the obli5 gations of the United States with respect 

6 to any applicable international trade agree7 ment or treaty to which the United States 

8 is a party; 

9 (ii) the country in which the com10 modity was produced does not impose com11 parable limits or fees on the use of fossil 

12 carbon; and 

13 (iii) domestic producers of comparable 

14 commodities would be demonstrably dis15 advantaged economically by the Program 

16 in the absence of the fees. 

17 (D) USE OF FEES.—Any fees collected by 

18 the Secretary under this paragraph shall be 

19 transferred to the CERT Fund. 

20 (E) ADJUSTMENT METHODOLOGY.—Not 

21 later than 180 days after the date of enactment 

22 of this Act and periodically thereafter, the Sec23 retary, in consultation with the Secretary of 

24 Commerce, the Secretary of Energy, and the 

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1 pose specific data sources and methodologies for 

2 measuring and determining which sectors and 

3 commodities should be covered by production 

4 process carbon adjustments. 

5 (7) TARGETED RELIEF FUNDS.— 

6 (A) IN GENERAL.—Not later than January 

7 1, 2013, the Secretary, in consultation with the 

8 Secretary of Commerce, the Secretary of En9 ergy, and the United States Trade Representa10 tive, shall distribute funds that are appro11 priated from the CERT Fund to individuals 

12 and entities that are unable to compete due to 

13 unfair market prices arising from disparate fos14 sil carbon limits or fees among countries. 

15 (B) AMOUNT OF FEE.—To the maximum 

16 extent practicable, the funds described in sub17 paragraph (A) shall be an amount commensu18 rate with the product obtained by multiplying— 

19 (i) the average additional cost per 

20 unit output for the industry or economic 

21 sector due to disparate carbon limits 

22 among countries; and 

23 (ii) the number of output units. 


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1 (C) APPLICABILITY.—The funds described 

2 in subparagraph (A) shall only apply to an in3 dustry or economic sector if— 

4 (i) the funds are compatible with the 

5 obligations of the United States with re6 spect to any applicable international trade 

7 agreement or treaty to which the United 

8 States is a party; 

9 (ii) the destination country for United 

10 States exports does not impose comparable 

11 limits or fees on— 

12 (I) the use of fossil carbon within 

13 the territories of that country; or 

14 (II) the importation of produc15 tion process carbon; and 

16 (iii) domestic producers would be de17 monstrably disadvantaged economically 

18 and competitively by the program in the 

19 absence of the funds. 

20 (D) TRANSFER OF FUNDS.—Any funds 

21 distributed by the Secretary under this para22 graph shall be transferred from the CERT 

23 Fund, as authorized under section 6(c). 

24 (E) ADJUSTMENT METHODOLOGY.— 


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1 (i) IN GENERAL.—Not later than 180 

2 days after the date of enactment of this 

3 Act and periodically thereafter, in accord4 ance with clause (ii), the Secretary, in con5 sultation with the Secretary of Commerce, 

6 the Secretary of Energy, and the United 

7 States Trade Representative, shall propose 

8 specific data sources and methodologies for 

9 measuring and determining which sectors 

10 and industries should be considered to be 

11 eligible for targeted relief funds. 

12 (ii) PRIORITY.—In carrying out clause 

13 (i), to maximize the effectiveness of avail14 able funds, the Secretary shall give priority 

15 to the most economically and competitively 

16 disadvantaged industries and economic sec17 tors. 

18 (b) AUCTIONS.— 

19 (1) IN GENERAL.—Subject to paragraph (9), in 

20 carrying out the program, during each calendar 

21 year, the Secretary shall conduct monthly uniform 

22 price auctions of a portion of the carbon shares 

23 made available for the calendar year under sub24 section (a)(2). 


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1 (2) ELIGIBLE PARTICIPANTS.—First sellers 

2 shall be the only entities eligible to participate in an 

3 auction conducted under paragraph (1). 

4 (3) RESERVE PRICE.—The minimum price of 

5 any carbon share purchased under an auction con6 ducted under paragraph (1) shall be the minimum 

7 price for the corresponding calendar year specified in 

8 subsection (a)(4). 

9 (4) SAFETY VALVE PRICE.— 

10 (A) IN GENERAL.—Subject to subpara11 graph (B), the maximum price of any carbon 

12 share purchased under an auction conducted 

13 under paragraph (1) shall be the maximum 

14 price for the corresponding calendar year speci15 fied in subsection (a)(4). 

16 (B) SAFETY VALVE SHARES.—If the safety 

17 valve price is reached in any 1 auction con18 ducted under paragraph (1), the number of 

19 available carbon shares may be increased to ex20 ceed the aggregate quantity described in sub21 section (a)(2) to ensure that all legal bids at 

22 the safety valve price can be accommodated for 

23 the 1 auction. 

24 (C) SAFETY VALVE REVENUES.—Any rev25 enue generated by the sale of a carbon share at 


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1 the safety valve price that is in excess of the ag2 gregate quantity described in subsection (a)(2) 

3 shall be— 

4 (i) deposited in the CERT Fund; and 

5 (ii) used only for the conduct of a pro6 gram or initiative within the United States 

7 described in subparagraph (F) or (G) of 

8 section 6(c)(1). 

9 (D) USE OF SAFETY VALVE CARBON

10 SHARES.—A carbon share purchased at the 

11 safety valve price shall be redeemed by not later 

12 than 90 days after the date on which the origi13 nal purchaser purchased the carbon share. 

14 (5) USE OF CARBON SHARES.—A carbon share 

15 purchased under an auction conducted under para16 graph (1), or on an exchange described in paragraph 

17 (7)(A), may only be redeemed by a first seller during 

18 the 10-year period commencing on the date of 

19 issuance to the original carbon share holder. 

20 (6) LIMITATION OF CARBON SHARE PURCHASES

21 AND ACCUMULATION.— 

22 (A) PURCHASE LIMITATION.—During any 

23 calendar year, a first seller may not purchase a 

24 quantity of carbon shares that significantly ex25 ceeds the anticipated volume of covered fossil 


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1 carbon of the first seller for the calendar year, 

2 as determined by the Secretary. 

3 (B) ACCUMULATION LIMITATION.—A first 

4 seller may not accumulate a quantity of carbon 

5 shares that, as determined by the Secretary— 

6 (i) exceeds the anticipated volume of 

7 covered fossil carbon of the first seller for 

8 the duration of the period during which 

9 the carbon shares held by the first seller 

10 may be redeemed; 

11 (ii) allows for speculation or manipu12 lation; or 

13 (iii) interferes with normal market 

14 competition. 

15 (7) PURCHASE OR SALE OF CARBON SHARES.— 

16 (A) IN GENERAL.—A transaction other 

17 than an auction described in paragraph (1) that 

18 involves the purchase or sale of a carbon share 

19 may be carried out only if— 

20 (i) the carbon share is offered for sale 

21 to any eligible first seller on a dedicated 

22 public carbon share exchange established 

23 and administered by the Secretary for that 

24 purpose; and 


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1 (ii) all relevant transaction dates, car2 bon share quantities, and prices are made 

3 publicly available on a real-time basis. 

4 (B) CERTAIN RECIPIENTS OF CARBON

5 SHARES.—Recipients of carbon shares under 

6 subsection (c) shall be granted access to an ex7 change described in subparagraph (A) solely for 

8 the purpose of selling carbon shares to eligible 

9 first sellers. 

10 (8) CARBON SHARE DERIVATIVES MARKET.— 

11 (A) PROHIBITION.—A first seller may not 

12 directly or indirectly create, purchase, sell, or 

13 trade carbon share derivatives. 

14 (B) REGULATIONS.—Not later than 1 year 

15 after the date of enactment of this Act, the Sec16 retary, in consultation with the Commodity Fu17 tures Trading Commission, the Federal Energy 

18 Regulatory Commission, and the Federal Trade 

19 Commission, shall promulgate regulations for 

20 the establishment, operation, and oversight of 

21 markets for all carbon share derivatives— 

22 (i) to provide for effective and com23 prehensive market oversight; 

24 (ii) to prohibit fraud, market manipu25 lation (in accordance with section 222 of 


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1 the Federal Power Act (16 U.S.C. 824v)), 

2 and excessive speculation; and 

3 (iii) to limit unreasonable or excessive 

4 fluctuations in the price of carbon share 

5 derivatives and carbon shares. 

6 (9) MODIFICATION OF AUCTION FREQUENCY.— 

7 The Secretary may modify the frequency of the uni8 form price auctions under paragraph (1) if the Sec9 retary determines that the modification will signifi10 cantly— 

11 (A) improve the accuracy, predictability, 

12 and stability of the market-clearing auction 

13 price; or 

14 (B) facilitate greater program efficiency. 

15 (c) REIMBURSEMENT FOR EMBEDDED, REINJECTED, 

16 AND SEQUESTERED CARBON.—The Secretary shall pro17 vide carbon shares that are in excess of the aggregate 

18 quantity established under subsection (a)(2) to each— 

19 (1) operator of a carbon capture and storage 

20 facility, in a quantity that corresponds to the quan21 tity of fossil carbon verifiably sequestered by the car22 bon capture and storage facility in compliance with 

23 each appropriate law (including regulations); 


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1 (2) operator of an oil or gas reinjection project, 

2 in a quantity that corresponds to the quantity of re3 injected covered fossil carbon; and 

4 (3) manufacturer that embeds fossil carbon in 

5 the products produced by the manufacturer in— 

6 (A) a manner that prevents the emission of 

7 the fossil carbon into the atmosphere for a pe8 riod of time that is sufficient to prevent any 

9 negative impact on the climate; and 

10 (B) a quantity that corresponds to the ag11 gregate quantity of covered fossil carbon em12 bedded in the products. 

13 (d) ADJUSTMENT FOR VOLUNTARY CARBON REDUC14 TION MARKET.— 

15 (1) IN GENERAL.—The Secretary shall reduce 

16 the aggregate quantity of carbon shares established 

17 under subsection (a)(2) for all verifiable reductions 

18 of fossil carbon emissions attributable solely to vol19 untary carbon reduction purchases. 

20 (2) QUANTITY.—The aggregate quantity of car21 bon shares established under subsection (a)(2) shall 

22 be reduced by an amount equal to the product ob23 tained by multiplying— 

24 (A) the corresponding quantity of fossil 

25 carbon emission reductions that are attributable 


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1 solely to voluntary carbon reduction purchases; 

2 and 

3 (B)(i) if the market price of the voluntary 

4 carbon reduction purchases is not less than the 

5 market price of the corresponding carbon 

6 shares (as determined by the most recent auc7 tion described in subsection (b)), 1; or 

8 (ii) if clause (i) does not apply, the 

9 quotient of the market price of the voluntary 

10 carbon reduction purchases and the market 

11 price of the corresponding carbon shares (as de12 termined by the most recent auction described 

13 in subsection (b)). 

14 (3) VERIFICATION.—The quantity of carbon 

15 shares determined under paragraph (2) shall be 

16 verified by the Federal Energy Regulatory Commis17 sion. 

18 (e) CONTRACTUAL TREATMENT OF CARBON

19 SHARES.— 

20 (1) LITIGATION REDUCTION.—A carbon share 

21 surrendered for fossil carbon produced by an oil or 

22 natural gas well shall be considered to be a lifting 

23 expense. 

24 (2) COST ALLOCATION.—With respect to any 

25 long-term, fixed-price delivery contract entered into 


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1 before the date of enactment of this Act, the dura2 tion of which is longer than 1 year, there shall be 

3 a rebuttable presumption that— 

4 (A) this Act makes performance of the 

5 contract impracticable; and 

6 (B) each party that entered into the con7 tract assumed at the time of bargaining that 

8 the effects of this Act would not occur. 

9 (f) CARBON REFUND TRUST FUND.— 

10 (1) IN GENERAL.—There is established in the 

11 Treasury of the United States a trust fund to be 

12 known as the ‘‘Carbon Refund Trust Fund’’, con13 sisting of such amounts as may be appropriated to 

14 the trust fund under this subsection. 

15 (2) TRANSFER OF AUCTION PROCEEDS.—There 

16 are appropriated to the Carbon Refund Trust Fund, 

17 out of funds in the Treasury not otherwise appropriated, an amount equal to 3 18 ⁄4 of the proceeds from 

19 auctions conducted under subsection (b). 

20 (3) EXPENDITURES FROM FUND.—Amounts in 

21 the Carbon Refund Trust Fund shall be available for 

22 the purpose of making energy security dividends as 

23 provided in section 5. 


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1 SEC. 5. PER CAPITA DISTRIBUTION OF AUCTION PRO2 CEEDS. 

3 (a) IN GENERAL.—Every qualified individual is eligi4 ble to receive an energy security dividend for each month 

5 beginning with the first month after such individual be6 comes a qualified individual and ending with the last full 

7 month prior to an individual ceasing to be a qualified indi8 vidual. 

9 (b) ADMINISTRATION.— 

10 (1) ENERGY SECURITY DIVIDENDS.—To provide 

11 an energy security dividend to each qualifying indi12 vidual, the Secretary shall coordinate with— 

13 (A) the Commissioner of Social Security; 

14 (B) the Secretary of Energy; 

15 (C) the Secretary of Agriculture; 

16 (D) the Secretary of Health and Human 

17 Services; 

18 (E) the head of any other appropriate Fed19 eral agency, as determined by the Secretary; 

20 and 

21 (F) the Governor or appropriate official 

22 of— 

23 (i) each State; 

24 (ii) the District of Columbia; and 

25 (iii) each territory and possession of 

26 the United States. 


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1 (2) COST-EFFECTIVE MECHANISM REQUIRE2 MENT.—To distribute energy security dividends, the 

3 Secretary shall use the most cost-effective mecha4 nism, including any public benefit program or elec5 tronic delivery mechanism administered by— 

6 (A) the Federal Government; or 

7 (B) any State. 

8 (3) PRIVACY GUARANTEE REQUIREMENT.—The 

9 Secretary shall guarantee— 

10 (A) the protection of the privacy of every 

11 qualified individual; and 

12 (B) that any personal information of a 

13 qualified individual shall be used by the Sec14 retary only to ensure the accurate distribution 

15 of energy security dividends. 

16 (4) DIVIDEND TAXATION.—Any amount re17 ceived from the receipt of an energy security divi18 dend shall be excluded from gross income under the 

19 Internal Revenue Code of 1986. 

20 (c) FREQUENCY AND MODE OF ALLOCATION OF EN21 ERGY SECURITY DIVIDENDS.—The Secretary may modify 

22 the frequency or mode of allocation of energy security divi23 dends— 

24 (1) to minimize administrative costs associated 

25 with the program; or 


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1 (2) to increase the value of energy security divi2 dends. 

3 (d) MONITORING; ANNUAL REPORTS.— 

4 (1) MONITORING.—Effective beginning January 

5 1, 2012, the Administrator of the Energy Informa6 tion Administration shall, on a monthly basis, cal7 culate and record the incremental contribution of 

8 carbon share prices to wholesale and retail fossil fuel 

9 prices. 

10 (2) ANNUAL REPORTS.—Not later than June 1, 

11 2013, and annually thereafter, the Administrator of 

12 the Energy Information Administration shall pre13 pare and post on the website of the Energy Informa14 tion Administration a report that contains, for the 

15 period covered by the report, the results of the moni16 toring carried out by the Administrator of the En17 ergy Information Administration under paragraph 

18 (1). 

19 (e) ENERGY EFFICIENCY CONSUMER LOAN PRO20 GRAM.—As soon as practicable after the date of enactment 

21 of this Act, the Secretary shall establish a program that 

22 enables a qualifying individual to borrow against any fu23 ture energy security dividend to the qualifying individual 

24 to enable the qualifying individual to make investments 


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1 in approved energy efficiency or clean energy technologies 

2 and services that would, within a reasonable time period— 

3 (1) result in a reduced energy bill for the quali4 fying individual; and 

5 (2) reduce greenhouse gas emissions. 

6 (f) OFFICE OF CONSUMER ADVOCACY.— 

7 (1) ESTABLISHMENT.—As soon as practicable 

8 after the date of enactment of this Act, the Sec9 retary shall establish in the Department of the 

10 Treasury an Office of Consumer Advocacy to serve 

11 as an advocate for the public interest of energy con12 sumers. 

13 (2) DUTIES.—The Office of Consumer Advo14 cacy may— 

15 (A) represent (and appeal on behalf of) 

16 residential and small commercial customers of 

17 energy; 

18 (B) monitor and review energy customer 

19 complaints and grievances; and 

20 (C) investigate, collect data, and report on 

21 matters relating to the manner by which this 

22 Act impacts rates charged or services provided 

23 by public utilities and natural gas companies. 


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1 SEC. 6. CLEAN ENERGY REINVESTMENT TRUST FUND. 

2 (a) ESTABLISHMENT.—There is established in the 

3 Treasury of the United States a revolving fund, to be 

4 known as the ‘‘Clean Energy Reinvestment Trust Fund’’ 

5 or the ‘‘CERT Fund’’, consisting of such amounts as are 

6 appropriated to the Fund under subsection (b). 

7 (b) TRANSFERS TO FUND.— 

8 (1) IN GENERAL.—There are appropriated to 

9 the CERT Fund, out of funds in the Treasury not 

10 otherwise appropriated, amounts equivalent to— 

(A) 1 11 ⁄4 of the proceeds from auctions con12 ducted under section 4(b)(1) and all of the pro13 ceeds under section 4(b)(4)(C); 

14 (B) the amount of penalties transferred to 

15 the CERT Fund under section 4(a)(5)(E); and 

16 (C) the amount of fees transferred to the 

17 CERT Fund under section 4(a)(6)(D). 

18 (2) INVESTMENT OF CORPUS.—Rules similar to 

19 the rules of section 9602(b) of the Internal Revenue 

20 Code of 1986 shall apply for purposes of this sec21 tion. 

22 (c) EXPENDITURES FROM FUND.— 

23 (1) IN GENERAL.—To the extent that budget 

24 authority and appropriations are made available in 

25 advance and subject to paragraph (2), amounts in 

26 the CERT Fund shall be used to carry out programs 


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1 and initiatives (including allocation to the CERT 

2 Fund to support financing programs designed or ad3 ministered by the Clean Energy Deployment Admin4 istration), provide incentives, and make loans and 

5 grants— 

6 (A) to provide targeted and region-specific 

7 transition assistance to workers, communities, 

8 industries, and small businesses of the United 

9 States experiencing the greatest economic dis10 locations due to efforts to reduce carbon emis11 sions and address climate change and ocean 

12 acidification; 

13 (B) to provide targeted and region-specific 

14 compensation for early retirement of carbon-in15 tensive facilities, machinery, or related assets in 

16 the United States that are stranded by new 

17 market dynamics; 

18 (C) to provide targeted and region-specific 

19 mitigation and adaptation assistance to resi20 dents, communities, industries, and small busi21 nesses of the United States that experience the 

22 greatest demonstrable negative impacts from 

23 climate change; 

24 (D) subject to the criteria described in sec25 tion 4(a)(7)(C), to provide targeted relief to enVerDate Nov 24 2008 06:24 Dec 12, 2009 Jkt 089200 PO 00000 Frm 00034 Fmt 6652 Sfmt 6201 E:\BILLS\S2877.IS S2877

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1 ergy-intensive industries (including agriculture 

2 and forestry industries) that export goods or 

3 products to countries that do not have similar 

4 restrictions on fossil carbon; 

5 (E) to support training and development 

6 programs to prepare United States workers for 

7 careers in energy efficiency, renewable energy, 

8 and other emerging clean technology industries; 

9 (F) to curtail the emission of— 

10 (i) greenhouse gases other than car11 bon dioxide from fossil carbon; and 

12 (ii) nongreenhouse gas substances 

13 that exacerbate or accelerate climate 

14 change (including black carbon); 

15 (G) to fund cost-effective domestic and 

16 international projects that verifiably reduce, 

17 avoid, or sequester greenhouse gas emissions 

18 through the modification of agriculture, for19 estry, or other land use practices; 

20 (H) to ensure sustained and robust invest21 ments in clean energy and fuels research, devel22 opment, and deployment activities; 

23 (I) to fund projects or initiatives that 

24 verifiably increase energy efficiency or energy 

25 productivity; 


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1 (J) to fund programs that provide financial 

2 support for low-income families that experience 

3 difficulty paying high seasonal utility bills; 

4 (K) to fund projects or initiatives that sup5 port residential fuel switching (with priority 

6 given to projects or initiatives relating to home 

7 heating oil); 

8 (L) to provide matching grants to low-in9 come energy efficiency consumer loan recipi10 ents; 

11 (M) to carry out weatherization and im12 prove energy efficiency of low-income and public 

13 buildings; 

14 (N) to provide funding for climate change 

15 or ocean acidification mitigation and adaptation 

16 projects, activities, and research to increase the 

17 resilience of human populations and commu18 nities, fish and wildlife, and managed and 

19 unmanaged terrestrial, aquatic, and marine eco20 systems in areas at which impacts are likely to 

21 be most severe; 

22 (O) to provide funding for programs that 

23 protect or advocate for energy consumers (in24 cluding the Office of Consumer Advocacy estab25 lished under section 5(f)); and 


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1 (P) to ensure that the program does not 

2 contribute to the budget deficit of the Federal 

3 Government. 

4 (2) USE.—Amounts in the CERT Fund shall— 

5 (A) only be used for the purposes described 

6 in paragraph (1); 

7 (B) be allocated to ensure compliance with 

8 the standards established by section 3(b), in9 cluding meeting reasonable interyear emissions 

10 reduction standards; 

11 (C) to the extent practicable, be awarded— 

12 (i) on a competitive-bid basis; and 

13 (ii) in accordance with applicable laws 

14 (including regulations) and procedures of 

15 existing Federal programs; and 

16 (D) to the extent practicable, complement 

17 and leverage existing Federal programs, the 

18 scope and mission of which complement the 

19 purposes described in paragraph (1). 

20 (d) TRANSFERS OF AMOUNTS.— 

21 (1) IN GENERAL.—The amounts required to be 

22 transferred to the CERT Fund under this section 

23 shall be transferred at least monthly from the gen24 eral fund of the Treasury to the CERT Fund on the 

25 basis of estimates made by the Secretary. 


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1 (2) ADJUSTMENTS.—Proper adjustment shall 

2 be made in amounts subsequently transferred to the 

3 extent prior estimates were in excess of or less than 

4 the amounts required to be transferred. 

5 SEC. 7. SENSE OF THE SENATE. 

6 It is the sense of the Senate that— 

7 (1) the goals of this Act are complemented and 

8 supported by policies and incentives, appropriated 

9 programs, and pending legislative proposals, includ10 ing— 

11 (A) Federal and State renewable energy 

12 standards; 

13 (B) energy tax credits; 

14 (C) energy efficiency standards for build15 ings and household appliances; and 

16 (D) vehicle fuel economy standards; 

17 (2) the Federal Government should take further 

18 action to reduce the risks associated with greenhouse 

19 gas emissions, especially greenhouse gas emissions 

20 not derived from fossil carbon; 

21 (3) climate change is a global problem that re22 quires a global solution, and action by the United 

23 States alone or by a coalition of developed nations 

24 will not— 


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1 (A) adequately address the risks associated 

2 with greenhouse gas emissions; or 

3 (B) solve the global energy problem; and 

4 (4) international trade and climate policy agree5 ments are the most effective instruments by which 

6 to address concerns about carbon leakage and inter7 national trade competitiveness. 

Æ 


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