Climate change is a global issue, but proposed responses generally would require action at the national level. In 1992, the United States ratified the United Nations Framework Convention on Climate Change (UNFCCC), which called on industrialized countries to take the lead in reducing the six primary greenhouse gases to 1990 levels by the year 2000. For more than a decade, a variety of voluntary and regulatory actions have been proposed or undertaken in the United States, including monitoring of power plant carbon dioxide emissions, improved appliance efficiency, and incentives for developing renewable energy sources. However, greenhouse gas emissions have continued to increase. In 2001, President George W. Bush rejected the Kyoto Protocol, which called for legally binding commitments by developed countries to reduce their greenhouse gas emissions. He has also rejected the concept of mandatory emissions reductions. Since then, the Administration has focused U.S. climate change policy on voluntary initiatives to reduce the growth in greenhouse gas emissions. In contrast, in 2005, the Senate passed a Sense of the Senate resolution on climate change declaring that Congress should enact legislation establishing a mandatory, market-based program to slow, stop, and reverse the growth of greenhouse gases at a rate and in a manner that "will not significantly harm the United States economy" and "will encourage comparable action" by other nations. A number of congressional proposals to advance programs designed to reduce greenhouse gases have been introduced in the 110 th Congress. These have generally followed one of three tracks. The first is to improve the monitoring of greenhouse gas emissions to provide a basis for research and development and for any potential future reduction scheme. The second is to enact a market-oriented greenhouse gas reduction program along the lines of the trading provisions of the current acid rain reduction program established by the 1990 Clean Air Act Amendments. The third is to enact energy and related programs that would have the added effect of reducing greenhouse gases: an example would be a requirement that electricity producers generate a portion of their electricity from renewable resources (a renewable portfolio standard). This report focuses on the second category of bills, and on two bills in particular: S. 1766 and S. 2191 (as reported). Note that CRS has a more comprehensive discussion of the costs and benefits of S. 2191 available. Many of the caveats and limitations about modeling and forecasting in that report are applicable to this one. Readers are urged to consult that report in addition to reading this one. S. 1766 . Introduced July 11, 2007, by Senators Bingaman and Specter, S. 1766 would set emissions targets on most of the country's greenhouse gas emissions. Beginning in 2012, covered entities would face emissions limits, with emissions targets set at their 2006 levels in 2020. The emissions targets would decline steadily until 2030, when the emission target would be set at the entities' 1990 levels. For each ton of carbon dioxide equivalent, covered entities can comply with the bill by submitting an allowance through a trading program or by paying a safety valve price (called a Technology Accelerator Payment or TAP). Under the trading program, allowances are allocated to various entities, including covered entities; eligible facilities (non-covered facilities that may be in covered sectors), such as coal mines and carbon-intensive industries; states; and parties conducting sequestration activities. Initially, 24% of all allowances are auctioned, a percentage that increases over time. The TAP is set at $12 per metric ton of carbon dioxide equivalent in 2012, increasing 5% annually above the rate of inflation. The bill also requires countries that do not take comparable action to control emissions to submit special allowances (or their foreign equivalent) to accompany imports into the United States of covered greenhouse gas intensive goods and/or primary products. S. 2191 . Senators Lieberman and Warner introduced S. 2191 on October 18, 2007. As reported by the Senate Committee on Environment and Public Works the bill would cover emissions from petroleum producers and importers, facilities that produce or import more than 10,000 tons (of carbon dioxide equivalent) of fluorinated chemicals annually, any facility that uses more than 5,000 tons of coal annually, any natural gas processing plant or importer (including LNG), and any facility that emits more than 10,000 tons (of carbon dioxide equivalent) of HFCs annually as a byproduct of hydrochloro-fluorocarbon production. S. 2191 is estimated by its sponsors to reduce total U.S. greenhouse gas emissions 19% below 2005 levels by 2020 (up from 15% as introduced) and 63% below 2005 levels by 2050. The bill would establish a Carbon Market Efficiency Board to observe the allowance market and implement cost-relief measures if necessary. Like S. 1766 , S. 2191 also requires countries that do not take comparable action to control emissions to submit special allowances (or their foreign equivalent) to accompany exports to the United States of any covered greenhouse gas intensive goods and primary products. On April 10, 2008, a proposed amendment to S. 2191 was submitted to the Congressional Budget Office (CBO) to be included in the scoring of the bill. The amendment would provide for some of the auctioned revenues to be put aside for deficit reduction purposes. On May 20, Senator Boxer introduced S. 3036 , which is identical to the reported version of S. 2191 except that it contains the above deficit reduction amendment. On June 2, 2008, the Senate invoked cloture on a motion to proceed on S. 3036 . Table 1 summarizes the major provisions of each bill. Two studies have been completed that compare S. 1766 and S. 2191 under the same baseline conditions. The most comprehensive analysis has been conducted by the U.S. Environmental Protection Agency (EPA). The reports are entitled EPA Analysis of the Low Carbon Economy Act of 2007: S. 1766 in the 110 th Congress (January 15, 2008), and EPA Analysis of the Lieberman-Warner Climate Security Act of 2008: S. 2191 in 110 th Congress (March 14, 2008). The analyses employ a suite of models and basecases, along with some useful sensitivity analysis. This report will focus on three of the models and two basecases. The first model is ADAGE: a computable general equilibrium (CGE) model developed by RTI International. The S. 1766 and S. 2191 cases employing the reference basecase are designated EPA/ADAGE-REF in this report, while the cases employing the high technology basecase are designated EPA/ADAGE-TECH. The second model is IGEM: a CGE model developed by Dale Jorgenson Associates. The cases employing the reference basecase are designated EPA/IGEM-REF in this report, while the cases employing the high technology basecase are designated EPA/IGEM-TECH. The third model is IPM: a dynamic, deterministic linear programming model of the U.S. electric power sector developed by ICF Resources. The cases employing the IPM model are designated EPA/IPM in this report. A second analysis has been conducted by the Energy Information Administration (EIA). The report is entitled Energy Market and Economic Impacts of S. 2191 , the Lieberman-Warner Climate Security Act of 2007 (April 2008) and included an updated analysis of S. 1766 . The analysis employs EIA's NEMS model: a macroeconomic forecasting model with extensive energy technology detail. In addition to conducting a "core" analysis of S. 2191 using its preliminary 2008 Annual Energy Outlook (AEO) Baseline , EIA also conducts some useful sensitivity analysis that focuses on the upside risk of increased energy prices under S. 2191 . However, EIA did not update the sensitivity analysis it had previously conducted on S. 1766 . The core S. 2191 analysis and the updated S. 1766 analysis are designated EIA/NEMS in this report. Figure 1 and Figure 2 present greenhouse gas emissions under S. 1766 and S. 2191 as estimated by the models. For S. 2191 , the spread in projected emissions reductions is largely the result of two factors: (1) estimated emissions growth in the 10%-15% of the economy not covered under the bill, and (2) estimated use of international allowances or offsets to meet emission reduction requirements. If a covered entity submits an international allowance or offset for compliance purposes, the entity can emit a comparable amount domestically. This latter point is most evident in the ADAGE estimates. For S. 1766 , the spread would also be in response to these uncertainties, although the EPA cases and EIA's updated analysis did not include international credits. What the figures do not show is that the TAP (safety valve) is increasingly used by covered entities after 2030, preventing the projected emissions from achieving the targets specified under the bill. This result is discussed more fully later. Figure 3 and Figure 4 present the estimated GDP per capita as estimated by each of the scenarios for the reference case and under S. 1766 and S. 2191 . Not surprisingly, the GDP effects of both bills are absorbed by the uncertainty reflected in the reference case assumptions. In the five scenarios, the increase in GDP between 2010 and 2030 ranges between 62% and 81% in the base cases. Under S. 2191 , the more stringent bill, the range is 62% to 80%. These figures indicate the models' conclusions that the economy continues to grow under S. 1766 and S. 2191 , albeit at a somewhat slower rate than under their respective reference cases. The virtual superimposition of the curves in Figure 3 and Figure 4 shows how little variability there is between the base cases and the model results. To help sort this out further, Figure 5 and Figure 6 present the relative percentage reduction in GDP per capita for the two bills.