Select your localized edition:

Close ×

More Ways to Connect

Discover one of our 28 local entrepreneurial communities »

Be the first to know as we launch in new countries and markets around the globe.

Interested in bringing MIT Technology Review to your local market?

MIT Technology ReviewMIT Technology Review - logo


Unsupported browser: Your browser does not meet modern web standards. See how it scores »

{ action.text }

A long-awaited energy bill was unveiled today by its Senate sponsors, John Kerry (D-MA) and Joseph Lieberman (I-CT). According to a summary (pdf) of the bill, it would reduce carbon emissions by 17 percent by 2020 and by over 80 percent by 2050 by putting limits on the amount of carbon dioxide emissions from power plants and heavy industry, and from producers and importers of refined fuels for transportation.

The limits will only apply to those who emit over 25,000 tons of carbon dioxide a year, which works out to about 7,500 factories and power plants, according to the summary. These emitters will have to purchase emissions allowances, cut emissions, or both to meet the targets. Those who pollute less than their allowances can sell them to others in a market-based system.The proceeds from buying the allowances will be divided up–some will go to pay down the deficit; some will fund research and development; some will go to businesses to help them meet the caps; and the rest will be mailed to taxpayers in the form of a refund check. As the years go by, more of the proceeds will go directly to taxpayers.

The plan is very similar to the cap and trade system in a bill the House passed last year, except that one didn’t involve sending out refund checks (although there were provisions to help out poor people who are affected by higher energy bills). The new bill also only covers parts of the economy, rather than the whole thing.

Numerous provisions cater to different interests. It supports offshore drilling but lets states opt out. For those worried that a cap on carbon emissions will hurt the coal industry, the bill contains support for capturing and storing carbon from coal plants, which could help them meet the caps. Supporters of natural gas will find tax incentives for people to switch to natural gas powered vehicles, as well as other subtle changes that will make it more attractive to build natural gas power plants. Industries affected by the cap get a couple of boons. First, factories (not power plants) don’t get regulated until 2016, and the money from the purchases goes back to them to help them pay for switching to cleaner technology. They also are protected by trade provisions designed to keep business from moving to countries without caps on carbon. Farmers are exempt. And they’ll make billions with carbon offsets–such as planting trees that absorb and store carbon dioxide. Nuclear gets $54 billion in loan guarantees, as well as “risk insurance” to help get new power plants financed. There will also be money to promote battery-powered cars.

Renewable energy, carbon capture, and energy efficiency researchers should be happy. Money from the allowances and direct government funding will help extend R&D funding launched by the stimulus package last year.

The summary is careful to emphasize that Wall Street won’t make money by buying and trading carbon allowances because of strict regulations. But it didn’t mention how much this is likely to increase energy bills.

Now the sponsors have to start gathering votes. We’ll soon see if they’ve spread enough incentives around first to get it taken up on the Senate floor, and then maybe even passed.

9 comments. Share your thoughts »

Tagged: Energy, renewable energy, climate change, greenhouse gases, emissions, cap and trade, energy bill

Reprints and Permissions | Send feedback to the editor

From the Archives


Introducing MIT Technology Review Insider.

Already a Magazine subscriber?

You're automatically an Insider. It's easy to activate or upgrade your account.

Activate Your Account

Become an Insider

It's the new way to subscribe. Get even more of the tech news, research, and discoveries you crave.

Sign Up

Learn More

Find out why MIT Technology Review Insider is for you and explore your options.

Show Me