Daniel Hall, Ray Kopp, and Billy Pizer

Background The US Climate Action Partnership (USCAP) includes 10 large companies (Alcoa, BP America, Caterpillar Inc., Duke Energy, DuPont, FPL Group, General Electric, Lehman Brothers, PG&E Corporation, and PNM Resources) and four environmental groups (Environmental Defense, Natural Resources Defense Council, Pew Center on Global Climate Change, and World Resources Institute).  More information is available at www.us-cap.org. Report Overview The USCAP report, "A Call for Action," recommends "prompt enactment of national legislation in the United States to slow, stop, and reverse the growth of greenhouse gas emissions over the shortest period of time reasonably achievable."

Report Summary: U.S. Climate Action Partnership Daniel Hall, Ray Kopp and Billy Pizer January 2006

The centerpiece of the report is a call for a national cap-and-trade program in the United States , with recommendations for a basic framework for the program. Calls are also made for technology and sector-specific policies. Finally, the report recommends that the U.S. government should engage other major emitting countries and "become more involved in developing the post-2012 international arrangements for addressing climate change."

Environmental Goal

• Stabilize global atmospheric greenhouse gas (GHG) concentrations at 450–550 parts per million carbon dioxide equivalent (ppm CO₂e)

• An economy-wide cap-and-trade program with the following targets:
• 100–105% of current emissions levels within 5 years
• 90–100% of current levels within 10 years
• 70–90% of current levels within 15 years
• 20–40% of current levels by 2050
• Point of regulation either:
• Upstream (e.g., coal mines, refineries, etc.) OR
• "Hybrid," with downstream for large stationary sources (~80% of emissions) and upstream for others
• Allocating allowances:
• Allocation should mitigate costs to entities and regions that:
• Are more adversely impacted by emission limits
• Have already made investments in higher-cost, low-GHG technologies
• Are transitioning from older, higher emitting technologies to newer, lower emitting technologies
• A "significant portion" of allowances initially distributed free to:
• Capped entities
• Economic sectors disadvantaged by the cap
• Free allocations to the private sector phased out over time
• Cost control measures (to give businesses greater confidence that costs will be limited):
• The "most powerful cost control measure is a robust cap and trade program"
• "any … cost-control option … must ensure the integrity of the emissions cap"
• Measures could include:
• Safety valve
• Borrowing
• Strategic allowance reserve
• Technology incentives
• Offsets:
• Allow offsets from both domestic and international sources for part of obligations
• Must be "additional, verifiable, permanent, and enforceable."
• National greenhouse gas registry and inventory:
• Put in place by the end of 2008
• Credit for early action
• Businesses who can demonstrate reductions prior to the start of the program and after a legislated baseline year (e.g., 1995) should be given credit for those reductions in the proposed trading program.

• Joint public/private cost-sharing and oversight
• Dedicated R&D revenue stream (not annual appropriations)
• Public/private institution to govern
• Deployment policies, such as:
• Loan guarantees
• Investment tax credits
• Procurement standards

• New coal-burning facilities
• Policies should "speed transition to low- and zero-emission stationary sources and strongly discourage further construction of stationary sources that cannot easily capture CO₂ emissions for geologic sequestration."
• No allowance allocations to new sources that "cannot easily capture CO₂."
• Carbon capture
• EPA should promulgate regulations to permit sequestration
• Congress should fund at least three sequestration demonstration projects
• Transportation
• Congress should:
• Promote low-carbon transportation fuels
• "Cost-effectively" decrease greenhouse gas emissions from cars and trucks (either by promoting low-emission vehicles or raising CAFE standards)
• Increase mass transit
• Promote better urban growth planning
• Educate consumers
• Address air, rail, and marine emissions
• Buildings and energy efficiency
• Climate policies should:
• Incentivize energy efficiency
• Strengthen energy efficiency standards for buildings and appliances
• Put in place incentives and tax reforms to advance "smart" technologies and distributed generation

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Resources for the Future, an independent and nonpartisan Washington, D.C., think-tank, seeks to improve environmental and natural resource policymaking worldwide through objective social science research of the highest caliber.