To provide for a program to accelerate the reduction of greenhouse gas emissions in the United States.

SA 826. Mr. McCAIN (for himself and Mr. Lieberman) proposed an
amendment to the bill H.R. 6, to ensure jobs for our future with
secure, affordable, and reliable energy; which was ordered to lie on
the table; as follows:

At the end of the bill, add the following:

DIVISION      --CLIMATE STEWARDSHIP AND INNOVATION

SEC. ------01. SHORT TITLE.

This division may be cited as the ``Climate Stewardship and
Innovation Act of 2005''.

SEC. ------02. TABLE OF CONTENTS.

The table of contents for this division is as follows:

Sec. ------01. Short title.
Sec. ------02. Table of contents.
Sec. ------03. Definitions.

Title I--Federal Climate Change Research and Related Activities

Sec. --0101. National Science Foundation fellowships.
Sec. --0102. Report on United States impact of Kyoto protocol.
Sec. --0103. Research grants.
Sec. --0104. Abrupt climate change research.
Sec. --0105. Impact on low-income populations research.
Sec. --0106. NIST greenhouse gas functions.
Sec. --0107. Development of new measurement technologies.
Sec. --0108. Enhanced environmental measurements and standards.
Sec. --0109. Technology development and diffusion.
Sec. --0110. Agricultural outreach program.

Title II--National Greenhouse Gas Database

Sec. --0201. National greenhouse gas database and registry established.
Sec. --0202. Inventory of greenhouse gas emissions for covered
entities.
Sec. --0203. Greenhouse gas reduction reporting.
Sec. --0204. Measurement and verification.

Title III--Market-driven Greenhouse Gas Reductions

Subtitle A--Emission Reduction Requirements; Use of Tradeable
Allowances

Sec. --0301. Covered entities must submit allowances for emissions.
Sec. --0302. Compliance.
Sec. --0303. Borrowing against future reductions.
Sec. --0304. Other uses of tradeable allowances.
Sec. --0305. Exemption of source categories.

Subtitle B--Establishment and Allocation of Tradeable Allowances

Sec. --0331. Establishment of tradeable allowances.
Sec. --0332. Determination of tradeable allowance allocations.
Sec. --0333. Allocation of tradeable allowances.
Sec. --0334. Ensuring target adequacy.
Sec. --0335. Initial allocations for early participation and
accelerated participation.
Sec. --0336. Bonus for accelerated participation.

Subtitle C--Climate Change Credit Corporation

Sec. --0351. Establishment.
Sec. --0352. Purposes and functions.

Subtitle D--Sequestration Accounting; Penalties

Sec. --0371. Sequestration accounting.
Sec. --0372. Penalties.

Title IV--Innovation and Competitiveness

Sec. --0401. Findings.

Subtitle A--Innovation Infrastructure

Sec. --0421. The Innovation Administration.
Sec. --0422. Technology transfer opportunities.
Sec. --0423. Government-sponsored technology investment program.
Sec. --0424. Federal technology innovation personnel incentives.
Sec. --0425. Interdisciplinary research and commercialization.
Sec. --0426. Climate innovation partnerships.
Sec. --0427. National medal of climate stewardship innovation.
Sec. --0428. Math and science teachers' enhancement program.
Sec. --0429. Patent study.
Sec. --0430. Lessons-learned program.

Subtitle B--Specific Program Initiatives

Sec. --0451. Transportation.
Sec. --0452. Agricultural sequestration.
Sec. --0453. Geological storage of sequestered greenhouse gases.
Sec. --0454. Energy efficiency audits.
Sec. --0455. Adaptation technologies.
Sec. --0456. Advanced research and development for safety and
nonproliferation.

Subtitle C--Climate Technology Deployment Program

part i--program authority

Sec. --0471. Government-industry partnerships for first-of-a-kind
engineering design.
Sec. --0472. Demonstration programs.

part ii--financing

Sec. --0481. Climate Technology Financing Board.
Sec. --0482. Responsibilities of the Secretary.
Sec. --0483. Limitations.
Sec. --0484. Source of funding for programs.

part iii--definitions

Sec. --0486. Definitions.

Subtitle D--Reverse Auction for Technology Dissemination

Sec. --0491. Climate technology challenge program.

SEC. ------03. DEFINITIONS.

In this Act:
(1) Administrator.--The term ``Administrator'' means the
Administrator of the Environmental Protection Agency.
(2) Baseline.--The term ``baseline'' means the historic
greenhouse gas emission levels of an entity, as adjusted
upward by the Administrator to reflect actual reductions that
are verified in accordance with--

[[Page S6961]]

(A) regulations promulgated under section --0201(c)(1); and
(B) relevant standards and methods developed under this
title.
(3) Carbon dioxide equivalents.--The term ``carbon dioxide
equivalents'' means, for each greenhouse gas, the amount of
each such greenhouse gas that makes the same contribution to
global warming as one metric ton of carbon dioxide, as
determined by the Administrator.
(4) Covered sectors.--The term ``covered sectors'' means
the electricity, transportation, industry, and commercial
sectors, as such terms are used in the Inventory.
(5) Covered entity.--The term ``covered entity'' means an
entity (including a branch, department, agency, or
instrumentality of Federal, State, or local government)
that--
(A) owns or controls a source of greenhouse gas emissions
in the electric power, industrial, or commercial sectors of
the United States economy (as defined in the Inventory),
refines or imports petroleum products for use in
transportation, or produces or imports hydrofluorocarbons,
perfluorocarbons, or sulfur hexafluoride; and
(B) emits, from any single facility owned by the entity,
over 10,000 metric tons of greenhouse gas per year, measured
in units of carbon dioxide equivalents, or produces or
imports--
(i) petroleum products that, when combusted, will emit,
(ii) hydrofluorocarbons, perfluorocarbons, or sulfur
hexafluoride that, when used, will emit, or
(iii) other greenhouse gases that, when used, will emit,
over 10,000 metric tons of greenhouse gas per year, measured
in units of carbon dioxide equivalents.
(6) Database.--The term ``database'' means the national
greenhouse gas database established under section --0201.
(7) Direct emissions.--The term ``direct emissions'' means
greenhouse gas emissions by an entity from a facility that is
owned or controlled by that entity.
(8) Facility.--The term ``facility'' means a building,
structure, or installation located on any 1 or more
contiguous or adjacent properties of an entity in the United
States.
(9) Greenhouse gas.--The term ``greenhouse gas'' means--
(A) carbon dioxide;
(B) methane;
(C) nitrous oxide;
(D) hydrofluorocarbons;
(E) perfluorocarbons; and
(F) sulfur hexafluoride.
(10) Indirect emissions.--The term ``indirect emissions''
means greenhouse gas emissions that are--
(A) a result of the activities of an entity; but
(B) emitted from a facility owned or controlled by another
entity.
(11) Inventory.--The term ``Inventory'' means the Inventory
of U.S. Greenhouse Gas Emissions and Sinks, prepared in
compliance with the United Nations Framework Convention on
Climate Change Decision 3/CP.5).
(12) Leakage.--The term ``leakage'' means--
(A) an increase in greenhouse gas emissions by one facility
or entity caused by a reduction in greenhouse gas emissions
by another facility or entity; or
(B) a decrease in sequestration that is caused by an
increase in sequestration at another location.
(13) Permanence.--The term ``permanence'' means the extent
to which greenhouse gases that are sequestered will not later
be returned to the atmosphere.
(14) Registry.--The term ``registry'' means the registry of
greenhouse gas emission reductions established under section
--0201(b)(2).
(15) Secretary.--The term ``Secretary'' means the Secretary
of Commerce.
(16) Sequestration.--
(A) In general.--The term ``sequestration'' means the
capture, long-term separation, isolation, or removal of
greenhouse gases from the atmosphere.
(B) Inclusions.--The term ``sequestration'' includes--
(i) agricultural and conservation practices;
(ii) reforestation;
(iii) forest preservation; and
(iv) any other appropriate method of capture, long-term
separation, isolation, or removal of greenhouse gases from
the atmosphere, as determined by the Administrator.
(C) Exclusions.--The term ``sequestration'' does not
include--
(i) any conversion of, or negative impact on, a native
ecosystem; or
(ii) any introduction of non-native species.
(17) Source category.--The term ``source category'' means a
process or activity that leads to direct emissions of
greenhouse gases, as listed in the Inventory.
(18) Stationary source.--The term ``stationary source''
means generally any source of greenhouse gases except those
emissions resulting directly from an engine for
transportation purposes.

TITLE I--FEDERAL CLIMATE CHANGE RESEARCH AND RELATED ACTIVITIES

SEC. 101. NATIONAL SCIENCE FOUNDATION FELLOWSHIPS.

The Director of the National Science Foundation shall
establish a fellowship program for students pursuing graduate
studies in global climate change, including capability in
observation, analysis, modeling, paleoclimatology,
consequences, and adaptation.

SEC. 102. REPORT ON UNITED STATES IMPACT OF KYOTO PROTOCOL.

Within 6 months after the date of enactment of this Act,
the Secretary shall execute a contract with the National
Academy of Science for a report to the Senate Committee on
Commerce, Science, and Transportation and the House of
Representatives Committee on Science on the effects that the
entry into force of the Kyoto Protocol without United States
participation will have on--
(1) United States industry and its ability to compete
globally;
(2) international cooperation on scientific research and
development; and
(3) United States participation in international
environmental climate change mitigation efforts and
technology deployment.

SEC. 103. RESEARCH GRANTS.

Section 105 of the Global Change Research Act of 1990 (15
U.S.C. 2935) is amended--
(1) by redesignating subsection (c) as subsection (d); and
(2) by inserting after subsection (b) the following:
``(c) Research Grants.--
``(1) Committee to develop list of priority research
areas.--The Committee shall develop a list of priority areas
for research and development on climate change that are not
being addressed by Federal agencies.
``(2) Director of ostp to transmit list to nsf.--The
Director of the Office of Science and Technology Policy shall
transmit the list to the National Science Foundation.
``(3) Funding through nsf.--
``(A) Budget request.--The National Science Foundation
shall include, as part of the annual request for
appropriations for the Science and Technology Policy
Institute, a request for appropriations to fund research in
the priority areas on the list developed under paragraph (1).
``(B) Authorization.--For fiscal year 2005 and each fiscal
year thereafter, there are authorized to be appropriated to
the National Science Foundation not less than $25,000,000, to
be made available through the Science and Technology Policy
Institute, for research in those priority areas.''.

SEC. 104. ABRUPT CLIMATE CHANGE RESEARCH.

(a) In General.--The Secretary, through the National
Oceanic and Atmospheric Administration, shall carry out a
program of scientific research on potential abrupt climate
change designed--
(1) to develop a global array of terrestrial and
oceanographic indicators of paleoclimate in order
sufficiently to identify and describe past instances of
abrupt climate change;
(2) to improve understanding of thresholds and
nonlinearities in geophysical systems related to the
mechanisms of abrupt climate change;
(3) to incorporate these mechanisms into advanced
geophysical models of climate change; and
(4) to test the output of these models against an improved
global array of records of past abrupt climate changes.
(b) Abrupt Climate Change Defined.--In this section, the
term ``abrupt climate change'' means a change in climate that
occurs so rapidly or unexpectedly that human or natural
systems may have difficulty adapting to it.
(c) Authorization of Appropriations.--There are authorized
to be appropriated to the Secretary for fiscal year 2005
$60,000,000 to carry out this section, such sum to remain
available until expended.

SEC. 105. IMPACT ON LOW-INCOME POPULATIONS RESEARCH.

(a) In General.--The Secretary shall conduct research on
the impact of climate change on low-income populations
everywhere in the world. The research shall--
(1) include an assessment of the adverse impact of climate
change on developing countries and on low-income populations
in the United States;
(2) identify appropriate climate change adaptation measures
and programs for developing countries and low-income
populations and assess the impact of those measures and
programs on low-income populations;
(3) identify appropriate climate change mitigation
strategies and programs for developing countries and low-
income populations and assess the impact of those strategies
and programs on developing countries and on low-income
populations in the United States; and
(4) include an estimate of the costs of developing and
implementing those climate change adaptation and mitigation
programs.
(b) Report.--Within 1 year after the date of enactment of
this Act, the Secretary shall transmit a report on the
research conducted under subsection (a) to the Senate
Committee on Commerce, Science, and Transportation, the
Senate Committee on Environment and Public Works, the House
of Representatives Committee on Science, and the House of
Representatives Committee on Energy and Commerce.
(c) Authorization of Appropriations.--There are authorized
to be appropriated to the Secretary $2,000,000 to carry out
the research required by subsection (a).

SEC. 106. NIST GREENHOUSE GAS FUNCTIONS.

Section 2(c) of the National Institute of Standards and
Technology Act (15 U.S.C. 272(c)) is amended--
(1) by striking ``and'' after the semicolon in paragraph
(21);
(2) by redesignating paragraph (22) as paragraph (23); and
(3) by inserting after paragraph (21) the following:

[[Page S6962]]

``(22) perform research to develop enhanced measurements,
calibrations, standards, and technologies which will
facilitate activities that reduce emissions of greenhouse
gases or increase sequestration of greenhouse gases,
including carbon dioxide, methane, nitrous oxide, ozone,
perfluorocarbons, hydrofluorocarbons, and sulfur
hexafluoride; and''.

SEC. 107. DEVELOPMENT OF NEW MEASUREMENT TECHNOLOGIES.

To facilitate implementation of section --0204, the
Secretary shall initiate a program to develop, with technical
assistance from appropriate Federal agencies, innovative
standards and measurement technologies to calculate
greenhouse gas emissions or reductions for which no accurate
or reliable measurement technology exists. The program shall
include--
(1) technologies (including remote sensing technologies) to
measure carbon changes and other greenhouse gas emissions and
reductions from agriculture, forestry, and other land use
practices; and
(2) technologies to calculate non-carbon dioxide greenhouse
gas emissions from transportation.

SEC. 108. ENHANCED ENVIRONMENTAL MEASUREMENTS AND STANDARDS.

The National Institute of Standards and Technology Act (15
U.S.C. 271 et seq.) is amended--
(1) by redesignating sections 17 through 32 as sections 18
through 33, respectively; and
(2) by inserting after section 16 the following:

``SEC. 17. CLIMATE CHANGE STANDARDS AND PROCESSES.

``(a) In General.--The Director shall establish within the
Institute a program to perform and support research on global
climate change standards and processes, with the goal of
providing scientific and technical knowledge applicable to
the reduction of greenhouse gases (as defined in section ----
--03(8) of the Climate Stewardship and Innovation Act of
2005) and of facilitating implementation of section --0204 of
that Act.
``(b) Research Program.--
``(1) In general.--The Director is authorized to conduct,
directly or through contracts or grants, a global climate
change standards and processes research program.
``(2) Research projects.--The specific contents and
priorities of the research program shall be determined in
consultation with appropriate Federal agencies, including the
Environmental Protection Agency, the National Oceanic and
Atmospheric Administration, and the National Aeronautics and
Space Administration. The program generally shall include
basic and applied research--
``(A) to develop and provide the enhanced measurements,
calibrations, data, models, and reference material standards
which will enable the monitoring of greenhouse gases;
``(B) to assist in establishing a baseline reference point
for future trading in greenhouse gases and the measurement of
progress in emissions reduction;
``(C) that will be exchanged internationally as scientific
or technical information which has the stated purpose of
developing mutually recognized measurements, standards, and
procedures for reducing greenhouse gases; and
``(D) to assist in developing improved industrial processes
designed to reduce or eliminate greenhouse gases.
``(c) National Measurement Laboratories.--
``(1) In general.--In carrying out this section, the
Director shall utilize the collective skills of the National
Measurement Laboratories of the National Institute of
Standards and Technology to improve the accuracy of
measurements that will permit better understanding and
control of these industrial chemical processes and result in
the reduction or elimination of greenhouse gases.
``(2) Material, process, and building research.--The
National Measurement Laboratories shall conduct research
under this subsection that includes--
``(A) developing material and manufacturing processes which
are designed for energy efficiency and reduced greenhouse gas
emissions into the environment;
``(B) developing chemical processes to be used by industry
that, compared to similar processes in commercial use, result
in reduced emissions of greenhouse gases or increased
sequestration of greenhouse gases; and
``(C) enhancing building performance with a focus in
developing standards or tools which will help incorporate
low- or no-emission technologies into building designs.
``(3) Standards and tools.--The National Measurement
Laboratories shall develop standards and tools under this
subsection that include software to assist designers in
selecting alternate building materials, performance data on
materials, artificial intelligence-aided design procedures
for building subsystems and `smart buildings', and improved
test methods and rating procedures for evaluating the energy
performance of residential and commercial appliances and
products.
``(d) National Voluntary Laboratory Accreditation
Program.--The Director shall utilize the National Voluntary
Laboratory Accreditation Program under this section to
establish a program to include specific calibration or test
standards and related methods and protocols assembled to
satisfy the unique needs for accreditation in measuring the
production of greenhouse gases. In carrying out this
subsection the Director may cooperate with other departments
and agencies of the Federal Government, State and local
governments, and private organizations.''.

SEC. 109. TECHNOLOGY DEVELOPMENT AND DIFFUSION.

The Director of the National Institute of Standards and
Technology, through the Manufacturing Extension Partnership
Program, may develop a program to promote the use, by the
more than 380,000 small manufacturers, of technologies and
techniques that result in reduced emissions of greenhouse
gases or increased sequestration of greenhouse gases.

SEC. 110. AGRICULTURAL OUTREACH PROGRAM.

(a) In General.--The Secretary of Agriculture, acting
through the Global Change Program Office and in consultation
with the heads of other appropriate departments and agencies,
shall establish the Climate Change Education and Outreach
Initiative Program to educate, and reach out to, agricultural
organizations and individual farmers on global climate
change.
(b) Program Components.--The program--
(1) shall be designed to ensure that agricultural
organizations and individual farmers receive detailed
information about--
(A) the potential impact of climate change on their
operations and well-being;
(B) market-driven economic opportunities that may come from
storing carbon in soils and vegetation, including emerging
private sector markets for carbon storage; and
(C) techniques for measuring, monitoring, verifying, and
inventorying such carbon capture efforts;
(2) may incorporate existing efforts in any area of
activity referenced in paragraph (1) or in related areas of
activity;
(3) shall provide--
(A) outreach materials to interested parties;
(B) workshops; and
(C) technical assistance; and
(4) may include the creation and development of regional
centers on climate change or coordination with existing
centers (including such centers within NRCS and the
Cooperative State Research Education and Extension Service).

TITLE II--NATIONAL GREENHOUSE GAS DATABASE

SEC. 201. NATIONAL GREENHOUSE GAS DATABASE AND REGISTRY
ESTABLISHED.

(a) Establishment.--As soon as practicable after the date
of enactment of this Act, the Administrator, in coordination
with the Secretary, the Secretary of Energy, the Secretary of
Agriculture, and private sector and nongovernmental
organizations, shall establish, operate, and maintain a
database, to be known as the ``National Greenhouse Gas
Database'', to collect, verify, and analyze information on
greenhouse gas emissions by entities.
(b) National Greenhouse Gas Database Components.--The
database shall consist of--
(1) an inventory of greenhouse gas emissions; and
(2) a registry of greenhouse gas emission reductions and
increases in greenhouse gas sequestrations.
(c) Comprehensive System.--
(1) In general.--Not later than 2 years after the date of
enactment of this Act, the Administrator shall promulgate
regulations to implement a comprehensive system for
greenhouse gas emissions reporting, inventorying, and
reductions registration.
(2) Requirements.--The Administrator shall ensure, to the
maximum extent practicable, that--
(A) the comprehensive system described in paragraph (1) is
designed to--
(i) maximize completeness, transparency, and accuracy of
information reported; and
(ii) minimize costs incurred by entities in measuring and
reporting greenhouse gas emissions; and
(B) the regulations promulgated under paragraph (1)
establish procedures and protocols necessary--
(i) to prevent the double-counting of greenhouse gas
emissions or emission reductions reported by more than 1
reporting entity;
(ii) to provide for corrections to errors in data submitted
to the database;
(iii) to provide for adjustment to data by reporting
entities that have had a significant organizational change
(including mergers, acquisitions, and divestiture), in order
to maintain comparability among data in the database over
time;
(iv) to provide for adjustments to reflect new technologies
or methods for measuring or calculating greenhouse gas
emissions;
(v) to account for changes in registration of ownership of
emission reductions resulting from a voluntary private
transaction between reporting entities; and
(vi) to clarify the responsibility for reporting in the
case of any facility owned or controlled by more than 1
entity.
(3) Serial numbers.--Through regulations promulgated under
paragraph (1), the Administrator shall develop and implement
a system that provides--
(A) for the verification of submitted emissions reductions
registered under section --0204;
(B) for the provision of unique serial numbers to identify
the registered emission reductions made by an entity relative
to the baseline of the entity;
(C) for the tracking of the registered reductions
associated with the serial numbers; and
(D) for such action as may be necessary to prevent
counterfeiting of the registered reductions.

[[Page S6963]]

SEC. 202. INVENTORY OF GREENHOUSE GAS EMISSIONS FOR COVERED
ENTITIES.

(a) In General.--Not later than July 1st of each calendar
year after 2008, each covered entity shall submit to the
Administrator a report that states, for the preceding
calendar year, the entity-wide greenhouse gas emissions (as
reported at the facility level), including--
(1) the total quantity of direct greenhouse gas emissions
from stationary sources, expressed in units of carbon dioxide
equivalents, except those reported under paragraph (3);
(2) the amount of petroleum products sold or imported by
the entity and the amount of greenhouse gases, expressed in
units of carbon dioxide equivalents, that would be emitted
when these products are used for transportation in the United
States, as determined by the Administrator under section --
0301(b);
(3) the amount of hydrofluorocarbons, perfluorocarbons, or
sulfur hexafluoride, expressed in units of carbon dioxide
equivalents, that are sold or imported by the entity and will
ultimately be emitted in the United States, as determined by
the Administrator under section --0301(d); and
(4) such other categories of emissions as the Administrator
determines in the regulations promulgated under section --
0201(c)(1) may be practicable and useful for the purposes of
this division, such as--
(A) indirect emissions from imported electricity, heat, and
steam;
(B) process and fugitive emissions; and
(C) production or importation of greenhouse gases.
(b) Collection and Analysis of Data.--The Administrator
shall collect and analyze information reported under
subsection (a) for use under title III.

SEC. 203. GREENHOUSE GAS REDUCTION REPORTING.

(a) In General.--Subject to the requirements described in
subsection (b)--
(1) a covered entity may register greenhouse gas emission
reductions achieved after 1990 and before 2010 under this
section; and
(2) an entity that is not a covered entity may register
greenhouse gas emission reductions achieved at any time since
1990 under this section.
(b) Requirements.--
(1) In general.--The requirements referred to in subsection
(a) are that an entity (other than an entity described in
paragraph (2)) shall--
(A) establish a baseline; and
(B) submit the report described in subsection (c)(1).
(2) Requirements applicable to entities entering into
certain agreements.--An entity that enters into an agreement
with a participant in the registry for the purpose of a
carbon sequestration project shall not be required to comply
with the requirements specified in paragraph (1) unless that
entity is required to comply with the requirements by reason
of an activity other than the agreement.
(c) Reports.--
(1) Required report.--Not later than July 1st of the each
calendar year beginning more than 2 years after the date of
enactment of this Act, but subject to paragraph (3), an
entity described in subsection (a) shall submit to the
Administrator a report that states, for the preceding
calendar year, the entity-wide greenhouse gas emissions (as
reported at the facility level), including--
(A) the total quantity of direct greenhouse gas emissions
from stationary sources, expressed in units of carbon dioxide
equivalents;
(B) the amount of petroleum products sold or imported by
the entity and the amount of greenhouse gases, expressed in
units of carbon dioxide equivalents, that would be emitted
when these products are used for transportation in the United
States, as determined by the Administrator under section --
0301(b);
(C) the amount of hydrofluorocarbons, perfluorocarbons, or
sulfur hexafluoride, expressed in units of carbon dioxide
equivalents, that are sold or imported by the entity and will
ultimately be emitted in the United States, as determined by
the Administrator under section --0301(d); and
(D) such other categories of emissions as the Administrator
determines in the regulations promulgated under section --
0201(c)(1) may be practicable and useful for the purposes of
this division, such as--
(i) indirect emissions from imported electricity, heat, and
steam;
(ii) process and fugitive emissions; and
(iii) production or importation of greenhouse gases.
(2) Voluntary reporting.--An entity described in subsection
(a) may (along with establishing a baseline and reporting
emissions under this section)--
(A) submit a report described in paragraph (1) before the
date specified in that paragraph for the purposes of
achieving and commoditizing greenhouse gas reductions through
use of the registry and for other purposes; and
(B) submit to the Administrator, for inclusion in the
registry, information that has been verified in accordance
with regulations promulgated under section --0201(c)(1) and
that relates to--
(i) any activity that resulted in the net reduction of the
greenhouse gas emissions of the entity or a net increase in
sequestration by the entity that were carried out during or
after 1990 and before the establishment of the database,
verified in accordance with regulations promulgated under
section --0201(c)(1), and submitted to the Administrator
before the date that is 4 years after the date of enactment
of this Act; and
(ii) with respect to the calendar year preceding the
calendar year in which the information is submitted, any
project or activity that resulted in the net reduction of the
greenhouse gas emissions of the entity or a net increase in
net sequestration by the entity.
(3) Provision of verification information by reporting
entities.--Each entity that submits a report under this
subsection shall provide information sufficient for the
Administrator to verify, in accordance with measurement and
verification methods and standards developed under section --
0204, that the greenhouse gas report of the reporting
entity--
(A) has been accurately reported; and
(B) in the case of each voluntary report under paragraph
(2), represents--
(i) actual reductions in direct greenhouse gas emissions--

(I) relative to historic emission levels of the entity; and
(II) after accounting for any increases in indirect
emissions described in paragraph (1)(C)(i); or

(ii) actual increases in net sequestration.
(4) Failure to submit report.--An entity that participates
or has participated in the registry and that fails to submit
a report required under this subsection shall be prohibited
from using, or allowing another entity to use, its registered
emissions reductions or increases in sequestration to satisfy
the requirements of section --0301.
(5) Independent third-party verification.--To meet the
requirements of this section and section --0203, an entity
that is required to submit a report under this section may--
(A) obtain independent third-party verification; and
(B) present the results of the third-party verification to
the Administrator.
(6) Availability of data.--
(A) In general.--The Administrator shall ensure that
information in the database is--
(i) published; and
(ii) accessible to the public, including in electronic
format on the Internet.
(B) Exception.--Subparagraph (A) shall not apply in any
case in which the Administrator determines that publishing or
otherwise making available information described in that
subparagraph poses a risk to national security or discloses
confidential business information that can not be derived
from information that is otherwise publicly available and
that would cause competitive harm if published.
(7) Data infrastructure.--The Administrator shall ensure,
to the maximum extent practicable, that the database uses,
and is integrated with, Federal, State, and regional
greenhouse gas data collection and reporting systems in
effect as of the date of enactment of this Act.
(8) Additional issues to be considered.--In promulgating
the regulations under section --0201(c)(1) and implementing
the database, the Administrator shall take into consideration
a broad range of issues involved in establishing an effective
database, including--
(A) the data and information systems and measures necessary
to identify, track, and verify greenhouse gas emissions in a
manner that will encourage private sector trading and
exchanges;
(B) the greenhouse gas reduction and sequestration
measurement and estimation methods and standards applied in
other countries, as applicable or relevant;
(C) the extent to which available fossil fuels, greenhouse
gas emissions, and greenhouse gas production and importation
data are adequate to implement the database; and
(D) the differences in, and potential uniqueness of, the
facilities, operations, and business and other relevant
practices of persons and entities in the private and public
sectors that may be expected to participate in the database.
(d) Annual Report.--The Administrator shall publish an
annual report that--
(1) describes the total greenhouse gas emissions and
emission reductions reported to the database during the year
covered by the report;
(2) provides entity-by-entity and sector-by-sector analyses
of the emissions and emission reductions reported;
(3) describes the atmospheric concentrations of greenhouse
gases;
(4) provides a comparison of current and past atmospheric
concentrations of greenhouse gases; and
(5) describes the activity during the year covered by the
period in the trading of greenhouse gas emission allowances.

SEC. 204. MEASUREMENT AND VERIFICATION.

(a) Standards.--
(1) In general.--Not later than 1 year after the date of
enactment of this Act, the Secretary shall establish by rule,
in coordination with the Administrator, the Secretary of
Energy, and the Secretary of Agriculture, comprehensive
measurement and verification methods and standards to ensure
a consistent and technically accurate record of greenhouse
gas emissions, emission reductions, sequestration, and
atmospheric concentrations for use in the registry.
(2) Requirements.--The methods and standards established
under paragraph (1) shall include--

[[Page S6964]]

(A) a requirement that a covered entity use a continuous
emissions monitoring system, or another system of measuring
or estimating emissions that is determined by the Secretary
to provide information with precision, reliability,
accessibility, and timeliness similar to that provided by a
continuous emissions monitoring system where technologically
feasible;
(B) establishment of standardized measurement and
verification practices for reports made by all entities
participating in the registry, taking into account--
(i) protocols and standards in use by entities requiring or
desiring to participate in the registry as of the date of
development of the methods and standards under paragraph (1);
(ii) boundary issues, such as leakage;
(iii) avoidance of double counting of greenhouse gas
emissions and emission reductions;
(iv) protocols to prevent a covered entity from avoiding
the requirements of this division by reorganization into
multiple entities that are under common control; and
(v) such other factors as the Secretary, in consultation
with the Administrator, determines to be appropriate;
(C) establishment of methods of--
(i) estimating greenhouse gas emissions, for those cases in
which the Secretary determines that methods of monitoring,
measuring or estimating such emissions with precision,
reliability, accessibility, and timeliness similar to that
provided by a continuous emissions monitoring system are not
technologically feasible at present; and
(ii) reporting the accuracy of such estimations;
(D) establishment of measurement and verification standards
applicable to actions taken to reduce, avoid, or sequester
greenhouse gas emissions;
(E) in coordination with the Secretary of Agriculture,
standards to measure the results of the use of carbon
sequestration and carbon recapture technologies, including--
(i) soil carbon sequestration practices; and
(ii) forest preservation and reforestation activities that
adequately address the issues of permanence, leakage, and
verification;
(E) establishment of such other measurement and
verification standards as the Secretary, in consultation with
the Secretary of Agriculture, the Administrator, and the
Secretary of Energy, determines to be appropriate;
(F) establishment of standards for obtaining the
Secretary's approval of the suitability of geological storage
sites that include evaluation of both the geology of the site
and the entity's capacity to manage the site; and
(G) establishment of other features that, as determined by
the Secretary, will allow entities to adequately establish a
fair and reliable measurement and reporting system.
(b) Review and Revision.--The Secretary shall periodically
review, and revise as necessary, the methods and standards
developed under subsection (a).
(c) Public Participation.--The Secretary shall--
(1) make available to the public for comment, in draft form
and for a period of at least 90 days, the methods and
standards developed under subsection (a); and
(2) after the 90-day period referred to in paragraph (1),
in coordination with the Secretary of Energy, the Secretary
of Agriculture, and the Administrator, adopt the methods and
standards developed under subsection (a) for use in
implementing the database.
(d) Experts and Consultants.--
(1) In general.--The Secretary may obtain the services of
experts and consultants in the private and nonprofit sectors
in accordance with section 3109 of title 5, United States
Code, in the areas of greenhouse gas measurement,
certification, and emission trading.
(2) Available arrangements.--In obtaining any service
described in paragraph (1), the Secretary may use any
available grant, contract, cooperative agreement, or other
arrangement authorized by law.

TITLE III--MARKET-DRIVEN GREENHOUSE GAS REDUCTIONS

Subtitle A--Emission Reduction Requirements; Use of Tradeable
Allowances

SEC. 301. COVERED ENTITIES MUST SUBMIT ALLOWANCES FOR
EMISSIONS.

(a) In General.--
(1) Submission of allowances.--Except as provided in
paragraph (2), beginning with calendar year 2010--
(A) each covered entity in the electric generation,
industrial, and commercial sectors shall submit to the
Administrator one tradeable allowance for every metric ton of
greenhouse gases, measured in units of carbon dioxide
equivalents, that it emits from stationary sources, except
those described in subparagraph (B);
(B) each producer or importer of hydrofluorocarbons,
perfluorocarbons, or sulfur hexafluoride that is a covered
entity shall submit to the Administrator one tradeable
allowance for every metric ton of hydrofluorocarbons,
perfluorocarbons, or sulfur hexafluoride, measured in units
of carbon dioxide equivalents; that it produces or imports
and that will ultimately be emitted in the United States, as
determined by the Administrator under subsection (d) and
(C) each petroleum refiner or importer that is a covered
entity shall submit one tradeable allowance for every unit of
petroleum product it sells that will produce one metric ton
of greenhouse gases, measured in units of carbon dioxide
equivalents, as determined by the Administrator under
subsection (b), when used for transportation.
(2) Tennessee Valley Authority.--Paragraph (1) shall apply
to the Tennessee Valley Authority beginning with calendar
year 2016.
(b) Determination of Transportation Sector Amount.--For the
transportation sector, the Administrator shall determine the
amount of greenhouse gases, measured in units of carbon
dioxide equivalents, that will be emitted when petroleum
products are used for transportation.
(c) Exception for Certain Deposited Emissions.--
Notwithstanding subsection (a), a covered entity is not
required to submit a tradeable allowance for any amount of
greenhouse gas that would otherwise have been emitted from a
facility under the ownership or control of that entity if--
(1) the emission is deposited in a geological storage
facility approved by the Administrator under section --
0204(a)(2)(F); and
(2) the entity agrees to submit tradeable allowances for
any portion of the deposited emission that is subsequently
emitted from that facility.
(d) Determination of Hydroflurocarbon, Perfluorocarbon, and
Sulfur Hexafluoride Amount.--The Administrator shall
determine the amounts of hydrofluorocarbons,
perfluorocarbons, or sulfur hexafluoride, measured in units
of carbon dioxide equivalents, that will be deemed to be
emitted for purposes of this division.

SEC. 302. COMPLIANCE.

(a) In General.--
(1) Source of tradeable allowances used.--A covered entity
may use a tradeable allowance to meet the requirements of
this section without regard to whether the tradeable
allowance was allocated to it under subtitle B or acquired
from another entity or the Climate Change Credit Corporation
established under section --0351.
(2) Verification by Administrator.--At various times during
each year, the Administrator shall determine whether each
covered entity has met the requirements of this section. In
making that determination, the Administrator shall--
(A) take into account the tradeable allowances submitted by
the covered entity to the Administrator; and
(B) retire the serial number assigned to each such
tradeable allowance.
(b) Alternative Means of Compliance.--For the years 2010
and after, a covered entity may satisfy up to 15 percent of
its total allowance submission requirement under this section
by--
(1) submitting tradeable allowances from another nation's
market in greenhouse gas emissions if--
(A) the Secretary determines that the other nation's system
for trading in greenhouse gas emissions is complete,
accurate, and transparent and reviews that determination at
least once every 5 years;
(B) the other nation has adopted enforceable limits on its
greenhouse gas emissions which the tradeable allowances were
issued to implement; and
(C) the covered entity certifies that the tradeable
allowance has been retired unused in the other nation's
market;
(2) submitting a registered net increase in sequestration,
as registered in the database, adjusted, if necessary, to
comply with the accounting standards and methods established
under section --0372;
(3) submitting a greenhouse gas emissions reduction (other
than a registered net increase in sequestration) that was
registered in the database by a person that is not a covered
entity; or
(4) submitting credits obtained from the Administrator
under section --0303.
(c) Dedicated Program for Sequestration in Agricultural
Soils.--If a covered entity chooses to satisfy 15 percent of
its total allowance submission requirements under the
provisions of subsection (b), it shall satisfy at least 01.5
percent of its total allowance submission requirement by
submitting registered net increases in sequestration in
agricultural soils, as registered in the database, adjusted,
if necessary, to comply with the accounting standards and
methods established under section --0371.

SEC. 303. BORROWING AGAINST FUTURE REDUCTIONS.

(a) In General.--The Administrator shall establish a
program under which a covered entity may--
(1) receive a credit in the current calendar year for
anticipated reductions in emissions in a future calendar
year; and
(2) use the credit in lieu of a tradeable allowance to meet
the requirements of this division for the current calendar
year, subject to the limitation imposed by section --0302(b).
(b) Determination of Tradeable Allowance Credits.--The
Administrator may make credits available under subsection (a)
only for anticipated reductions in emissions that--
(1) are attributable to the realization of capital
investments in equipment, the construction, reconstruction,
or acquisition of facilities, or the deployment of new
technologies--
(A) for which the covered entity has executed a binding
contract and secured, or applied for, all necessary permits
and operating or implementation authority;
(B) that will not become operational within the current
calendar year; and
(C) that will become operational and begin to reduce
emissions from the covered entity within 5 years after the
year in which the credit is used; and

[[Page S6965]]

(2) will be realized within 5 years after the year in which
the credit is used.
(c) Carrying Cost.--If a covered entity uses a credit under
this section to meet the requirements of this division for a
calendar year (referred to as the use year), the tradeable
allowance requirement for the year from which the credit was
taken (referred to as the source year) shall be increased by
an amount equal to--
(1) 10 percent for each credit borrowed from the source
year; multiplied by
(2) the number of years beginning after the use year and
before the source year.
(d) Maximum Borrowing Period.--A credit from a year
beginning more than 5 years after the current year may not be
used to meet the requirements of this division for the
current year.
(e) Failure to Achieve Reductions Generating Credit.--If a
covered entity that uses a credit under this section fails to
achieve the anticipated reduction for which the credit was
granted for the year from which the credit was taken, then--
(1) the covered entity's requirements under this Act for
that year shall be increased by the amount of the credit,
plus the amount determined under subsection (c);
(2) any tradeable allowances submitted by the covered
entity for that year shall be counted first against the
increase in those requirements; and
(3) the covered entity may not use credits under this
section to meet the increased requirements.

SEC. 304. OTHER USES OF TRADEABLE ALLOWANCES.

(a) In General.--Tradeable allowances may be sold,
exchanged, purchased, retired, or used as provided in this
section.
(b) Intersector Trading.--Covered entities may purchase or
otherwise acquire tradeable allowances from other covered
sectors to satisfy the requirements of section --0301.
(c) Climate Change Credit Corporation.--The Climate Change
Credit Corporation established under section --0351 may sell
tradeable allowances allocated to it under section --
0332(a)(2) to any covered entity or to any investor, broker,
or dealer in such tradeable allowances. The Climate Change
Credit Corporation shall use all proceeds from such sales in
accordance with the provisions of section --0352.
(d) Banking of Tradeable Allowances.--Notwithstanding the
requirements of section --0301, a covered entity that has
more than a sufficient amount of tradeable allowances to
satisfy the requirements of section --0301, may refrain from
submitting a tradeable allowance to satisfy the requirements
in order to sell, exchange, or use the tradeable allowance in
the future.

SEC. 305. EXEMPTION OF SOURCE CATEGORIES.

(a) In General.--The Administrator may grant an exemption
from the requirements of this division to a source category
if the Administrator determines, after public notice and
comment, that it is not feasible to measure or estimate
emissions from that source category, until such time as
measurement or estimation becomes feasible.
(b) Reduction of Limitations.--If the Administrator exempts
a source category under subsection (a), the Administrator
shall also reduce the total tradeable allowances under
section --0331(a)(1) by the amount of greenhouse gas
emissions that the exempted source category emitted in
calendar year 2000, as identified in the 2000 Inventory.
(c) Limitation on Exemption.--The Administrator may not
grant an exemption under subsection (a) to carbon dioxide
produced from fossil fuel.

Subtitle B--Establishment and Allocation of Tradeable Allowances

SEC. 331. ESTABLISHMENT OF TRADEABLE ALLOWANCES.

(a) In General.--The Administrator shall promulgate
regulations to establish tradeable allowances, denominated in
units of carbon dioxide equivalents, for calendar years
beginning after 2009, equal to--
(1) 5896 million metric tons, measured in units of carbon
dioxide equivalents, reduced by
(2) the amount of emissions of greenhouse gases in calendar
year 2000 from non-covered entities.
(b) Serial Numbers.--The Administrator shall assign a
unique serial number to each tradeable allowance established
under subsection (a), and shall take such action as may be
necessary to prevent counterfeiting of tradeable allowances.
(c) Nature of Tradeable Allowances.--A tradeable allowance
is not a property right, and nothing in this title or any
other provision of law limits the authority of the United
States to terminate or limit a tradeable allowance.
(d) Non-covered entity.--
(1) In general.--In this section the term ``non-covered
entity'' means an entity that--
(A) owns or controls a source of greenhouse gas emissions
in the electric power, industrial, or commercial sectors of
the United States economy (as defined in the Inventory),
refines or imports petroleum products for use in
transportation, or produces or imports hydrofluorocarbons,
perfluorocarbons, or sulfur hexafluoride; and
(B) is not a covered entity.
(2) Exception.--Notwithstanding paragraph (1), an entity
that is a covered entity for any calendar year beginning
after 2009 shall not be considered to be a non-covered entity
for purposes of subsection (a) only because it emitted, or
its products would have emitted, 10,000 metric tons or less
of greenhouse gas, measured in units of carbon dioxide
equivalents, in the year 2000.

SEC. 332. DETERMINATION OF TRADEABLE ALLOWANCE ALLOCATIONS.

(a) In General.--The Secretary shall determine--
(1) the amount of tradeable allowances to be allocated to
each covered sector of that sector's allotments; and
(2) the amount of tradeable allowances to be allocated to
the Climate Change Credit Corporation established under
section --0351.
(b) Allocation Factors.--In making the determination
required by subsection (a), the Secretary shall consider--
(1) the distributive effect of the allocations on household
income and net worth of individuals;
(2) the impact of the allocations on corporate income,
taxes, and asset value;
(3) the impact of the allocations on income levels of
consumers and on their energy consumption;
(4) the effects of the allocations in terms of economic
efficiency;
(5) the ability of covered entities to pass through
compliance costs to their customers;
(6) the degree to which the amount of allocations to the
covered sectors should decrease over time; and
(7) the need to maintain the international competitiveness
of United States manufacturing and avoid the additional loss
of United States manufacturing jobs.
(c) Allocation Recommendations and Implementation.--Before
allocating or providing tradeable allowances under subsection
(a) and within 24 months after the date of enactment of this
Act, the Secretary shall submit the determinations under
subsection (a) to the Senate Committee on Commerce, Science,
and Transportation, the Senate Committee on Environment and
Public Works, the House of Representatives Committee on
Science, and the House of Representatives Committee on Energy
and Commerce. The Secretary's determinations under paragraph
(1), including the allocations and provision of tradeable
allowances pursuant to that determination, are deemed to be a
major rule (as defined in section 804(2) of title 5, United
States Code), and subject to the provisions of chapter 8 of
that title.

SEC. 333. ALLOCATION OF TRADEABLE ALLOWANCES.

(a) In General.--Beginning with calendar year 2010 and
after taking into account any initial allocations under
section --0335, the Administrator shall--
(1) allocate to each covered sector that sector's
allotments determined by the Administrator under section --
0332 (adjusted for any such initial allocations and the
allocation to the Climate Change Credit Corporation
established under section --0351); and
(2) allocate to the Climate Change Credit Corporation
established under section --0351 the tradeable allowances
allocable to that Corporation.
(b) Intrasectorial Allotments.--The Administrator shall, by
regulation, establish a process for the allocation of
tradeable allowances under this section, without cost to
covered entities, that will--
(1) encourage investments that increase the efficiency of
the processes that produce greenhouse gas emissions;
(2) minimize the costs to the government of allocating the
tradeable allowances;
(3) not penalize a covered entity for emissions reductions
made before 2010 and registered with the database; and
(4) provide sufficient allocation for new entrants into the
sector.
(c) Point Source Allocation.--The Administrator shall
allocate the tradeable allowances for the electricity
generation, industrial, and commercial sectors to the
entities owning or controlling the point sources of
greenhouse gas emissions within that sector.
(d) Hydrofluorocarbons, perfluorocarbons, and sulfur
hexafluoride.--The Administrator shall allocate the tradeable
allowances for producers or importers of hydrofluorocarbons,
perfluorocarbons, or sulfur hexafluoride to such producers or
importers.
(e) Special Rule for Allocation within the Transportation
Sector.--The Administrator shall allocate the tradeable
allowances for the transportation sector to petroleum
refiners or importers that produce or import petroleum
products that will be used as fuel for transportation.
(f) Allocations to Rural Electric Cooperatives.--For each
electric generating unit that is owned or operated by a rural
electric cooperative, the Administrator shall allocate each
year, at no cost, allowances in an amount equal to the
greenhouse gas emissions of each such unit in 2000, plus an
amount equal to the average emissions growth expected for all
such units. The allocations shall be offset from the
allowances allocated to the Climate Change Credit
Corporation.
(g) Early Auction for Technology Deployment and
Dissemination.--
(1) In general.--Within 1 year after the date of enactment
of this Act, the Administrator, in consultation with the
Secretary of Energy and the Secretary of Commerce, shall
allocate tradeable allowances by the Climate Change Credit
Corporation for auction before 2010. The Climate Change
Credit Corporation shall use the proceeds of the

[[Page S6966]]

auction, together with any funds received as reimbursements
under subtitle C of title IV of this division, to support the
programs established by that subtitle until the secretary of
Energy and the Corporation jointly determine that the
purposes of those programs have been accomplished. The
Corporation shall also use the proceeds of the auction to
support the programs established by subtitle D of title IV of
this division until 2010.
(2) Determination of allocation.--In determining the amount
of tradeable allowances to be allocated to the Climate Change
Credit Corporation under this subsection, the Administrator
shall consider--
(A) the expected market value of tradeable allowances for
auction;
(B) the annual funding required for the programs
established by subtitle C of title IV;
(C) the repayment provisions of those programs; and
(D) the allocation factors in section --0332(b).
(3) Limitation.--In allocating tradeable allowances under
paragraph (1) the Administrator shall take into account the
purposes of section --0331 and the impact, if any, the
allocation under paragraph (1) may have on achieving those
purposes.
(h) Allocation to Covered Entities in States Adopting
Mandatory Greenhouse Gas Emissions Reduction Programs.--For a
covered entity operating in any State that has adopted a
legally binding and enforceable program to achieve and
maintain reductions that are consistent with, or more
stringent than, reductions mandated by this Act, and which
requirements are effective prior to 2010, the Administrator
shall consider such binding state actions in making the final
determination of allocation to such covered entities.

SEC. 334. ENSURING TARGET ADEQUACY.

(a) In General.--Beginning 2 years after the date of
enactment of this Act, the Under Secretary of Commerce for
Oceans and Atmosphere shall review the allowances established
by section --0331 no less frequently than biennially--
(1) to re-evaluate the levels established by that
subsection, after taking into account the best available
science and the most currently available data, and
(2) to re-evaluate the environmental and public health
impacts of specific concentration levels of greenhouse gases,

to determine whether the allowances established by subsection
(a) continue to be consistent with the objective of the
United Nations' Framework Convention on Climate Change of
stabilizing levels of greenhouse gas emissions at a level
that will prevent dangerous anthropogenic interference with
the climate system.
(b) Review of 2010 Levels.--The Under Secretary shall
specifically review in 2008 the level established under
section --0331(a)(1), and transmit a report on his reviews,
together with any recommendations, including legislative
recommendations, for modification of the levels, to the
Senate Committee on Commerce, Science, and Transportation,
the Senate Committee on Environment and Public Works, the
House of Representatives Committee on Science, and the House
of Representatives Committee on Energy and Commerce.

SEC. 335. INITIAL ALLOCATIONS FOR EARLY PARTICIPATION AND
ACCELERATED PARTICIPATION.

(a) Before making any allocations under section --0333, the
Administrator shall allocate--
(1) to any covered entity an amount of tradeable allowances
equivalent to the amount of greenhouse gas emissions
reductions registered by that covered entity in the national
greenhouse gas database if--
(A) the covered entity has requested to use the registered
reduction in the year of allocation;
(B) the reduction was registered prior to 2010; and
(C) the Administrator retires the unique serial number
assigned to the reduction under section --0201(c)(3); and
(2) to any covered entity that has entered into an
accelerated participation agreement under section --0336,
such tradeable allowances as the Administrator has determined
to be appropriate under that section.
(b) Any covered entity that is subject to a State mandatory
greenhouse gas emissions reduction program that meets the
requirements of subsection (h) of section --0333 shall be
eligible for the allocation of allowances under this section
and section --0336 if the requirements of the State mandatory
greenhouse gas emission reduction program are consistent
with, or more stringent than, the emission targets
established by this Act.

SEC. 336. BONUS FOR ACCELERATED PARTICIPATION.

(a) In General.--If a covered entity executes an agreement
with the Administrator under which it agrees to reduce its
level of greenhouse gas emissions to a level no greater than
the level of its greenhouse gas emissions for calendar year
1990 by the year 2010, then, for the 6-year period beginning
with calendar year 2010, the Administrator shall--
(1) provide additional tradeable allowances to that entity
when allocating allowances under section --0334 in order to
recognize the additional emissions reductions that will be
required of the covered entity;
(2) allow that entity to satisfy 20 percent of its
requirements under section --0301 by--
(A) submitting tradeable allowances from another nation's
market in greenhouse gas emissions under the conditions
described in section --0312(b)(1);
(B) submitting a registered net increase in sequestration,
as registered in the National Greenhouse Gas Database
established under section --0201, and as adjusted by the
appropriate sequestration discount rate established under
section --0371; or
(C) submitting a greenhouse gas emission reduction (other
than a registered net increase in sequestration) that was
registered in the National Greenhouse Gas Database by a
person that is not a covered entity.
(b) Termination.--An entity that executes an agreement
described in subsection (a) may terminate the agreement at
any time.
(c) Failure to Meet Commitment.--If an entity that executes
an agreement described in subsection (a) fails to achieve the
level of emissions to which it committed by calendar year
2010--
(1) its requirements under section --0301 shall be
increased by the amount of any tradeable allowances provided
to it under subsection (a)(1); and
(2) any tradeable allowances submitted thereafter shall be
counted first against the increase in those requirements.

Subtitle C--Climate Change Credit Corporation

SEC. 351. ESTABLISHMENT.

(a) In General.--The Climate Change Credit Corporation is
established as a nonprofit corporation without stock. The
Corporation shall not be considered to be an agency or
establishment of the United States Government.
(b) Applicable Laws.--The Corporation shall be subject to
the provisions of this title and, to the extent consistent
with this title, to the District of Columbia Business
Corporation Act.
(c) Board of Directors.--The Corporation shall have a board
of directors of 5 individuals who are citizens of the United
States, of whom 1 shall be elected annually by the board to
serve as chairman. No more than 3 members of the board
serving at any time may be affiliated with the same political
party. The members of the board shall be appointed by the
President of the United States, by and with the advice and
consent of the Senate and shall serve for terms of 5 years.

SEC. 352. PURPOSES AND FUNCTIONS.

(a) Trading.--The Corporation--
(1) shall receive and manage tradeable allowances allocated
to it under section --0333(a)(2); and
(2) shall buy and sell tradeable allowances, whether
allocated to it under that section or obtained by purchase,
trade, or donation from other entities; but
(3) may not retire tradeable allowances unused.
(b) Use of Tradeable Allowances and Proceeds.--
(1) In general.--The Corporation shall use the tradeable
allowances, and proceeds derived from its trading activities
in tradeable allowances, to reduce costs borne by consumers
as a result of the greenhouse gas reduction requirements of
this division. The reductions--
(A) may be obtained by buy-down, subsidy, negotiation of
discounts, consumer rebates, or otherwise;
(B) shall be, as nearly as possible, equitably distributed
across all regions of the United States; and
(C) may include arrangements for preferential treatment to
consumers who can least afford any such increased costs.
(2) Transition assistance to dislocated workers and
communities.--The Corporation shall allocate a percentage of
the proceeds derived from its trading activities in tradeable
allowances to provide transition assistance to dislocated
workers and communities. Transition assistance may take the
form of--
(A) grants to employers, employer associations, and
representatives of employees--
(i) to provide training, adjustment assistance, and
employment services to dislocated workers; and
(ii) to make income-maintenance and needs-related payments
to dislocated workers; and
(B) grants to State and local governments to assist
communities in attracting new employers or providing
essential local government services.
(3) Phase-out of transition assistance.--The percentage
allocated by the Corporation under paragraph (2)--
(A) shall be 20 percent for 2010;
(B) shall be reduced by 2 percentage points each year
thereafter; and
(C) may not be reduced below zero.
(4) Adaptation and mitigation assistance for low-income
persons and communities.--The Corporation shall allocate at
least 10 percent of the proceeds derived from its trading
activities to funding climate change adaptation and
mitigation programs to assist low-income populations
identified in the report submitted under section --0105(b) as
having particular needs in addressing the impact of climate
change.
(5) Adaptation assistance for fish and wildlife habitat.--
The Corporation shall fund efforts to strengthen and restore
habitat that improves the ability of fish and wildlife to
adapt successfully to climate change. The Corporation shall
deposit the proceeds from no less than 10 percent of the
total allowances allocated to it in the wildlife restoration
fund subaccount known as the Wildlife Conservation and
Restoration Account established under section 3 of the

[[Page S6967]]

Pittman-Robertson Wildlife Restoration Act (16 U.S.C. 669b).
Amounts deposited in the subaccount under this paragraph
shall be available without further appropriation for
obligation and expenditure under that Act.
(6) Technology deployment programs.--The Corporation shall
establish and carry out a program, through direct grants,
revolving loan programs, or other financial measures, to
provide support for the deployment of technology to assist in
compliance with this Act by distributing the proceeds from no
less than 50 percent of the total allowances allocated in
support of the program established under section --0491.
(c) Appropriations.--Notwithstanding any other provision of
this Act, no funds may be obligated or expended by the
Corporation except as provided by appropriations Acts.

Subtitle D--Sequestration Accounting; Penalties

SEC. 371. SEQUESTRATION ACCOUNTING.

(a) Sequestration Accounting.--If a covered entity uses a
registered net increase in sequestration to satisfy the
requirements of section --0301 for any year, that covered
entity shall submit information to the Administrator every 5
years thereafter sufficient to allow the Administrator to
determine, using the methods and standards created under
section --0204, whether that net increase in sequestration
still exists. Unless the Administrator determines that the
net increase in sequestration continues to exist, the covered
entity shall offset any loss of sequestration by submitting
additional tradeable allowances of equivalent amount in the
calender year following that determination.
(b) Regulations Required.--The Secretary, acting through
the Under Secretary of Commerce for Science and Technology,
in coordination with the Secretary of Agriculture, the
Secretary of Energy, and the Administrator, shall issue
regulations establishing the sequestration accounting rules
for all classes of sequestration projects.
(c) Criteria for Regulations.--In issuing regulations under
this section, the Secretary shall use the following criteria:
(1) If the range of possible amounts of net increase in
sequestration for a particular class of sequestration project
is not more than 10 percent of the median of that range, the
amount of sequestration awarded shall be equal to the median
value of that range.
(2) If the range of possible amounts of net increase in
sequestration for a particular class of sequestration project
is more than 10 percent of the median of that range, the
amount of sequestration awarded shall be equal to the fifth
percentile of that range.
(3) The regulations shall include procedures for accounting
for potential leakage from sequestration projects and for
ensuring that any registered increase in sequestration is in
addition that which would have occurred if this Act had not
been enacted.
(d) Updates.--The Secretary shall update the sequestration
accounting rules for every class of sequestration project at
least once every 5 years.

SEC. 372. PENALTIES.

Any covered entity that fails to meet the requirements of
section --0301 for a year shall be liable for a civil
penalty, payable to the Administrator, equal to thrice the
market value (determined as of the last day of the year at
issue) of the tradeable allowances that would be necessary
for that covered entity to meet those requirements on the
date of the emission that resulted in the violation.

TITLE IV--INNOVATION AND COMPETITIVENESS

SEC. 401. FINDINGS.

The Congress finds the following:
(1) Innovation, the process that ultimately provides new
and improved products, manufacturing processes, and services,
is the basis for technological progress. This technological
advancement is a key element of sustained economic growth.
(2) The innovation economy is fundamentally different from
the industrial or even the information economy. It requires a
new vision and new approaches.
(3) Changing innovation processes and the evolution of the
relative contribution made by the private and public sectors
have emphasized the need for strong industry-science
linkages.
(4) Patent regimes play an increasingly complex role in
encouraging innovation, disseminating scientific and
technical knowledge, and enhancing market entry and firm
creation.
(5) Increasing participation and maintaining quality
standards in tertiary education in science and technology are
imperative to meet growing demand for workers with scientific
and technological knowledge and skills.
(6) Research, innovation, and human capital are our
principal strengths. By sustaining United States investments
in research and finding collaborative arrangements to
leverage existing resources and funds in a scarce budget
environment, we ensure that America remains at the forefront
of scientific and technological capability.
(7) Technology transfer of publicly funded research is a
critical mechanism for optimizing the return on taxpayer
investment, particularly where other benefits are not
measurable at all or are very long-term.
(8) Identifying metrics to quantify program effectiveness
is of increasing importance because the entire innovation
process is continuing to evolve in an arena of increasing
global competition. Metrics need to take into account a wide
range of steps in a highly complex process, as well as the
ultimate product or service, but should not constrain the
continued evolution or development of new technology transfer
approaches.
(9) The United States lacks a national innovation strategy
and agenda, including an aggressive public policy strategy
that energizes the environment for national innovation, and
no Federal agency is responsible for developing national
innovation policy.

Subtitle A--Innovation Infrastructure

SEC. 421. THE INNOVATION ADMINISTRATION.

(a) In General.--Section 5 of the Stevenson-Wydler
Technology Innovation Act of 1990 (15 U.S.C. 3704) is
amended--
(1) by striking ``a Technology'' in subsection (a) and
inserting ``an Innovation'';
(2) by striking ``The Technology'' in subsection (a) and
inserting ``The Innovation'';
(3) by striking ``of Technology'' in subsection (a)(3) and
inserting ``of Innovation'';
(4) by striking ``Technology'' each place it appears in
subsection (b) and in subsection (c)(1) and inserting
``Innovation'';
(5) by inserting ``(1) In general.--'' before ``The
Secretary'' in subsection (c) and redesignating paragraphs
(1) through (15) as subparagraphs (A) through (O); and
(6) by adding at the end of subsection (c) the following:
``(2) Specific innovation-related duties.--
``(A) In general.--The Secretary, through the Under
Secretary, shall--
``(i) provide advice to the President with respect to the
policies and conduct of the Innovation Administration,
including ways to improve research and development concerning
climate change innovation and the methods of collecting and
disseminating findings of such research;
``(ii) provide advice to the President and the Congress on
the development of climate change innovation research
programs;
``(iii) develop and monitor metrics to be used by the
Federal government in managing the innovation process;
``(iv) develop and establish government wide climate change
innovation policy and strategic plans, consistent with the
strategic plans of the United States Climate Change Science
Program and the United States Climate Technology Challenge
Program, including an implementation plan, developed in
consultation with the Secretary of Energy and the Climate
Change Credit Corporation, for the Climate Technology
Challenge Program under section --0491, addressing technology
priorities, total funding, opportunities for Federal
procurement, and other issues;
``(v) review and evaluate on a continuing basis--

``(I) technologies available for transfer and deployment to
the commercial sector;
``(II) all statutes and regulations pertaining to Federal
programs which assist in the transfer and deployment of
technologies, both domestically and internationally; and
``(III) new and emerging innovation policy issues affecting
the deployment of new technologies, including identification
of barriers to commercialization and recommendations for
removal of those barriers;

``(vi) assess the extent to which such policies, programs,
practices, and procedures facilitate or impede the promotion
of the policies set forth in subsection (b);
``(vii) gather information about the implementation,
effectiveness, and impact of the deployed climate change
related technologies based on metrics developed under clause
(iii);
``(viii) make recommendations to the President and the
Congress and other officials of Federal agencies or other
Federal entities, regarding ways to better promote the
policies developed under paragraph (1)(B);
``(ix) provide advice, recommendations, legislative
proposals to the Congress on a continuing basis, and any
additional information the Agency or the Congress deems
appropriate;
``(x) make recommendations to the President, the Congress,
and Federal agencies or entities regarding policy on Federal
purchasing behavior that would provide incentives to industry
to bring new products to market faster;
``(xi) conduct economic analysis in support of climate
change technology development and deployment;
``(xii) work with academia to develop education programs to
support the multi-disciplinary nature of innovation;
``(xiii) establish partnerships with industry to determine
the needs for the future workforce to support deployed
technologies;
``(xiv) assist in the search for partners to establish
public-private partnerships, and in searching for capital
funds from the investment community for new businesses in the
climate change technology sector; and
``(xv) identify opportunities to promote cooperation on
research, development, and commercialization with other
countries and make recommendations, based on the
opportunities so identified to the Secretary of State.
``(B) Annual report.--
``(i) In general.--The Administrator shall prepare and
submit to the President and the appropriate committees of the
Congress a report entitled `Climate Change Innovation: A
Progress Report' within 6 months after the date of enactment
of the Climate Stewardship and Innovation Act of 2005 and
annually thereafter.

[[Page S6968]]

``(ii) Contents.--The report shall assess the status of the
Nation in achieving the purposes set forth in subsection (b),
with particular focus on the new and emerging issues
impacting the deployment of new climate change technologies.
The report shall present, as appropriate, available data on
research, education, workforce, financing, and market
opportunities. The report shall include recommendations for
policy change.
``(iii) Consultation required.--In determining the
findings, conclusions, and recommendations of the report, the
Agency shall seek input from industry, academia, and other
interested parties.''.
(b) References.--Any reference to the Technology
Administration in any other Federal law, Executive order,
rule, regulation, or delegation of authority, or any document
or pertaining to the Technology Administration or an officer
or employee of the Technology Administration, is deemed to
refer to the Innovation Administration or an officer or
employee of the Innovation Administration, as appropriate.

SEC. 422. TECHNOLOGY TRANSFER OPPORTUNITIES.

(a) In General.--The Secretary of Commerce shall conduct a
study of technology transfer barriers, best practices, and
outcomes of technology transfer activities at Federal
laboratories related to the licensing and commercialization
of energy efficient technologies, and other technologies
that, compared to similar technology in commercial use,
result in reduced emissions of greenhouse gases, increased
ability to adapt to climate change impacts, or increased
sequestration of greenhouse gases. The Secretary shall submit
a report setting forth the findings and conclusions of the
study to the Senate Committee on Commerce, Science, and
Transportation and the House of Representatives Committee on
Science within 6 months after the date of enactment of this
Act. The Secretary shall work with the existing interagency
working group to address identified barriers to technology
transfer.
(b) Business Opportunities Study.--The Secretary of
Commerce shall perform an analysis of business opportunities,
both domestically and internationally, available for climate
change technologies. The Secretary shall transmit the
Secretary's findings and recommendations from the first such
analysis to the Senate Committee on Commerce, Science, and
Transportation and the House of Representatives Committee on
Science within 6 months after the date of enactment of this
Act, and shall transmit a revised report of such findings and
recommendations to those Committees annually thereafter.
(c) Agency Report To Include Information on Technology
Transfer Income and Royalties.--Paragraph (2)(B) of section
11(f) of the Stevenson-Wydler Technology Innovation Act of
1980 (15 U.S.C. 3710(f)) is amended--
(1) by striking ``and'' after the semicolon in clause (vi);
(2) by redesignating clause (vii) as clause (ix); and
(3) by inserting after clause (vi) the following:
``(vii) the number of fully-executed licenses which
received royalty income in the preceding fiscal year for
climate-change or energy-efficient technology;
``(viii) the total earned royalty income for climate-change
or energy-efficient technology; and''.
(d) Increased Incentives for Development of Climate-change
or Energy-efficient Technology.--Section 14(a) of the
Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C.
3710c(a)) is amended--
(1) by striking ``15 percent,'' in paragraph (1)(A) and
inserting ``15 percent (25 percent for climate change-related
technologies),''; and
(2) by inserting ``($250,000 for climate change-related
technologies)'' after ``$150,000'' each place it appears in
paragraph (3).

SEC. 423. GOVERNMENT-SPONSORED TECHNOLOGY INVESTMENT PROGRAM.

(a) Purpose.--It is the purpose of this section to provide
financial support for the development, through private
enterprise, of technology that has potential application to
climate change adaptation and mitigation.
(b) Financial Support.--The Secretary of Commerce may
establish a nonprofit government sponsored enterprise for the
purpose of providing investment in private sector
technologies that show promise for climate change adaptation
and mitigation applications.
(c) Terms; Conditions; Transparency.--The Secretary shall
report within 30 days after the end of each calendar quarter
to the Senate Committee on Commerce, Science, and
Transportation and the House of Representatives Committee on
Science on its operations during that preceding calendar
quarter.
(d) Authorization of Appropriations.--There are authorized
to be appropriated to the Secretary of Commerce for the use
of the enterprise established under subsection (b) such sums
as may be necessary to carry out the purpose of this section.

SEC. 424. FEDERAL TECHNOLOGY INNOVATION PERSONNEL INCENTIVES.

The Stevenson-Wydler Technology Innovation Act of 1980 (15
U.S.C. 3701 et seq.) is amended by adding at the end the
following:

``SEC. 24. FEDERAL TECHNOLOGY INNOVATION PERSONNEL
INCENTIVES.

``(a) In General.--The head of a Federal laboratory may
authorize the participation by any employee of the laboratory
in an activity described in subsection (b) in order to
achieve the purposes of this division.
``(b) Authorized Activities.--
``(1) Commercial development participation arrangements.--
``(A) In general.--The head of a Federal laboratory may,
under the authority provided by section 12(b)(5) of this Act,
authorize an employee to participate, as an officer or
employee, in the creation of an enterprise established to
commercially exploit research work realized in carrying out
that employee's responsibilities as an employee of that
laboratory for a period of up to 24 months. The authority may
be renewed for an additional 12-month period.
``(B) Limitations.--In addition to the requirements set
forth in section 12, an employee may not be authorized under
subparagraph (A) to participate in such an enterprise if--
``(i) it would be prejudicial to the normal functioning of
the laboratory;
``(ii) by its nature, terms and conditions, or the manner
in which the authority would be exercised, participation by
that employ would reflect adversely on the functions
exercised by that employee as an employee of the laboratory,
or risk compromising or calling in question the independence
or neutrality of the laboratory; or
``(iii) the interests of the enterprise are of such a
nature as to be prejudicial to the mission or integrity of
the laboratory or employee.
``(C) Relationship to laboratory employment.--
``(i) Representation.--The employee may not represent the
employee's official position or the laboratory while
participating in the creation of the enterprise.
``(ii) Federal employment status.--Beginning with the
effective date of the authorization under subsection (a), an
employee shall be placed in a temporary status without duties
or pay and shall cease all duties in connection with the
laboratory.
``(iii) Return to service.--At the end of the authorization
period, the employee may be restored to his former position
in the laboratory upon termination of any employment or
professional relationship with the enterprise.
``(2) Service in private sector advisory capacity.--
``(A) In general.--The head of a Federal laboratory may,
under the authority provided by section 12(b)(5) of this Act,
authorize an employee to serve, as a member of the board of
directors of, as a member of an advisory committee to, or in
any similar capacity with a corporation, partnership, joint
venture, or other business enterprise for a period of not
more than 5 years in order to provide advice and counsel on
ways to improve the diffusion and use of an invention or
other intellectual property of a Federal laboratory.
``(B) Qualifying investment.--Under the authorization, an
employee authorized to serve on the board of directors of a
corporation may purchase and hold the number of qualifying
shares of stock needed to serve as a member of that board.
``(C) Participation in certain proceedings.--An employee
authorized under subparagraph (A) may not participate in any
grant evaluation, contract negotiation, or other proceeding
in which the corporation, partnership, joint venture, or
other business enterprise has an interest during the
authorization period.''.

SEC. 425. INTERDISCIPLINARY RESEARCH AND COMMERCIALIZATION.

(a) In General.--The Director of the National Science
Foundation shall develop and implement a plan to increase and
establish priorities for funding for multidisciplinary and
interdisciplinary research at universities in support of the
adaptation to and mitigation of climate change. The plan
shall--
(1) address the cross-fertilization and fusion of research
within and across the biological and physical sciences, the
spectrum of engineering disciplines, and entirely new fields
of scientific exploration; and
(2) include the area of emerging service sciences.
(b) Report to Congress.--The Director shall transmit a copy
of the plan to the Senate Committee on Commerce, Science, and
Transportation and the House of Representatives Committee on
Science within 6 months after the date of enactment of this
Act.
(c) Service Science Defined.--In this section, the term
``service science'' means the melding together of the fields
of computer science, operations research, industrial
engineering, mathematics, management science, decision
sciences, social sciences, and legal sciences in a manner
that may transform entire enterprises and drive innovation at
the intersection of business and technology expertise.

SEC. 426. CLIMATE INNOVATION PARTNERSHIPS.

(a) In General.--The Secretary of Commerce, in consultation
with the Director of the National Science Foundation, shall
create a program of public-private partnerships that--
(1) focus on supporting climate change related regional
innovation;
(2) bridge the gap between the long-term research and
commercialization;
(3) focus on deployment of technologies needed by a
particular region in adapting or mitigating the impacts of
climate change; and

[[Page S6969]]

(4) support activities that are selected from proposals
submitted in merit-based competitions.
(b) Institutional Diversity.--In creating the program, the
Secretary and the Administrator shall--
(1) encourage institutional diversity; and
(2) provide that universities, research centers, national
laboratories, and other non-profit organizations are allowed
to partner with private industry in submitting applications.
(c) Grants.--The Secretary may make grants under the
program to the partnerships, but the Federal share of funding
for any project may not exceed 50 percent of the total
investment in any fiscal year.
(d) Authorization of Appropriations.--There are authorized
to be appropriated to the Secretary such sums as may be
necessary to carry out this section.

SEC. 427. NATIONAL MEDAL OF CLIMATE STEWARDSHIP INNOVATION.

(a) In General.--There is established a National Medal of
Climate Stewardship Innovation, which shall be of such design
and materials, and bear such inscription, as the President
may prescribe. The President shall award the medal on the
basis of recommendations submitted by the National Science
Foundation and the Secretary of Commerce to individuals who,
in the judgment of the President, are deserving of special
recognition by reason of their outstanding contributions to
knowledge in the field of climate change innovation.
(b) Criteria.--The medal shall be awarded in accordance
with the following criteria:
(1) Annual limit.--No more than 20 individuals may be
awarded the medal in any calendar year.
(2) Citizenship.--No individual may be awarded the medal
unless, at the time the award is made, the individual is--
(A) a citizen or other national of the United States; or
(B) an alien lawfully admitted to the United States for
permanent residence who--
(i) has filed a petition for naturalization in the manner
prescribed by section 334 of the Immigration and Nationality
Act (8 U.S.C. 1445); and
(ii) is not permanently ineligible to become a citizen of
the United States.
(3) Posthumous award.--
(A) In general.--Notwithstanding paragraph (2), the medal
may be awarded posthumously to an individual who, at the time
of death, met the conditions set forth in paragraph (2).
(B) 5-year limitation.--Notwithstanding subparagraph (A),
the medal may not be awarded posthumously to an individual
after the fifth anniversary of that individual's death.
(c) Inscription and Certificate.--Each medal shall be
suitably inscribed. Each individual awarded the medal shall
also receive a citation descriptive of the award.
(d) Presentation.--The presentation of the medal shall be
made by the President with such ceremonies as the President
deems proper, including attendance by appropriate Members of
Congress.

SEC. 428. MATH AND SCIENCE TEACHERS' ENHANCEMENT PROGRAM.

(a) In General.--The Director of the National Science
Foundation shall establish within the Foundation a climate
change science and technology enhancement program for
teachers.
(b) Purpose.--The purpose of the program is to provide for
professional development of mathematics and science teachers
at elementary, middle, and secondary schools (as defined by
the Director), including improving the education and skills
of those teachers with respect to--
(1) teaching strategies;
(2) subject-area expertise; and
(3) the understanding of climate change science and
technology and the environmental, economic, and social
impacts of climate change on commerce.
(c) Program Areas.--In carrying out the program under this
section, the Director shall focus on the areas of--
(1) scientific measurements;
(2) tests and standards development;
(3) industrial competitiveness and quality;
(4) manufacturing;
(5) technology transfer; and
(6) any other area of expertise that the Director
determines to be appropriate.
(d) Application Procedure.--The Director shall prescribe
procedures and selection criteria for participants in the
program.
(e) Awards.--The Director shall issue awards under the
program to participants. In issuing the awards, the Director
shall ensure that the maximum number of participants
practicable participate in the program. In order to ensure a
maximum level of participation of participants, the program
under this section shall be conducted on an annual basis
during the summer months, when a majority of elementary,
middle, and secondary schools are not in classes.
(f) Authorization of Appropriations.--There are authorized
to be appropriated to the Director for carrying out this
section--
(1) $2,500,000 for fiscal year 2006; and
(2) $2,500,000 for fiscal year 2007.

SEC. 429. PATENT STUDY.

(a) In General.--The Director of the Patent and Trademark
Office, in consultation with representatives of interested
parties in the private sector, shall conduct a study to
determine the extent to which changes to the United States
patent system are necessary to increase the flow of climate
change-related technologies. The study shall address--
(1) the balance between the protection of the inventor and
the disclosure of information;
(2) the role of patents in innovation within the covered
sectors;
(3) the extent to which patents facilitate increased
investments in climate change research and development;
(4) the international deployment of United States developed
climate change related technologies on the United States
patent system;
(5) ways to leverage databases as innovation tools;
(6) best practices for collaborative standard setting; and
(7) any other issues the Director deems appropriate.
(b) Report.--Within 6 months after the date of enactment of
this Act, the Director shall transmit a report setting forth
the findings and conclusions of the study to the Congress.

SEC. 430. LESSONS-LEARNED PROGRAM.

(a) In General.--Within 180 days after the date of
enactment of this Act, the Secretary of Energy shall
establish a national lessons-learned and best practices
program to ensure that lessons learned and best practices
concerning energy efficiency and greenhouse gas emission
reductions are available to the public. The program shall
contain consumer awareness initiatives including product
labeling and campaigns to raise public awareness. The
Secretary shall determine the process and frequency by which
the information is provided.
(b) Program Content.--The program--
(1) may include experiences realized outside of the Federal
government;
(2) shall include criteria by which entries in the program
are determined;
(3) shall use a standardized, user-friendly format for data
reports; and
(4) may include any other matters the Secretary deems
appropriate.

Subtitle B--Specific Program Initiatives

SEC. 451. TRANSPORTATION.

(a) In General.--The Secretary of Energy, the Administrator
of the Environmental Protection Agency, and the Secretary of
Transportation shall establish jointly a competitive, merit-
based research program to fund proposals that--
(1) develop technologies that aid in reducing fuel use or
reduce greenhouse gas emissions associated with any fuel;
(2) further develop existing or new technologies to create
renewable fuels created from less carbon or energy-intensive
practices than current renewable fuel production; or
(3) remove existing barriers for deployment of existing
fuels that dramatically reduce greenhouse gas emissions;
(4) support low-carbon transportation fuels, including
renewable hydrogen, advanced cellulosic ethanol, and biomass-
based diesel substitutes, and the technical hurdles to market
entry;
(5) support short-term and long-term technology
improvements for United States cars and light trucks that
reduce greenhouse gas emissions, including advanced, high-
power hybrid vehicle batteries, advanced gasoline engine
designs, fuel cells, hydrogen storage, power electronics, and
lightweight materials;
(6) support advanced heavy-duty truck technologies to
reduce greenhouse gas emissions from the existing and new
fleets, including aerodynamics, weight reduction, improved
tires, anti-idling technology, high-efficiency engines, and
hybrid systems; or
(7) expand research into the climatological impacts of air
travel and support advanced technologies to reduce greenhouse
gas emissions from aircraft including advanced turbines,
aerodynamics, and logistics technology that reduces delays,
increases load factors and cuts in-air emissions.
(b) Real-world Test Procedures.--The Administrator of the
Environmental Protection Agency, in consultation with the
Secretary of Transportation, shall--
(1) conduct research and establish a Federal test procedure
for certifying fuel economy of heavy duty vehicles; and
(2) update Federal test procedures for certifying fuel
economy of automobiles and light duty trucks so the results
better reflect real-world operating conditions.
(c) Incorporation into Program.--The Secretaries shall
ensure that the program established under subsection (a) is
incorporated into the United States Climate Technology
Challenge Program.
(d) Marketing Study.--The Secretary of Transportation, in
coordination with the Secretary of Commerce, shall conduct a
study on how the government can accelerate the market for
low-carbon vehicles. The results of the study shall be
submitted to the Congress within 6 months after the date of
enactment of this Act.

SEC. 452. AGRICULTURAL SEQUESTRATION.

(a) In General.--The Director of the Office of Science and
Technology Policy shall establish an interagency panel of
representatives from the United States Forest Service,
Agriculture Research Service, Agricultural Experiment
Stations and Extension Service, Economic Research Service
Natural Resource Conservation Service, Environmental
Protection Agency, the U.S. Geological Survey, and the
National Institute of Standards and Technology to establish
standards for measurement (and re-measurement) of sequestered
carbon, including lab procedures,

[[Page S6970]]

field sampling methods, and accuracy of sampling statistics.
(b) Duties.--The interagency panel shall--
(1) develop discounted default values for the amount of
greenhouse gas emission reductions due to carbon
sequestration or emissions reductions from improved practices
and technologies;
(2) develop technologies for low-cost laboratory and field
measurement;
(3) develop procedures to improve the accuracy of equations
used to estimate greenhouse gas emissions reductions produced
by adoption of improved land management technologies and
practices;
(4) develop local and regional databases on carbon
sequestration in soils and biomass, greenhouse gas emissions,
and adopted land management technologies and practices;
(5) develop computation methods for additionality discounts
for prospective greenhouse gas offsets;
(6) develop entitywide reporting requirements to evaluate
project-level leakage;
(7) develop commodity-specific greenhouse gas offset
discount factors for market-level leakage, and update those
factors periodically;
(8) develop guidelines and standards for greenhouse gas
offset and reduction project monitoring and verification and
uniform qualifications for third party verifiers, including
specification of conflict of interest conditions;
(9) increase landowner accessibility to technologies and
practices by--
(A) improving and expanding availability and adoption of
best management practices for soils, crop residues, and
forests to achieve additional carbon sequestration that meets
standards as bona fide greenhouse gas offsets;
(B) improving and expanding availability and adoption of
best management practices for soils, crop residues, and
forests to achieve reductions in emissions of carbon dioxide,
methane, and nitrous oxides that meet standards as bona fide
greenhouse gas emissions reductions; and
(C) establishing incentives for land managers to help
finance investments in facilities that produce bona fide
greenhouse gas offsets or reductions through carbon
sequestration or direct greenhouse gas emissions reductions;
and
(10) establish best practices to address non-permanence and
risk of release of sequestered greenhouse gases by--
(A) assessing and quantifying risks, both advertent and
inadvertent, of release of greenhouse gases sequestered in
soils and biomass; and
(B) establishing insurance instruments concerning the
release, both advertent and inadvertent, of sequestered
greenhouse gases.
(c) Additionality Defined.--In this section the term
``additionality'' means emissions reduction and sequestration
activities that result in atmospheric benefits that would not
otherwise have occurred.

SEC. 453. GEOLOGICAL STORAGE OF SEQUESTERED GREENHOUSE GASES.

(a) In General.--The Secretary of Energy, in consultation
with the Secretary of Agriculture and the Administrator of
the Environmental Protection Agency, shall establish
guidelines for setting individual project baselines for
reductions of greenhouse gas emissions and greenhouse gas
storage in various types of geological formations to serve as
the basis for determining the amount of greenhouse gas
reductions produced by the project.
(b) Specific Activities.--The Secretary of Energy, in
consultation with the Director of the U.S. Geological Survey,
shall--
(1) develop local and regional databases on existing
practices and technologies for greenhouse gas injection in
underground aquifers;
(2) develop methods for computation of additionality
discounts for prospective greenhouse gas reductions or
offsets due to carbon dioxide injection and storage in
underground aquifers;
(3) develop accepted standards for monitoring of carbon
dioxide stored in geological subsurface reservoirs by--
(A) developing minimum suitability standards for
identifying and monitoring of geological storage sites
including oil, gas, and coal bed methane reservoir and deep
saline aquifers; and
(B) testing monitoring standards using sites with long term
(multi-decade) large injections of carbon dioxide into oil
field enhanced recovery projects; and
(4) address non-permanence and risk of release of
sequestered greenhouse gas by--
(A) establishing guidelines for risk assessment of
inadvertent greenhouse gas release, both long-term and short-
term, associated with geological sequestration sites; and
(B) developing insurance instruments to address greenhouse
gas release liability in geological sequestration.
(c) National Geological Carbon Sequestration Assessment.--
(1) Findings.--The Congress finds the following:
(A) One of the most promising options for avoiding
emissions of carbon dioxide is through long-term storage by
geological sequestration in stable geological formations,
which involves--
(i) capturing carbon dioxide from industrial sources; and
(ii) injecting the captured carbon dioxide into geological
storage sites, such as deep saline formations, unmineable
coal seams, and depleted gas and oil fields.
(B) As of the date of introduction of this Act, there are
only very broad estimates of national geological storage
capacity.
(C) The potential to recover additional oil and gas
resources through enhanced oil and gas recovery using
captured carbon dioxide emissions is an option that could add
the equivalent of tens-of-billions of barrels of oil to the
national resource base.
(D) An initial geological survey of storage capacity in the
subsurface of sedimentary basins in the United States would--
(i) provide estimates of storage capacity based on clearly
defined geological parameters with stated ranges of
uncertainty;
(ii) allow for an initial determination of whether a basin
or 1 or more portions of the basin may be developed into a
storage site; and
(iii) provide information on--

(I) a baseline for monitoring injections and post injection
phases of storage; and
(II) early opportunities for matching carbon dioxide
sources and sinks for early deployment of zero-emissions
fossil fuel plants using capture and storage technologies.

(2) National Geological Carbon Sequestration Assessment.--
(A) Development and testing of assessment methodology.--
(i) In general.--Not later than 1 year after the date of
enactment of this Act, the Director of the United States
Geological Survey shall develop and test methods for the
conduct of a national assessment of geological storage
capacity for carbon dioxide.
(ii) Opportunity for review and comment.--During the period
beginning on the date that is 180 days after the date of
enactment of this Act and ending on the date of completion of
the development and testing of the methodologies under clause
(i), the Director shall provide the Under Secretary for
Oceans and Atmosphere of the Department of Commerce, the
Secretary of Energy, the Administrator of the Environmental
Protection Agency, the Director of the Minerals Management
Service, the Director of the Bureau of Land Management, the
heads of other Federal land management agencies, the heads of
State land management agencies, industry stakeholders, and
other interested parties with an opportunity to review and
comment on the proposed methodologies.
(B) Assessment.--
(i) In general.--The Director shall conduct the assessment
during the period beginning on the date on which the
development and testing of the methodologies is completed
under subparagraph (A) and ending 4 years after the date of
enactment of this Act.
(ii) Availability of information.--The Director shall
establish an Internet database accessible to the public that
provides the results of the assessment, including a detailed
description of the data collected under the assessment.
(iii) Report.--Not later than 1 year after the date on
which the assessment is completed under clause (i), the
Director shall submit to the appropriate committees of
Congress and the President a report that describes the
findings of the assessment.
(3) Authorization of Appropriations.--There are authorized
to be appropriated $15,000,000 to carry out this section for
fiscal years 2006 through 2009.

SEC. 454. ENERGY EFFICIENCY AUDITS.

(a) In General.--The Secretary of Energy shall establish a
program to reduce greenhouse gas emissions through the
deployment of energy efficiency measures, including
appropriate technologies, by large commercial customers by
providing for energy audits. The program shall provide
incentives for large users of electricity or natural gas to
obtain an energy audit.
(b) Components.--The energy audit shall provide users with
an inventory of potential energy efficiency measures,
including appropriate technologies, and their cost savings
over time, along with financing options to initiate the
project.
(c) Reimbursement of Audit Costs.--If any of the
recommendations of an energy audit implemented by a facility
owner result in cost savings greater than 5 times the cost of
the original audit, then the facility owner shall reimburse
the Secretary for the cost of the audit.

SEC. 455. ADAPTATION TECHNOLOGIES.

(a) In General.--The Director of the Office of Science and
Technology Policy shall establish a program on adaptation
technologies as part of the Climate Technology Challenge
Program. The Director shall perform an assessment of the
climate change technological needs of various regions of the
country. This assessment shall be provided to the Senate
Committee on Commerce, Science, and Transportation and the
House of Representatives Committee on Science within 6 months
after the date of enactment of this Act.
(b) Regional Estimates.--The Director of the Office of
Science and Technology Policy, in consultation with the
Secretaries of Transportation, Homeland Security,
Agriculture, Housing and Urban Development, Health and Human
Services, Defense, Interior, Energy, and Commerce, the
Administrator of the Environmental Protection Agency, the
Director of U.S. Geologic Survey, and other such Federal
offices as the Director deems necessary, along with relevant
State agencies, shall perform 6 regional infrastructure cost
assessments covering the United States, and a national cost
assessment, to provide estimates of the range of

[[Page S6971]]

costs that should be anticipated for adaptation to the
impacts of climate change. The Director shall develop those
estimates for low, medium, and high probabilities of climate
change and its potential impacts. The assessments shall be
provided to the Senate Committee on Commerce, Science, and
Transportation and the House of Representatives Committee on
Science within 1 year after the date of enactment of this
Act.

SEC. 456. ADVANCED RESEARCH AND DEVELOPMENT FOR SAFETY AND
NONPROLIFERATION.

The Secretary of Energy shall establish, operate, and
report biannually to Congress the results of--
(1) a program of research and development focused on
advanced once-through fuel cycles;
(2) a Nuclear System Modeling project to carry out the
analysis, research, simulation, and collection of engineering
data needed to evaluate all fuel cycles with respect to cost,
inherent safety, waste management and proliferation-avoidance
and -resistance; and
(3) an Advanced Diversified Waste-Disposal Research Program
for deep-bore hole disposal options, alternative geological
environments, and improved engineered barriers.

Subtitle C--Climate Technology Deployment Program

part i--program authority

SEC. 471. GOVERNMENT-INDUSTRY PARTNERSHIPS FOR FIRST-OF-A-
KIND ENGINEERING DESIGN.

(a) In General.--The Corporation may provide funding for a
cost-sharing program to address first-of-a-kind engineering
costs inherent in building the first facility of a
substantially new design that generates electricity with low
or no net greenhouse gas emissions or produces transportation
fuels that result in low or no net greenhouse gas emissions,
including Integrated Gasification Combined Cycle Advanced
Coal power generating facilities using carbon capture
technology with geological storage of greenhouse gases,
advanced reactor designs, large scale biofuels facilities
that maximize the use of cellulosic biomass, and large scale
solar concentrating power facilities.
(b) Project Selection.--The Secretary of Energy in
coordination with the Corporation shall select the final
designs to be supported, in terms of reducing greenhouse gas
emissions, demonstrating a new technology, meeting other
clean air attainment goals, generating economic benefits,
contributing to energy security, contributing to fuel and
technology diversity, maintaining price stability, and
attaining cost effectiveness and economic competitiveness.
(c) Cost-sharing limitations.--
(1) Corporation's share of costs.--Costs for the program
shall be shared equally between the Corporation and the
builder of such first facilities.
(2) Nuclear reactors.--Funding under this section for any
nuclear facility--
(A) may not exceed $200,000,000 for an individual project;
and
(B) shall be available for no more than 1 of each of the 3
designs certified by the Nuclear Regulatory Commission.
(d) Reimbursement of Costs.--For any subsequently-built
facility that uses a design supported by the cost-sharing
program under this section, the Secretary of Energy and the
Corporation shall specify an amount to be paid to the
Corporation in order for the Corporation to receive full
reimbursement for costs the Corporation incurred in
connection with the design, considering the program's
objectives, including the costs of promoting the deployment
of cost-effective, economically competitive technologies with
no or low net greenhouse gas emissions.
(e) Reimbursement for Delay.--If the construction of such a
first facility of a substantially new design is not started
within 10 years after the date on which a commitment under
the cost-sharing program is made by the Secretary, then the
industry partner shall reimburse the Corporation for any
costs incurred by the Corporation under the program.
(f) Jurisdiction.--
(1) Nuclear Regulatory Commission.--Nothing in this Act
shall affect the jurisdiction of the Nuclear Regulatory
Commission over nuclear power plant design approvals or
combined construction and operating licenses pursuant to the
Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.).
(2) Regulatory agencies.--Nothing in this Act affects the
jurisdiction of any Federal, State, or local government
regulatory agency.

SEC. 472. DEMONSTRATION PROGRAMS.

(a) Nuclear Regulatory Commission Licensing Process.--
(1) Demonstration program.--Within 24 months after the date
of enactment of this Act, the Secretary of Energy shall
establish a demonstration program to reduce the first-time
regulatory costs of the current Nuclear Regulatory Commission
licensing process incurred by the first applicant using an
advanced reactor design.
(2) Permits; licenses; cost-sharing.--
(A) The demonstration program shall--
(i) address the Early Site Permit applications and the
combined construction and operating license applications; and
(ii) be jointly funded by the Department of Energy and the
applicant.
(B) The Secretary shall work with the applicant to
determine the appropriate percentage of costs that the
Department and the applicant shall each provide.
(3) Reimbursement for license transfer.--If an applicant
decides to transfer a permit granted by the Commission under
the program to another entity, the applicant shall reimburse
the Department for its costs in obtaining the permit.
(b) Retooling of Advanced Vehicle Manufacturing.--
(1) In general.--Within 24 months after the date of
enactment of this Act, the Secretary of Energy shall
establish a program to demonstrate the effectiveness of
retooling an existing vehicle or vehicle component
manufacturing facility to reduce reduced greenhouse gas
emissions from vehicles and increasing competitiveness of
advanced technology vehicle production facilities.
(2) Program elements.--
(A) Activities supported.--The demonstration program shall
be designed--
(i) to re-equip an existing manufacturing facility to
produce advanced technology vehicles or components that will
result in reduced greenhouse gas emissions; and
(ii) to conduct engineering integration activities of
advanced technological vehicles and components.
(B) Funding.--The program shall be jointly funded by the
private sector and the Department of Energy. Secretary of
Energy shall work with participating entities to determine
the appropriate percentage of costs that each shall provide.
(C) Eligible components and activities.--The Secretary, in
coordination with the Administrator of the Environmental
Protection Agency and the Secretary of Transportation, shall
determine what advanced technology components and engineering
integration activities will qualify for support under the
program.
(D) Eligible costs.--Costs eligible to be shared under this
subsection include the cost of engineering tasks related 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.
(3) Limitation.--No more than 2 facilities may receive
financial assistance under the program for re-equipment and
expansion or for engineering integration.
(4) Advanced technology vehicle defined.--In this
subsection, the term ``advanced technology vehicle'' means a
light duty motor vehicle that is either a hybrid or advanced
lean burn technology motor vehicle, and that meets the
following additional performance criteria:
(A) The vehicle shall meet the Tier II Bin 5 emission
standard established in regulations prescribed by the
Administrator under that Act.
(B) The vehicle shall meet any new emission standard for
fine particulate matter prescribed by the Administrator under
that Act.
(C) The vehicle shall achieve at least 125 percent of the
base year city fuel economy for its weight class.

part ii--financing

SEC. 481. CLIMATE TECHNOLOGY FINANCING BOARD.

(a) Purpose.--The Climate Technology Financing Board shall
work with the Sedretary of Energy to make financial
assistance available to joint venture partnerships and
promote private sector participation in financing eligible
projects under this subtitle.
(b) Establishment.--
(1) In general.--Not later than 90 days after the date of
enactment of this Act, the Secretary of Energy shall
establish within the Department of Energy a Climate
Technology Financing Board, which shall be responsible for
assisting the Secretary in carrying out this subtitle.
(2) Membership.--The Climate Technology Financing Board
shall be comprised of--
(A) the Secretary of Energy, who shall serve as chair; and
(B) 6 additional members appointed by the Secretary,
including--
(i) the Chief Financial Officer of the Department of
Energy;
(ii) at least 1 representative of the Corporation; and
(iii) other members with experience in corporate and
project finance in the energy sector as deemed necessary by
the Secretary to carry out the functions of the Board.
(3) Representation of federal interest.--The Climate
Technology Financing Board shall represent the Federal
government's interest in all negotiations with project
developers interested in forming joint venture partnerships
and obtaining secured loans or loan guarantees under this
subtitle.
(c) Regulations.--
(1) In general.--Not later than 12 months after the date of
enactment of this Act, the Climate Technology Financing
Board, through the Secretary of Energy, shall publish in the
Federal Register such final regulations as may be necessary
to implement section --0482 of this title.
(2) Project selection criteria.--In selecting eligible
projects for financial assistance under this subtitle, the
Board shall consider, among other relevant criteria--
(A) the extent to which the project reduces greenhouse
gases, demonstrates new technologies, meets other clean air
attainment goals, generates economic benefits, contributes to
energy security, contributes to fuel and technology
diversity, and maintains price stability, cost effectiveness,
and economic competitiveness;

[[Page S6972]]

(B) the extent to which assistance under this subtitle
would foster innovative public-private partnerships and
attract private equity investment;
(C) the likelihood that assistance under this subtitle
would enable the project to proceed at an earlier date than
the project would otherwise be able to proceed without such
assistance;
(D) the extent to which the project represents the
construction of the first generation of facilities that use
substantially new technology; and
(E) any other criteria deemed necessary by the Secretary
for the promotion of long-term cost effective climate change-
related technologies.
(3) Mandatory regulatory provisions.--The regulations
required by paragraph (1) shall include the following:
(A) The general terms and conditions under which non-
recourse financial assistance will be provided. Those terms
shall include--
(i) a debt-to-equity ratio of up to 80 percent debt from
the Corporation, approved by the Secretary, and no less than
20 percent equity from the project developer;
(ii) a pledge of the eligible project's assets to the
Secretary and the project developer to secure their
respective loan and equity contributions; and
(iii) loan repayment terms generally consistent with
financial terms available to project developers in the United
States power generation industry.
(B) The general terms and conditions under which loan
guarantees will be provided, which shall be consistent with
section --0483(c).
(C) The procedures by which project owners and project
developers may request such financial assistance.
(D) A process under which the Climate Technology Financing
Board, the joint venture partnership, and the project
developer shall negotiate commercially reasonable terms
consistent with terms generally available in the United
States power generation industry regarding cost, construction
schedule, and other conditions under which the project
developer shall acquire the loan from the joint venture
partnership and repay the secured loan and acquire an
undivided interest in the eligible project when the project
achieves commercial operation. Terms prescribed under this
subparagraph shall include--
(i) a defined right of the joint venture partnership to
terminate the loan agreement upon a date certain for project
delays that are not the fault of the project developer; and
(ii) may not refer to the Federal Acquisition Regulations.
(E) Provisions to retain independent third-party
engineering assistance, satisfactory to the Climate
Technology Financing Board, the project developer, and the
joint venture partnership, to verify and validate
construction costs and construction schedules, to monitor
construction, and authorize draws on financing during
construction to ensure that construction is consistent with
generally accepted utility practice, and to make
recommendations as to the cause of delay or cost increases
should such delays or cost increases occur.
(F) Provisions to ensure--
(i) continued project development and construction in the
event of a delay to achieving commercial operation caused by
an event outside the control of the joint development
partners and the project developer; and
(ii) continued project operations in the event the sale of
the eligible project to the project developer is not executed
due to an event outside the control of the project developer.
(G) Any other information necessary for the Secretary of
Energy to discharge fully the obligation conferred under this
subtitle, including a process for negotiating the terms and
conditions of such financial assistance.
(d) Comprehensive Implementation Plan.--Not later than 12
months after the date of enactment of this Act, the Climate
Technology Financing Board shall prepare and transmit to the
President and Congress a comprehensive plan for
implementation of this subtitle.
(e) Progress Reports.--Not later than 12 months after the
comprehensive plan required by subsection (d) and annually
thereafter the Secretary shall prepare and transmit to the
President and the Congress a report summarizing progress in
satisfying the requirements established by the subtitle.

SEC. 482. RESPONSIBILITIES OF THE SECRETARY.

(a) Financial Assistance.--Subject to the requirements of
the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.),
the Secretary, in coordination with the Corporation, may make
available to joint venture partnerships for eligible project
costs such Federal financial assistance as the Climate
Technology Financing Board determines is necessary to enable
access to, or to supplement, private sector financing for
projects if the Board determines that such projects are
needed to reduce greenhouse gas emissions, contribute to
energy security, fuel or technology diversity, or clean air
attainment goals. The Secretary, in coordination with the
Corporation, shall prescribe such terms and conditions for
financial assistance as the Secretary deems necessary or
appropriate to protect the financial interests of the United
States.
(b) Requirements.--Approval criteria for financial
assistance under subsection (a) shall include--
(1) the creditworthiness of the project;
(2) the extent to which Federal financial assistance would
encourage public-private partnerships, attract private-sector
investment, and demonstrate safe and secure electric
generation or fuel production technology;
(3) the likelihood that Federal financial assistance would
hasten commencement of the project;
(4) in the case of a nuclear power plant, whether the
project developer provides reasonable assurance to the
Secretary that the project developer can successfully manage
nuclear power plant operations;
(5) the extent to which the project will demonstrate safe
and secure reduced or zero greenhouse gas emitting electric
generating or fuel production technology; and
(6) any other criteria the Secretary deems necessary or
appropriate.
(c) Reserve Amount.--Before entering into any agreements
under this subtitle, the Secretary, in consultation with the
Director of the Office of Management and Budget, shall
determine an appropriate capital reserve subsidy amount for
any loan or loan guarantee provided by the agreement. The
Secretary, in consultation with the project developer, shall
determine the appropriate type of Federal financial
assistance to be provided for eligible projects.
(d) Confidentiality.--The Secretary and the Corporation
shall protect the confidentiality of any information that is
certified by a project developer to be commercially
sensitive.
(e) Full Faith and Credit.--All loans or loan guarantees
provided by the Secretary under this subtitle shall be
general obligations of the United States backed by the full
faith and credit of the United States.

SEC. 483. LIMITATIONS.

(a) Secured Loans.--
(1) In general.--The financial assistance provided by this
subtitle for secured loans or loan guarantees--
(A) shall be available for new low or zero greenhouse gas
emitting energy generating or fuel production facilities,
including--
(i) no more than 3 integrated gasification combined cycle
coal power plants with carbon capture and geological storage
of greenhouse gases;
(ii) no more than the first of each of the 3 advanced
reactor design projects for which applications for combined
construction and operating licenses have been filed on or
before December 31, 2015;
(iii) no more than 3 large scale biofuels production
facilities that encourage a diversity of pioneer projects
relying on different feedstocks in different regions of the
country and maximizing the use of cellulosic biomass; and
(iv) no more than 3 large scale solar facilities of greater
than 5 megawatts capacity which begin operation after
December 31, 2005, and before January 1, 2011; and
(B) may not exceed 80 percent of eligible project costs for
each project.
(2) Government-caused delays.--Paragraph (1)(B) of this
subsection does not apply if--
(A) with respect to a nuclear power plant--
(i) the conditions specified in the construction and
operation license issued by the Nuclear Regulatory Commission
change; and
(ii) the changed conditions result in project delays or
changes in project scope after the start of construction that
are not attributable to private sector project management,
construction, or variances from the Nuclear Regulatory
Commission's approved design criteria or safety requirements;
or
(B) with respect to an advanced coal power plant, biofuels
production facility, solar power facility, or other eligible
facility--
(i) the conditions specified in the construction permit
change; and
(ii) the changed conditions result in project delays or
changes in project scope after the start of construction that
are not attributable to private sector project management,
construction, or variances from the approved design criteria
or safety requirements.
(3) Additional assistance.--If paragraph (1)(B) of this
subsection does not apply for reasons described in paragraph
(2), then the financial assistance payable to the project
developer shall include additional capital costs, costs of
project oversight, lost replacement power, and calculated
interest, as determined appropriate by the Secretary of
Energy.
(b) Loan Repayment Terms.--
(1) The repayment terms for non-recourse secured loans made
under this subtitle shall be negotiated among the Climate
Technology Financing Board, the joint venture partnership,
and the project developer prior to issuance of the loan and
commencement of construction.
(2) The project developer shall purchase the joint venture
partnership's interest in the project after the start of the
eligible project's commercial operation pursuant to the
conditions of the loan with the proceeds of refinancing from
non-Federal funding sources.
(3) The value of the joint venture partnership's interest
in the eligible project shall be determined in negotiations
prior to issuance of a secured loan under the subtitle.
(4) The interest rate on loans made under this subtitle
shall not be less than the yield on United States Treasury
securities of a similar maturity to the maturity of the loan

[[Page S6973]]

on the date of execution of the loan agreement.
(5) A secured loan for an eligible project under this
subtitle shall be non-recourse to the joint venture
partnership in the event of bankruptcy, insolvency,
liquidation, or failure of the project to start commercial
operation when the project is ready for commercial operation.
(c) Loan Guarantee Terms.--
(1) In general.--A loan guarantee shall apply only when a
project developer defaults on a loan solely as a result of
the regulatory actions, directly applied to the project, of a
State, Federal or local government.
(2) Limitation.--Nothing in this subsection shall obligate
the Corporation or Secretary to provide payments in the event
of a default that results from a project developer's
malfeasance, misfeasance, or mismanagement of the
construction or operation of the project, or from conduct or
circumstances unrelated to the regulatory actions of any
governmental entity.
(3) Escrow.--The corporation shall hold in escrow the
amounts necessary for payments in the event of a default by
the project developer in accordance with the terms of this
subsection.

SEC. 484. SOURCE OF FUNDING FOR PROGRAMS.

Notwithstanding any other provision of law, or any other
provision of this division, authorizing or appropriating
funds to carry out the provisions of this division, no funds
may be made available to carry out any activity under this
subtitle except proceeds from the auction authorized by
section --0333(g) of this division, subject to the limitation
in section --0333(g)(3).

part iii--definitions

SEC. 486. DEFINITIONS.

In this subtitle:
(1) Advanced reactor design.--The term ``advanced reactor
design'' means any reactor design approved and certified by
the Nuclear Regulatory Commission.
(2) Cellulosic ethanol.--The term ``cellulosic ethanol''
means ethanol produced from fibrous or woody plant materials.
(3) Commercial operation.--
(A) Nuclear power facility.--With respect to a nuclear
power plant, the term ``commercial operation'' means the
date--
(i) on which a new nuclear power plant has received a full
power 40-year operating license from the Nuclear Regulatory
Commission; and
(ii) by which all Federal, State, and local appeals and
legal challenges to such operating license have become final.
(B) Advanced coal power plants.--With respect to an
advanced coal power plant, the term ``commercial operation''
means the date--
(i) on which a new power plant has received a full power
rating; and
(ii) by which all Federal, State, and local appeals and
legal challenges to the operating license for the power plant
have become final.
(4) Corporation.--The term ``Corporation'' means the
Climate Change Credit Corporation.
(5) Eligible project.--The term ``eligible project''
means--
(A) any commercial nuclear power facility for the
production of electricity that uses one or more advanced
reactor designs;
(B) any advanced coal power plant utilizing the integrated
gasification combined cycle technology with carbon capture
and geological storage of greenhouse gases;
(C) any biofuels production facility which uses cellulosic
feedstock; or
(D) any power facility which uses solar energy for the
production of more than 75 percent of its annual output,
which output capacity shall not be less than 10 megawatts as
determined by common engineering practice.
(6) Eligible project costs.--The term ``eligible project
costs'' means all costs related to the development and
construction of an eligible project under this subtitle,
including, without limitation, the cost of--
(A) development phase activities, including site
acquisition and related real property agreements,
environmental reviews, licensing and permitting, engineering
and design work, off-taker agreements and arrangements, and
other preconstruction activities;
(B) fabrication and acquisition of equipment, project
construction activities and construction contingencies,
project overheads, project management costs, and labor and
engineering costs incurred during construction;
(C) capitalized interest necessary to meet market
requirements, reasonably required reserve funds, capital
issuance expenses, and other carrying costs during
construction; and
(D) any other costs that the Climate Technology Financing
Board deems reasonable and appropriate as eligible project
costs.
(7) Federal financial assistance.--The term ``Federal
financial assistance'' means project construction financing
of up to 80 percent of a project's eligible project costs in
the form of a non-recourse secured loan or loan guarantee.
(8) First-of-a-kind engineering costs.--The term ``first-
of-a-kind engineering costs'' means the extra costs
associated with the first units of a design category for
engineering work that develops the design details that finish
plant standardization up to a complete plant design and that
can be reused for building subsequent units.
(9) Joint venture partnership.--The term ``joint venture
partnership'' means a special purpose entity, including
corporations, partnerships, or other legal entities
established to develop, construct, and finance an eligible
project and to receive financing proceeds in the form of non-
recourse secured loans provided by the Secretary and private
equity provided by project developers.
(10) Loan.--The term ``loan'' means a direct non-recourse
loan issued to a joint venture partnership engaged in
developing an eligible project and funded by the Secretary
under this subtitle, which is subject to repayment by the
joint venture partnership under terms and conditions to be
negotiated among the project developer, joint venture
partnership, and the Secretary before the start of
construction on the project.
(11) Loan guarantee.--The term ``loan guarantee'' means any
guarantee or other pledge by the Secretary to pay all or part
of the principle and interest on a loan or other debt
obligation issued by a project developer related to its
equity investment and funded by a lender.
(12) Project developer.--The term ``project developer''
means a corporation, partnership, or limited liability
company that--
(A) provides reasonable assurance to the Secretary that the
project developer can successfully manage plant operations;
(B) has the financial capability to contribute 20 percent
equity to the development of the project; and
(C) upon commercial operation, will purchase the project
from the joint venture partnership.
(13) Secretary.--The term ``Secretary'' means the Secretary
of Energy.
(14) Subsidy amount.--The term ``subsidy amount'' means the
amount of budget authority sufficient to cover the estimated
long-term cost to the Federal government of a loan,
calculated on a net present value basis, excluding
administrative costs and any incidental effects on
governmental receipts or outlays, in accordance with the
provisions of the Federal Credit Reform Act of 1990 (2 U.S.C.
661 et seq.).

Subtitle D--Reverse Auction for Technology Dissemination

SEC. 491. CLIMATE TECHNOLOGY CHALLENGE PROGRAM.

(a) In General.--The Secretary of Energy, in coordination
with the Climate Change Credit Corporation, shall develop and
carry out a program in fiscal years 2006 through 2009, to be
known as the ``Climate Technology Challenge Program''. The
Secretary shall award funding through the program to
stimulate innovation in development, demonstration, and
deployment of technologies that have the greatest potential
for reducing greenhouse gas emissions. The program shall be
conducted as follows:
(1) The Secretary shall post a request for zero or low
greenhouse gas energy services or products along with a
suggested level of funding for each competition.
(2) The Secretary shall award the funding to the lowest
bidder in each competition who meets all other qualifications
in a form of a production incentive to supply--
(A) the requested services for a specified period of time;
or
(B) the requested product within a specified period of
time.
(b) Funding.--
(1) Source.--Notwithstanding any other provision of law, or
any other provision of this division, authorizing or
appropriating funds to carry out the provisions of this
division, no funds may be made available to carry out any
activity under this subtitle except proceeds from the auction
authorized by section --0333(g) of this division, subject to
the limitation in section --0333(g)(3).
(2) Operating funds.--Beginning with fiscal year 2010, the
Climate Change Credit Corporation shall administer the
Climate Technology Challenge Program using funds generated
under section --0352 of this division.
(c) Program Requirements.--
(1) Competitive process.--Recipients of awards under the
program shall be selected through competitions conducted by
the Secretary.
(2) Advertisement of competitions.--The Secretary shall
widely advertise any competitions conducted under the
program.
(3) Categories of competitions.--The Secretary shall
conduct separate competitions in the following areas of
energy and fuel production and services:
(A) Advanced coal (including integrated gasification
combined cycle) with carbon capture and storage.
(B) Renewable electricity.
(C) Energy efficiency (including transportation).
(D) Advanced technology vehicles.
(E) Transportation fuels.
(F) Carbon sequestration and storage.
(G) Zero and low emissions technologies.
(H) Adaptation technologies.
(I) The Secretary may also conduct competition for a
general category to stimulate additional, unanticipated
advances in technology.
(4) Evaluations and criteria for competitions.--
(A) Panel of experts.--The Secretary shall establish a
separate panel of experts to evaluate proposals submitted
under each competition.
(B) Competition criteria.--The Secretary, in consultation
with other relevant Federal agency heads, shall set minimum
criteria, including performance and safety criteria, for each
competition. Proposals shall be evaluated on their ability to
reduce, avoid, or sequester greenhouse gas emissions at a
given price.

[[Page S6974]]

(C) Full life cycle.--All proposals within a competition
shall compete on full life cycle avoided greenhouse gas
emissions (as weighted by global warming potential) per
dollar of incentive.
(5) Report of awards.--In 2009 and every 5 years thereafter
the Secretary shall issue a report on the awards granted by
the program, funding provided, and greenhouse gas emissions
avoided or sequestered.
(6) Program evaluation.--The Secretary, in coordination
with the National Academies of Science, shall evaluate the
continued necessity of the program and future funding needs
after fiscal year 2009. The evaluation shall be submitted 3
months before the end of fiscal year 2009 to the Congress and
the Climate Change Credit Corporation.
(7) Review and revision by corporation.--The Climate Change
Credit Corporation shall review and revise the awards program
every 5 years starting in 2009, issuing new guidelines for
the next 5 years of Climate Technology Challenge Program by
the end of the fiscal year in which the evaluation in
paragraph (6) is reported. The Climate Change Credit
Corporation shall assess and adjust the categories of
competitions as described in paragraph (3) to ensure new
developing technologies that reduce, avoid, or sequester
greenhouse gases and are in need of financial assistance for
further development and deployment are the focus of the
awards program.
(d) Budgeting and Awarding of Funds.--
(1) Availability of funds.--Any funds appropriated to carry
out this section shall remain available until expended, but
for not more than 4 fiscal years.
(2) Deposit and withdrawal of funds.--When an award is
offered, the Secretary shall deposit the total amount of
funding made available for that award in the Climate
Technology Challenge Trust Fund. If funding expires before an
award is granted, the Secretary shall deposit additional
funds in the account to ensure the availability of funding
for all awards. If an award competition expires before its
goals are met, the Secretary may redesignate those funds for
a new challenge, but any redesignated funds will be
considered as newly deposited for the purposes of paragraph
(3). All cash awards made under this section shall be paid
from that account.
(3) Maximum award.--No competition under the program may
result in the award of more than $100,000,000 without the
approval of the Secretary.
(4) Post-2010 funding.--Funding for the competitions after
fiscal year 2010 shall be taken from the Climate Change
Credit Corporation.
(e) Registration; Assumption of Risk.--
(1) Registration.--Each potential recipient of an award in
a competition under the program under this section shall
register for the competition.
(2) Assumption of risk.--In registering for a competition
under paragraph (1), a potential recipient of a prize shall
assume any and all risks, and waive claims against the United
States Government and its related entities (including
contractors and subcontractors at any tier, suppliers, users,
customers, cooperating parties, grantees, investigators, and
detailees), for any injury, death, damage, or loss of
property, revenue, or profits, whether direct, indirect, or
consequential, arising from participation in the competition,
whether such injury, death, damage, or loss arises through
negligence or otherwise, except in the case of willful
misconduct.
(f) Relationship to Other Authority.--The Secretary may
exercise the authority in this section in conjunction with or
in addition to any other authority of the Secretary to
acquire, support, or stimulate basic and applied research,
technology development, or prototype demonstration projects
that promote reduced greenhouse gas emissions.
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