Climate Stewardship and Innovation Act of 2005

        [Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1151 Introduced in Senate (IS)]

1st Session
S. 1151

To provide for a program to accelerate the reduction of greenhouse gas
emissions in the United States by establishing a market-driven system
of greenhouse gas tradeable allowances, to limit greenhouse gas
emissions in the United States and reduce dependence upon foreign oil,
to support the deployment of new climate change-related technologies,
and ensure benefits to consumers from the trading in such allowances,
and for other purposes.

_______________________________________________________________________

IN THE SENATE OF THE UNITED STATES

May 26, 2005

Mr. McCain (for himself and Mr. Lieberman) introduced the following
bill; which was read twice and referred to the Committee on Environment
and Public Works

_______________________________________________________________________

A BILL

To provide for a program to accelerate the reduction of greenhouse gas
emissions in the United States by establishing a market-driven system
of greenhouse gas tradeable allowances, to limit greenhouse gas
emissions in the United States and reduce dependence upon foreign oil,
to support the deployment of new climate change-related technologies,
and ensure benefits to consumers from the trading in such allowances,
and for other purposes.

SECTION 1. SHORT TITLE.

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

SEC. 2. TABLE OF CONTENTS.

The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Definitions.
Title I--Federal Climate Change Research and Related Activities

Sec. 101. National Science Foundation fellowships.
Sec. 102. Report on United States impact of Kyoto protocol.
Sec. 103. Research grants.
Sec. 104. Abrupt climate change research.
Sec. 105. Impact on low-income populations research.
Sec. 106. NIST greenhouse gas functions.
Sec. 107. Development of new measurement technologies.
Sec. 108. Enhanced environmental measurements and standards.
Sec. 109. Technology development and diffusion.
Sec. 110. Agricultural outreach program.
Title II--National Greenhouse Gas Database

Sec. 201. National greenhouse gas database and registry established.
Sec. 202. Inventory of greenhouse gas emissions for covered entities.
Sec. 203. Greenhouse gas reduction reporting.
Sec. 204. Measurement and verification.
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.
Sec. 302. Compliance.
Sec. 303. Borrowing against future reductions.
Sec. 304. Other uses of tradeable allowances.
Sec. 305. Exemption of source categories.
Subtitle B--Establishment and Allocation of Tradeable Allowances

Sec. 331. Establishment of tradeable allowances.
Sec. 332. Determination of tradeable allowance allocations.
Sec. 333. Allocation of tradeable allowances.
Sec. 334. Ensuring target adequacy.
Sec. 335. Initial allocations for early participation and accelerated
participation.
Sec. 336. Bonus for accelerated participation.
Subtitle C--Climate Change Credit Corporation

Sec. 351. Establishment.
Sec. 352. Purposes and functions.
Subtitle D--Sequestration Accounting; Penalties

Sec. 371. Sequestration accounting.
Sec. 372. Penalties.
Title IV--Innovation and Competitiveness

Sec. 401. Findings.
Subtitle A--Innovation Infrastructure

Sec. 421. The Innovation Administration.
Sec. 422. Technology transfer opportunities.
Sec. 423. Government-sponsored technology investment program.
Sec. 424. Federal technology innovation personnel incentives.
Sec. 425. Interdisciplinary research and commercialization.
Sec. 426. Climate innovation partnerships.
Sec. 427. National medal of climate stewardship innovation.
Sec. 428. Math and science teachers' enhancement program.
Sec. 429. Patent study.
Sec. 430. Lessons-learned program.
Subtitle B--Specific Program Initiatives

Sec. 451. Transportation.
Sec. 452. Agricultural sequestration.
Sec. 453. Geological storage of sequestered greenhouse gases.
Sec. 454. Energy efficiency audits.
Sec. 455. Adaptation technologies.
Sec. 456. Advanced research and development for safety and
nonproliferation.
Subtitle C--Climate Technology Deployment Program

part i--program authority

Sec. 471. Government-industry partnerships for first-of-a-kind
engineering design.
Sec. 472. Demonstration programs.
part ii--financing

Sec. 481. Climate Technology Financing Board.
Sec. 482. Responsibilities of the Secretary.
Sec. 483. Limitations.
Sec. 484. Source of funding for programs.
part iii--definitions

Sec. 486. Definitions.
Subtitle D--Reverse Auction for Technology Dissemination

Sec. 491. Climate technology challenge program.

SEC. 3. 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--
(A) regulations promulgated under section
201(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 201.
(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
201(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:
``(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 204, 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 3(8) of the Climate Stewardship and Innovation
Act of 2005) and of facilitating implementation of section 204 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 204;
(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.

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
301(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 301(d); and
(4) such other categories of emissions as the Administrator
determines in the regulations promulgated under section
201(c)(1) may be practicable and useful for the purposes of
this Act, 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 301(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 301(d); and
(D) such other categories of emissions as the
Administrator determines in the regulations promulgated
under section 201(c)(1) may be practicable and useful
for the purposes of this Act, 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
201(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
201(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 204,
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 301.
(5) Independent third-party verification.--To meet the
requirements of this section and section 203, 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 201(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--
(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 Act 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.--Beginning with calendar year 2010--
(1) 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 paragraph (2);
(2) 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
(3) 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.
(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
204(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 Act.

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 351.
(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 372;
(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 303.
(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 371.

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 Act for the current calendar year,
subject to the limitation imposed by section 302(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
(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 Act 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 Act 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 301.
(c) Climate Change Credit Organization.--The Climate Change Credit
Corporation established under section 351 may sell tradeable allowances
allocated to it under section 332(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 352.
(d) Banking of Tradeable Allowances.--Notwithstanding the
requirements of section 301, a covered entity that has more than a
sufficient amount of tradeable allowances to satisfy the requirements
of section 301, 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 Act 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 331(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
351.
(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 335, the
Administrator shall--
(1) allocate to each covered sector that sector's
allotments determined by the Administrator under section 332
(adjusted for any such initial allocations and the allocation
to the Climate Change Credit Corporation established under
section 351); and
(2) allocate to the Climate Change Credit Corporation
established under section 351 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 auction, together
with any funds received as reimbursements under subtitle C of
title IV of this Act, 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 Act 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 332(b).
(3) Limitation.--In allocating tradeable allowances under
paragraph (1) the Administrator shall take into account the
purposes of section 331 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 331 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 331(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 333, 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
201(c)(3); and
(2) to any covered entity that has entered into an
accelerated participation agreement under section 336, 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 333 shall be eligible for the allocation
of allowances under this section and section 336 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 334 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 301 by--
(A) submitting tradeable allowances from another
nation's market in greenhouse gas emissions under the
conditions described in section 312(b)(1);
(B) submitting a registered net increase in
sequestration, as registered in the National Greenhouse
Gas Database established under section 201, and as
adjusted by the appropriate sequestration discount rate
established under section 371; 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 301 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 333(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
Act. 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 106(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 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 491.

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 301 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 204, 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
301 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.
(D23/3) 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 491,
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.
``(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
Act.
``(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
(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, 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 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, to complement the current repository authorized under
the Nuclear Waste Policy Act, 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 482 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;
(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 483(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 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 Guarantees.--
(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.

SEC. 484. SOURCE OF FUNDING FOR PROGRAMS.

Notwithstanding any other provision of law, or any other provision
of this Act, authorizing or appropriating funds to carry out the
provisions of this Act, no funds may be made available to carry out any
activity under this subtitle except proceeds from the auction
authorized by section 333(g) of this Act, subject to the limitation in
section 333(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 Act, authorizing or appropriating
funds to carry out the provisions of this Act, no funds may be
made available to carry out any activity under this subtitle
except proceeds from the auction authorized by section 333(g)
of this Act, subject to the limitation in section 333(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 352 of this Act.
(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.
(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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