II
111th CONGRESS
1st Session
S. 1189
IN THE SENATE OF THE UNITED STATES
June 4, 2009
Mr. Bayh (for himself and Mr. Brown) introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources
A BILL
To require the Secretary of Energy to conduct a study of the impact of energy and climate policy on the competitiveness of energy-intensive manufacturing and measures to mitigate those effects.
Short title
This Act may be cited as the
Carbon Leakage Mitigation Study Act of
2009
.
Definitions
In this Act:
Cap-and-trade program
The term cap-and-trade program means an economy-wide program enacted by Congress under which greenhouse gas emission allowances are distributed or auctioned to control those emissions under the Clean Air Act (42 U.S.C. 7401 et seq.).
Carbon leakage
The term carbon leakage means any substantial increase (as determined by the Secretary) in greenhouse gas emissions—
by a manufacturing facility located in a country without a greenhouse gas emission regulation commensurate to a cap-and-trade program; or
that is caused by an incremental cost of production increase in the United States as a result of a domestic cap-and-trade program.
Compensatory measure
In general
The term compensatory measure means any provision of a cap-and-trade program intended to mitigate the risk of carbon leakage.
Inclusions
The term compensatory measure includes a provision described in subparagraph (A) relating to—
emission allowance allocation; or
a border tax adjustment.
Greenhouse gas
The term greenhouse gas means any gas designated as a greenhouse gas under a cap-and-trade program.
Output
The term output means the total tonnage or other standard unit of production (as determined by the Secretary) produced by a manufacturing facility.
Secretary
The term Secretary means the Secretary of Energy.
Industry productivity and carbon leakage study
In general
Not later than 120 days after the date of enactment of this Act, the Secretary, in consultation with the Secretary of Commerce, the Administrator of the Environmental Protection Agency, and the heads of other appropriate Federal departments and agencies, shall conduct a study—
to characterize the relative risk of carbon leakage and changes in output and investment in United States industrial sectors and subsectors caused by a potential cap-and-trade program implemented in the United States, in the absence of commensurate greenhouse gas emission regulations in other countries; and
to estimate the change in output in industrial sectors and subsectors of the United States that are determined to be at risk of significant carbon leakage.
Inclusions
The study under subsection (a) shall include an assessment of—
expected United States industrial production, imports, and exports, absent a cap-and-trade program;
the direct and indirect energy intensity and greenhouse gas intensity of United States industries in relation to gross value-added, cost of production, and total shipment values;
the price elasticity of United States industries;
the trade elasticity of United States industries;
the trade intensity (calculated as imports plus exports, relative to domestic consumption) of United States industries;
other qualitative indicators of the ability of United States industries to pass on cost increases to consumers, such as—
market structure and concentration;
level of product differentiation;
the availability of close substitutes for customers; and
factors that constrain the response of foreign producers to an increase in United States production costs;
the overall risk of carbon leakage, expressed in list form by sector and subsector of the United States economy, resulting from a cap-and-trade program;
the impacts on the production, profitability, greenhouse gas emissions, and level of employment of industries at risk of carbon leakage, expressed—
by sector and subsector, separately and in aggregate, as a percentage of gross domestic product;
in relation to national production, trade, and employment projections under a potential cap-and-trade program; and
as compared to baseline projections absent a cap-and-trade program;
the manner in which the economic impacts of climate change policies compare to changes over time in other factors affecting production and investment by industries, such as—
changes in production costs;
currency exchange rates;
consumer preference; and
other relevant factors; and
the highest-priority trading partners of the industries at risk of carbon leakage, listed in order of priority.
Report
On completion of the study under this section, the Secretary shall submit to Congress a report describing the results of the study, including recommendations regarding data collection activities and subsequent studies by the Secretary, if any.
Study of measures to mitigate carbon leakage
In general
Not later than 180 days after the date of enactment of this Act, but not earlier than the date of submission to Congress of the report regarding the competitiveness study under section 3(c), the Secretary, in consultation with the Secretary of Commerce, the Administrator of the Environmental Protection Agency, and the heads of other appropriate Federal departments and agencies, shall conduct a study to evaluate the impact of potential compensatory measures to prevent carbon leakage resulting from a cap-and-trade program.
Inclusions
The study under subsection (a) shall include an assessment of—
compensatory measures used by other jurisdictions to prevent carbon leakage under regional, national, or multinational climate policies;
the projected risk of carbon leakage from United States industries under potential prices on greenhouse gas emissions and realistic scenarios for international climate policy, with compensatory measures, including—
the production, profitability, and level of employment of the industries at risk of carbon leakage, expressed separately and in aggregate;
expected changes in the domestic market shares of products produced in the United States, as compared to products imported into the United States; and
expected changes in the foreign market shares of products produced in the United States, as compared to products produced by other countries; and
the consistency of compensatory measures with international trade commitments (including principles of the World Trade Organization).
Report
On completion of the study under this section, the Secretary shall submit to Congress a report describing the results of the study, including recommendations of the Secretary, if any.