Notes and Sources

Executive Summary

¹The request letter from Senators Warner and Lieberman is provided in Appendix A, while the request for additional analysis from Senators Barrasso, Inhofe, and Voinovich is in Appendix B.

²A detailed summary of the bill, obtained from Senator Lieberman’s web site, is provided in Appendix C.

³Energy Information Administration, Emissions of Greenhouse Gases in the United States 2006, DOE/EIA-0573(2006) (Washington, DC, November 2007), web site www.eia.doe.gov/oiaf/1605/ggrpt/index.html.

⁴Energy Information Administration, Energy Market and Economic Impacts of S.1766, the Low Carbon Economy Act of 2007, SR/OIAF/2007-06 (Washington, DC, January 2008), web site www.eia.doe.gov/oiaf/servicerpt/csia/index.html.

⁵All of the cases examined in this analysis incorporate the passage of the Energy Independence and Security Act of 2007, which was enacted on December 19, 2007. 

⁶Energy Information Administration, Annual Energy Outlook 2008, DOE/EIA-0383(2008) (Washington, DC, April 2008), web site www.eia.doe.gov/oiaf/aeo/index.html.

1. Background and Scope of the Analysis

¹The request letter from Senators Warner and Lieberman is provided in Appendix A, while the request for additional analysis from Senators Barrasso, Inhofe, and Voinovich is in Appendix B.

²Energy Information Administration, Emissions of Greenhouse Gases in the United States 2006, DOE/EIA-0573(2006)(Washington, DC, November 2007), web site www.eia.doe.gov/oiaf/1605/ggrpt/index.html.

³Energy Information Administration, Annual Energy Outlook 2008, DOE/EIA-0383(2008)(Washington, DC, April 2008), web site www.eia.doe.gov/oiaf/aeo/index.html.

⁴Energy Information Administration, Energy Market and Economic Impacts of S. 280, the Climate Stewardship and Innovation Act of 2007, SR/OIAF/2007-04 (Washington, DC, July 2007), web site www.eia.doe.gov/oiaf/servicerpt/csia/index.html.

⁵Section 2303 requires that the quantity of borrowed allowances to satisfy a given emission obligation be factored by 1.1 times the number of years after the “use year” and before the “source year” of the borrowed allowance.  The wording can be interpreted as allowing 1 year of borrowing without any interest imposed.  The intent is assumed to be, however, that a full 10-percent interest penalty on borrowed allowances is to be charged, without a free year of interest.

⁶Energy Information Administration, Energy Market and Economic Impacts of S. 1766, the Low Carbon Economy Act of 2007, SR/OIAF/2007-06 (Washington, DC, January 2008), web site www.eia.doe.gov/oiaf/servicerpt/csia/index.html.

2. Results

¹Each allowance represents one metric ton of CO2-equivalent emissions.  A price for an allowance is expressed in 2006 dollars per metric ton of CO2-equivalent emissions.

²In Figures 9 and 10, all emissions from purchased electricity are shown in the electricity sector.  Some of the emissions changes between cases reflect different levels of electricity usage in addition to direct emissions from generation.

³See www.eia.doe.gov/oiaf/service_rpts.htm

⁴Costs accumulated from 2005 through 2030. All dollar values are 2006 dollars.  Accumulated costs are discounted to 2005 using a 7-percent discount rate per guidance from Office of Management and Budget Circular A-94.

⁵The revenues described here include those created by the direct auctioning of allowances together with the free allocation of allowances to noncovered recipients.  These noncovered recipients, including States and Indian tribes, are assumed to sell the allowances to covered entities generating revenue for their use.