Green Logistics: Kerry, Lieberman roll out new energy legislation
May 19, 2010
WASHINGTON, D.C.Senators John Kerry (D-Mass.) and Joseph Lieberman (I-Conn.) introduced their long-awaited legislation, which, they said, will change the nations energy policy from a national weakness into a national strength.
Entitled, The American Power Act, the bill vows to reduce greenhouse gas emissions (GHG) by 17 percentcompared to 2005 levelsby 2020 and 83 percent by 2050, matching am objective put forth by the White House last year.
Looking at the bills action items from a supply chain and freight transportation perspective, one of the bills most notable takeaways is a goal to decrease the United States dependence on foreign oil. The Senators want to do this through myriad steps, including investing more than $6 billion per year in transportation infrastructure to increase efficiency and decrease oil consumption, with funding directed to the Highway Trust Fund, nearly $2 billion for state and local projects that reduce oil consumption, and GHG, and nearly $2 billion for TIGER grants.
Also receiving attention are: plans for electric vehicle infrastructure through a pilot program that would serve as a low-emission energy plan focusing on electric drive refueling infrastructure and identifying related needs for electricity providers, vehicle manufacturers, and electricity purchasers; investments in GHG emission reduction programs; and tax credits for natural gas motor vehicles.
Another transportation-specific measure includes a $6 billion annual subsidy allocated for increased efficiency and lowering oil consumption in the transportation sector. And regarding domestic oil production, the legislation would allow coastal states to opt out of drilling up to 75 miles from their shores.
While previous versions of this legislation included language that was viewed as Cap and Trade, which was described as a form of emissions trading used to control pollution by offering economic incentives in order to achieve reductions in emissions pollutants and put limits on emissions from motor vehicles, coal-fired plants, and factories, this bill has a somewhat similar offering but is not described as cap and trade by its authors.
In the American Power Act, there are provisions for emissions trading that would take effect in 2013. Emissions trading would start at $12 and $25 a ton and be geared towards utility companies, with the $12 per ton increasing at 3 percent over inflation annually and the $15 per ton increasing 5 percent over inflation annually. And rather than allowing a patchwork of conflicting state and federal regulations, it lays out one clear set of rules for reducing GHG, Kerry and Lieberman said. They added that states that already have cap and trade programs in place will be compensated for lost revenues due to termination of their programs.
The Senators noted that industrial sources will not enter the emissions trading program until 2016, at which point they will receive allowances to offset direct and indirect compliance costs.
But, as LM has previously reported, cap and tradeor any type of exchanging or trading emissions allowances or permitshas been widely met with heavy opposition in freight transportation and logistics circles. And that sentiment appears to be the same this time around as well.
Officials from the American Trucking Associations (ATA) said that this legislation will require refiners to purchase billions of dollars worth of carbon allowances that correspond to the carbon footprint of the fuels they sell, with refiners passing on costs to consumers in the form of higher fuel pricesor a hidden multi-billion dollar tax.
[This] climate bill clearly imposes a tax on transportation fuels and reallocates revenue from that tax for non-transportation purposes, said Bill Graves, ATA president and CEO. Only a small portion would go to the Highway Trust Fund for much-needed improvements and repairs to our nations highway infrastructure.
Despite the ATAs opposition, there are others that view this bill as step in the right direction.
A noted green logistics expert told LM that rather than taking a one size fits all approach to wean American off of foreign oil, this bill acknowledges the need for a change in strategy.
What I appreciate about the Kerry/Lieberman bill is their acknowledgement of the needs for different needs strategies and innovation by industry (power plants, heavy industry, transportation), said Brittain Ladd, a supply chain consultant and lecturer on green supply chain strategies for a consulting firm. I also like the fact that the bill recognizes America can’t wean itself from foreign oil without first creating alternative methods to powering our plants and vehicles. Providing price stabilization to reduce risks to investors and offering tax incentives to convert trucks and fleets to natural gas is certainly a step in the right direction.
While legislation is now on the table, the chances of it being signed into law are far from certain, due to sharp divides among partisan lines. A Bloomberg report quoted Senate Majority Leader Harry Reid as saying he may set this bill aside for a smaller energy bill that would increase production from renewable energy sources, including solar panels, set new energy efficiency standards, and limit offshore drilling expansion to the eastern Gulf of Mexico.
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