Protection from Electricity Price Increases: The
electricity sector will receive 35% of the allowances, representing
90% of current utility emissions. Local electric distribution companies,
whose rates are regulated by the states, will receive 30% of the
allowances, which they must use to protect consumers from electricity
price increases. Merchant coal and long-term power purchase agreements
will receive 5% of the allowances. These allowances will be distributed
according to a formula recommended by the utility industry and will
phase out over a five-year period from 2026 through 2030.
Protection from Natural Gas Price Increases: Local
natural gas distribution companies, whose rates are regulated by
the states, will receive 9% of allowances, which they must use to
protect consumers from natural gas price increases. These allowances
will phase out over a five-year period from 2026 through 2030.
Protection from Home Heating Oil Price Increases: States
will receive 1.5% of allowances for programs to benefit users of
home heating oil and propane. These allowances will phase out over
a five-year period from 2026 through 2030.
Protection of Low- and Moderate-Income Households: 15%
of allowances will be auctioned each year and the proceeds of these
allowances will be distributed to low- and moderate-income families
to protect them from other energy cost increases. These allowances
will be distributed through tax credits, direct payments, and electronic
benefit payments and will not phase out.
Protection for Energy-Intensive, Trade-Exposed Industries:
Pursuant to the Inslee-Doyle program, energy-intensive,
trade-exposed industries will receive allowances to cover their
increased costs from the global warming protection program. The
number of allowances set aside for this program will equal 15% of
the allowances in 2014 and then decrease based on the percent reductions
in the emissions targets. These allowances will phase out after
2025 unless the President decides the program is still needed.
Protection for Domestic Energy Production: Oil
refiners will receive 2% of allowances starting in 2014 and ending
and Clean Energy Technology
Investments in Carbon Capture and Sequestration:
2% of allowances from 2014 through 2017 and 5% of allowances in
2018 and subsequent years will be allocated to help electric utilities
cover the costs of installing and operating carbon capture and sequestration
Investments in Renewable Energy
and Energy Efficiency: States will receive 10% of
allowances from 2012 through 2015; 7.5% of allowances in 2016 and
2017; 6.5% of allowances from 2018 through 2021; and 5% of allowances
thereafter for investments in renewable energy and energy efficiency.
(The 5% of allowances from 2022 through 2025 will include some future
Investments in Advanced Automobile Technology: 3%
of allowances through 2017 and 1% from 2018 through 2025 will be
allocated for investments in electric vehicles and other advanced
automobile technology and deployment.
Investments in Research and Development: 1% of
allowances will be allocated to “Clean Energy Innovation Centers”
at research universities and institutions for applied research and
development on clean energy technologies.
Other Public Purposes
Supplemental Reductions from Preventing Tropical Deforestation:
5% of allowances will be allocated from 2012 through 2025
to prevent tropical deforestation and build capacity to generate
international deforestation offsets. By 2020, this program will
achieve additional emission reductions equivalent to 10% of U.S.
emissions in 2005. From 2026 through 2030, 3% of allowances will
be allocated to this program. In 2031 and thereafter, 2% will be
allocated to this program.
Domestic Adaptation: From 2012 through 2021,
2% of allowances will be allocated for domestic adaptation purposes.
The amount of allowances allocated for domestic adaptation will
increase to 4% from 2022 through 2026 and to 8% in 2027 and thereafter.
Half of these allowances will be used for wildlife and natural resource
protection and half for other domestic adaptation purposes, including
International Adaptation and Clean Technology Transfer:
From 2012 through 2021, 2% of allowances will be allocated
for international adaptation and clean technology transfer. The
amount of allowances allocated for these purposes will increase
to 4% from 2022 through 2026 and to 8% in 2027 and thereafter. Half
of these allowances will be used for adaptation and half for clean
Worker Assistance and Job Training: 0.5% of allowances
will be allocated for worker assistance and job training from 2012
through 2021. This amount will increase to 1% thereafter.
Some of the unallocated allowances will be auctioned to ensure
budget neutrality. The remainder will be used for consumer protection.