On June 9, 2010, Senator Dick Lugar (R-IN) introduced an energy legislation alternative to the Kerry-Lieberman and Waxman-Markey bills, entitled the “Practical Energy and Climate Plan” (S. 3464).  The bill is co-sponsored by Senators Lindsey Graham (R-SC), who earlier this year was a co-sponsor of the Kerry-Lieberman bill before withdrawing his support (see May 14, 2010 edition of the WER), and Lisa Murkowski (R-AK), whose resolution to disapprove EPA’s endangerment finding on greenhouse gases (“GHG”) was defeated in the Senate on Thursday (see “Murkowski Resolution Defeated” in this edition of the WER).

 Senator Lugar’s bill establishes a “Diverse Energy Standard” to promote investment in lower-emitting energy sources.  Electric utilities would be required to obtain a “target percentage” of their electricity from these sources; this percentage would start at 15% in 2015 and rise to 50% by 2050.  Sources that would meet the bill’s standard include renewable power sources, coal usage that captures and sequesters at least 80% of carbon emissions, biomass, and coal mine methane.

 In lieu of a comprehensive emissions cap-and-trade program or the establishment of a carbon price, the bill would establish a Federal diverse energy credit trading program.  Generators of electricity from these “diverse” sources would be issued energy credits, and could trade or sell any credits earned in excess of the quantity needed to comply with the “target percentage” to other electric utilities within the same state.  Until the year 2029, this program would issue credits to utilities generating electricity from coal that capture and sequester at least 65% of the coal’s carbon emissions.

 The bill also establishes a voluntary retirement program for the nation’s highest-emitting coal plants.  In exchange for voluntarily agreeing to retire one of these units before 2019, an electric utility would be subject to an “alternative compliance mechanism” lessening the unit’s regulatory compliance requirements under the Clean Air Act’s New Source Review, GHG performance standard, and Hazardous Air Pollutant programs.  Relief from these regulations would forego the need for the utility to install costly emissions reduction equipment over the next decade.

 Other sections of the bill call for increased vehicle efficiency and building energy efficiency measures and expanded loan guarantees for nuclear power.  The vehicle efficiency provisions codify proposed fuel economic standards until 2016; thereafter, passenger vehicles must achieve 4% annual efficiency improvements, and fuel efficiency standards for medium- and heavy-duty vehicles must be adopted.  The building energy efficiency provisions establish improved energy efficient building performance requirements for new residential and commercial construction, and offer federally-backed, low interest loans to promote energy efficiency retrofits.  Finally, the bill expands loan guarantees for nuclear power, offering an additional $36 billion to help deploy new nuclear power generation facilities.

A copy of the bill is available at http://lugar.senate.gov/energy/legislation/pdf/EnergyBill.pdf.