81R3256 JTS-D
By: Hernandez H.B. No. 634
A BILL TO BE ENTITLED
AN ACT
relating to establishing a carbon dioxide "cap and trade" program
to enable participation in the Regional Greenhouse Gas Initiative.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle C, Title 5, Health and Safety Code, is
amended by adding Chapter 391 to read as follows:
CHAPTER 391. "CAP AND TRADE" PROGRAM FOR CARBON DIOXIDE
EMISSIONS FROM CERTAIN ELECTRIC GENERATING
FACILITIES; REGIONAL GREENHOUSE GAS INITIATIVE
Sec. 391.001. DEFINITIONS. In this chapter:
(1) "Allowance" means an authorization to emit a
certain amount of carbon dioxide.
(2) "Commission" means the Texas Commission on
Environmental Quality.
(3) "Regional Greenhouse Gas Initiative" means a
memorandum of understanding dated December 20, 2005, as may be
amended, and the corresponding model rule, as may be amended, that
establishes a "cap and trade" program in the northeast region of the
United States.
Sec. 391.002. "CAP AND TRADE" PROGRAM. (a) The commission
in consultation with the Public Utility Commission of Texas by rule
shall establish a carbon dioxide "cap and trade" program that will
limit and then reduce the total carbon dioxide emissions released
by fossil fuel-fired electric generating facilities in this state.
(b) The commission's rules establishing the carbon dioxide
"cap and trade" program shall be designed to:
(1) fully comply with the Regional Greenhouse Gas
Initiative or with another similar initiative as the commission
determines is best suited for this state; and
(2) permit the holders of carbon dioxide allowances to
trade them in a market to be established through the Regional
Greenhouse Gas Initiative or other entity as determined by the
commission.
(c) The commission and any other relevant state agency or
official shall take the steps necessary to allow electric
generating facilities in this state to participate in a market to
trade carbon dioxide allowances allocated under the program.
Sec. 391.003. AUCTION OF ALLOWANCES. (a) Rules adopted
under the "cap and trade" program must require that in 2010 at least
50 percent of all allowances issued under the program be sold
through an auction open to any person in this state who wishes to
participate. In the years after 2010, the percentage of allowances
sold through auction shall be as follows:
(1) in 2011, at least 60 percent;
(2) in 2012, at least 70 percent;
(3) in 2013, at least 80 percent;
(4) in 2014, at least 90 percent; and
(5) in 2015 and all following years, 100 percent.
(b) The proceeds recovered from the allowance auction must
be used to benefit consumers, balancing short-term and long-term
benefits. The proceeds may be used only for the following purposes,
in proportions to be determined by the commission:
(1) to promote energy efficiency and conservation;
(2) to directly mitigate the adverse effects of the
program on consumers of electricity; and
(3) to promote renewable energy technologies that do
not produce carbon dioxide emissions.
(c) The commission shall determine and specify details for
implementing the auction of carbon dioxide emission allowances,
including:
(1) the auction's design;
(2) the person to conduct and manage the auction; and
(3) the timing of the auction in any year relative to
the dates of the compliance period in the Regional Greenhouse Gas
Initiative or other market.
Sec. 391.004. AUCTION MANAGER. (a) The commission shall:
(1) engage a person to serve as auction manager that is
experienced in auction design and management; or
(2) contract with a person to serve as auction manager
that is determined by the commission to be qualified to design,
manage, and conduct the auction in a manner that assures the
efficiency of the auction.
(b) The selection process for choosing an auction manager to
design, manage, and conduct the auction shall include an open and
public request for proposals. Proposals submitted in response to a
request under this subsection must include a summary of
qualifications and experience relevant to designing, managing, and
conducting the auction.
(c) An auction manager selected by the commission may be
reimbursed only for reasonable costs incurred by the auction
manager in administering the auction as determined by the
commission.
Sec. 391.005. ALLOWANCES HELD BY AUCTION MANAGER;
DISTRIBUTION OF AUCTION PROCEEDS. (a) The auction manager selected
under Section 391.004 shall be authorized to receive, hold, and
sell carbon dioxide emission allowances.
(b) The commission shall convey all allowances to the
auction manager, who shall collect the auction proceeds and,
without further appropriation, distribute the proceeds in
accordance with Section 391.003(b) under commission oversight.
(c) The auction manager annually shall submit to the
commission, not less than six months before the start of the
auction, a draft proposal on how to allocate the proceeds from the
auction. The commission shall hold a public hearing, accept public
comment, and approve, modify, or reject the draft proposal. If the
commission rejects the proposal, the commission shall work with the
auction manager to draft an acceptable proposal.
(d) The office shall require an annual report from the
auction manager describing the auction and its results. The
commission shall make the report public and shall submit the report
to the appropriate legislative committees.
Sec. 391.006. OTHER COMMISSION POWERS AND DUTIES RELATED TO
CLIMATE-CHANGING SUBSTANCES. The responsibilities created by
establishing a carbon dioxide "cap and trade" program are in
addition to all other responsibilities imposed by any other law or
rule and do not reduce any authority of the commission, including
the authority to adopt standards and regulations necessary for this
state to join and participate in a multistate program, at any stage
in the development and implementation of the program, intended to
control emissions of carbon dioxide or other substances that are
determined by the commission to be damaging or altering the
climate.
SECTION 2. Subchapter Z, Chapter 39, Utilities Code, is
amended by adding Section 39.927 to read as follows:
Sec. 39.927. CARBON DIOXIDE "CAP AND TRADE" PROGRAM. The
commission, in consultation with the Texas Commission on
Environmental Quality and the attorney general, through the
commission's authority under this chapter, including the authority
to review rates, prices, and schedules, shall adopt rules that
fully implement the carbon dioxide "cap and trade" program
prescribed by Chapter 391, Health and Safety Code. The commission
may adopt rules and enter any orders that ensure that the carbon
dioxide emissions associated with the generation of electric power
serving the customer load of this state are treated on a
commercially comparable basis regardless of the location of the
power stations operating to serve that load.
SECTION 3. Not later than January 1, 2010, the Texas
Commission on Environmental Quality and the Public Utility
Commission of Texas shall adopt rules to implement Chapter 391,
Health and Safety Code, as added by this Act.
SECTION 4. This Act takes effect September 1, 2009.