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EIA: Trucking A Small Part of Emissions Reductions Under APA

July 16, 2010

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Changes in fossil fuel use in the transportation and industrial sectors and in buildings would account for a small amount of emissions reductions under the American Power Act
, according to an analysis by the U.S. Energy Information Administration. While these changes would account for 14 to 22 percent of the total reduction in energy-related carbon dioxide emissions relative to the reference case in 2035, the electricity sector would account for between 78 percent and 86 percent of total reductions, the EIA found.

The American Power Act, introduced by Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.), would establish a hard price collar on carbon emissions credits that operators would have to purchase. The initial floor rate would be at $12 a ton, increasing at 3 percent over inflation annually. The ceiling would be at $25 a ton, increasing at 5 percent over inflation each year.

The legislation also includes $7 billion a year to improve the transportation infrastructure and efficiency. To address dependence on foreign oil, the bill would provide tax incentives to truck buyers and fleets for conversion to clean natural gas vehicles. The legislation would also support "efforts to create strong federal standards for greenhouse gas emissions and efficiency improvements in our vehicle fleet."

Other provisions of the bill include investments in clean coal, nuclear, and renewable energy technologies.

According to EIA, the fact that the transportation industry's impact would be small is a reflection of both smaller percentage changes in delivered fossil fuel prices than experienced by the electricity generation sector and the low availability of alternatives.

Meanwhile, reductions in electricity emissions can be achieved by reducing the role of conventional coal-fired generation, which provided 48 percent of total U.S. generation in 2008, EIA says. Other ways include increasing the use of no- or low-carbon generation technologies, such as renewables and nuclear. The reductions will also come from decreased electricity demand.

The EIA also found that the legislation would result in higher fuel prices, but this would lead to consumers cutting fuel consumption and suppliers boosting production of biofuels.

Last week, the Congressional Budget Office and the Joint Committee on Taxation released a report, saying that the American Power Act would reduce U.S. deficits by about $19 billion from 2011 to 2020. While the legislation would direct spending by $732 billion over the 10 years, it would increase revenues by about $751 billion, the report found.


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