The Waxman-Markey Bill is a comprehensive national climate and energy legislation designed to reduce global warming pollution and transition to a clean energy economy. In order to accomplish the first goal, the bill introduces a cap-and-trade program

Alvarez, Diego

Perrin, Richard K.

English

UNL | Libraries

University of Nebraska - Lincoln 
DigitalCommons@University of Nebraska - Lincoln 
Cornhusker Economics Agricultural Economics Department 
4-7-2010 
Climate Change Policy: The Waxman-Markey Bill 
Diego Alvarez 
University of Nebraska 
Richard K. Perrin 
University of Nebraska-Lincoln 
Follow this and additional works at: https://digitalcommons.unl.edu/agecon_cornhusker 
 Part of the Agricultural and Resource Economics Commons 
Alvarez, Diego and Perrin, Richard K., "Climate Change Policy: The Waxman-Markey Bill" (2010). 
Cornhusker Economics. 431. 
https://digitalcommons.unl.edu/agecon_cornhusker/431 
This Article is brought to you for free and open access by the Agricultural Economics Department at 
DigitalCommons@University of Nebraska - Lincoln. It has been accepted for inclusion in Cornhusker Economics by an 
authorized administrator of DigitalCommons@University of Nebraska - Lincoln. 
CORNHUSKER
ECONOMICS
University of Nebraska–Lincoln Extension
April 7, 2010
Institute of Agriculture & Natural Resources
Department of Agricultural Economics
http://www.agecon.unl.edu/Cornhuskereconomics.html
Climate Change Policy: The Waxman-Markey Bill
Market Report
Yr 
Ago
4 Wks
Ago 4/2/10
Livestock and Products,
 Weekly Average
Nebraska Slaughter Steers,
  35-65% Choice, Live Weight. . . . . . . .
Nebraska Feeder Steers, 
  Med. & Large Frame, 550-600 lb.. . . .
Nebraska Feeder Steers,
  Med. & Large Frame 750-800 lb. . . . .
Choice Boxed Beef, 
  600-750 lb. Carcass. . . . . . . . . . . . . .
Western Corn Belt Base Hog Price
  Carcass, Negotiated. . . . . . . . . . . . . .
Feeder Pigs, National Direct
  50 lbs, FOB.. . . . . . . . . . . . . . . . . . . .
Pork Carcass Cutout, 185 lb. Carcass,   
  51-52% Lean.. . . . . . . . . . . . . . . . . . .
Slaughter Lambs, Ch. & Pr., Heavy,
  Wooled, South Dakota, Direct. . . . . . .
National Carcass Lamb Cutout,
  FOB. . . . . . . . . . . . . . . . . . . . . . . . . .
$84.76
113.00
94.86
135.20
56.82
70.00
56.49
97.75
249.90
$89.44
124.54
102.00
150.34
72.26
       *
74.93
       *
266.78
$97.12
131.01
110.61
163.47
73.52
       *
73.87
       *
283.15
Crops, 
 Daily Spot Prices
Wheat, No. 1, H.W.
  Imperial, bu. . . . . . . . . . . . . . . . . . . . .
Corn, No. 2, Yellow
  Omaha, bu. . . . . . . . . . . . . . . . . . . . .
Soybeans, No. 1, Yellow
  Omaha, bu. . . . . . . . . . . . . . . . . . . . .
Grain Sorghum, No. 2, Yellow
  Dorchester, cwt. . . . . . . . . . . . . . . . . .
Oats, No. 2, Heavy
  Minneapolis, MN , bu. . . . . . . . . . . . .
5.30
3.93
9.77
6.02
2.04
3.84
3.54
9.12
5.64
2.26
3.62
3.35
9.21
5.29
2.08
Feed
Alfalfa, Large Square Bales, 
  Good to Premium, RFV 160-185
  Northeast Nebraska, ton. . . . . . . . . . .
Alfalfa, Large Rounds, Good
  Platte Valley, ton. . . . . . . . . . . . . . . . .
Grass Hay, Large Rounds, Premium
  Nebraska, ton. . . . . . . . . . . . . . . . . . .
Dried Distillers Grains, 10% Moisture, 
  Nebraska Average. . . . . . . . . . . . . . .
Wet Distillers Grains, 65-70% Moisture, 
  Nebraska Average. . . . . . . . . . . . . . .
190.00
77.50
85.00
129.50
49.25
135.00
87.50
       *
101.00
38.00
135.00
87.50
       *
98.00
35.00
*No Market
The Waxman-Markey Bill is a comprehensive
national climate and energy legislation designed to
reduce global warming pollution and transition to a
clean energy economy. In order to accomplish the first
goal, the bill introduces a cap-and-trade program. 
Cap and Trade
The cap and trade program establishes a limit
“cap” on the total amount of greenhouse gas (GHG)
emissions that would be allowed from specific
economic activities. 
Entities conducting such activities called “covered
entities,” would be required to hold, as of April 1,
2013, emission permits or allowances for their
previous year’s GHG reported emissions. 
Under the Waxman-Markey Bill covered entities
would include:
• Electricity plants
• Fuel producers and importers
• Industrial gas producers and importers
• Industrial stationary sources (only since 2015)
• Industrial fossil fuel-fired combustion devices
• Local distribution companies (LDCs)
Consequently, Nebraska corn ethanol plants and
electricity generating plants would be capped under
this bill (with some exceptions). Agricultural
exploitations on the other hand, would not be capped,
except for large units emitting more than 25,000 of
2CO  or its equivalent annually.
Extension is a D ivision of the Institute of Agriculture and Natural Resources at the University of Nebraska–Lincoln
cooperating with the Counties and the U.S. Departm ent of Agriculture.
University of Nebraska Extension educational program s abide with the non-discrim ination policies 
of the University of Nebraska–Lincoln and the United States Departm ent of Agriculture.
To achieve the desired decrease in GHG emissions
the cap would be reduced annually. Compared to the
level of GHG emissions registered in 2005, the
cutback would reach three percent by 2012, 17 percent
by 2020, 42 percent by 2030 and 83 percent by 2050.
The “trade” component of the cap-and-trade
program results from the fact that anyone could sell,
exchange, transfer or hold for compliance an emission
allowance, without restriction.
Clearly, it will be cheaper or easier for some
companies to reduce their emissions below their
required limit than others. These more efficient
companies, who emit less pollution than their
allowance, can sell their extra permits to companies
that are not able to make reductions as easily. This
creates a system that guarantees a set level of overall
reductions, while rewarding the most efficient
companies and ensuring that the cap can be met at the
lowest possible cost to the economy.
The supply and demand of pollution permits
would create a market that would ultimately
determine a price for the permits. The Environmental
Protection Agency (EPA) has estimated that a permit
to emit one ton of carbon dioxide or its equivalent
would be worth from $11 to $15 in 2012, $22 to $28
in 2025, and $70 in 2050 (in 2005 dollars).The value
of all permits would be about $60 billion in 2012 and
roughly $113 billion in 2025.
 
Revenue Opportunities for Farmers and Ranchers
Covered entities would be allowed to satisfy a
percentage of their compliance obligations by using
“offset credits.” These would be created (supplied) by
practices that avoid or reduce greenhouse gas
emissions or sequester greenhouse gases, such as:
L Agricultural, grassland and rangeland seques-
tration and management practices, including:
# Reduction of nitrogen fertilizer use or increase
in nitrogen use efficiency;
# Reduction in greenhouse gas emissions from
manure and effluent; and
# Reduction in greenhouse gas emissions due to
changes in animal management practices,
including dietary modifications.
Changes in carbon stocks attributed to land useL
change and forestry activities, including:
# Afforestation or reforestation of acreage that is
not forested;
# Management of peatland or wetland;
# Conservation of grassland and forested land;
# Reduced deforestation or avoided forest
conversion; and
# Agroforestry.
L  Manure management and disposal:
# Waste aeration;
# Biogas capture and combustion; and
#Application to fields as a substitute for
commercial fertilizer.
 
The bill would grant farmers and ranchers revenue
opportunities through the supply of (GHG) offsets.
Clean Energy and Energy Efficiency
The bill would also require the implementation of
a federal combined efficiency and renewable energy
standard. Its main purpose would be to stimulate a
more efficient use of energy and the production of
renewable energy, such as wind energy, solar energy
and renewable biomass, biogas or biofuels.
Additionally, it establishes a National Bioenergy
Partnership to support the infrastructure needed to
facilitate the deployment of sustainable biofuels and
bioenergy technologies.
Other important provisions of the bill include a
2 CO emissions standard for coal-fueled power plants,
requirements for retail electric suppliers and efficiency
programs and standards for buildings, lighting and
appliances.
Diego Alvarez, (402) 570-4461
Graduate Research Assistant
Department of Agricultural Economics
University of Nebraska-Lincoln
alvarezrdiego@gmail.com
Richard K Perrin, (402) 472-9818
Roberts Professor
Department of Agricultural Economics
University of Nebraska-Lincoln
rperrin@unl.edu 


Climate Change Policy: The Waxman-Markey Bill

DigitalCommons@University of Nebraska

University of Nebraska - Lincoln DigitalCommons@University of Nebraska - Lincoln Cornhusker Economics Agricultural Economics Department 4-7-2010 Climate Change Policy: The Waxman-Markey Bill Diego Alvarez University of Nebraska Richard K. Perrin University of Nebraska-Lincoln Follow this and additional works at: https://digitalcommons.unl.edu/agecon_cornhusker  Part of the Agricultural and Resource Economics Commons Alvarez, Diego and Perrin, Richard K., "Climate Change Policy: The Waxman-Markey Bill" (2010). Cornhusker Economics. 431. https://digitalcommons.unl.edu/agecon_cornhusker/431 This Article is brought to you for free and open access by the Agricultural Economics Department at DigitalCommons@University of Nebraska - Lincoln. It has been accepted for inclusion in Cornhusker Economics by an authorized administrator of DigitalCommons@University of Nebraska - Lincoln. CORNHUSKERECONOMICSUniversity of Nebraska–Lincoln ExtensionApril 7, 2010Institute of Agriculture & Natural ResourcesDepartment of Agricultural Economicshttp://www.agecon.unl.edu/Cornhuskereconomics.htmlClimate Change Policy: The Waxman-Markey BillMarket ReportYr Ago4 WksAgo 4/2/10Livestock and Products, Weekly AverageNebraska Slaughter Steers,  35-65% Choice, Live Weight. . . . . . . .Nebraska Feeder Steers,   Med. & Large Frame, 550-600 lb.. . . .Nebraska Feeder Steers,  Med. & Large Frame 750-800 lb. . . . .Choice Boxed Beef,   600-750 lb. Carcass. . . . . . . . . . . . . .Western Corn Belt Base Hog Price  Carcass, Negotiated. . . . . . . . . . . . . .Feeder Pigs, National Direct  50 lbs, FOB.. . . . . . . . . . . . . . . . . . . .Pork Carcass Cutout, 185 lb. Carcass,     51-52% Lean.. . . . . . . . . . . . . . . . . . .Slaughter Lambs, Ch. & Pr., Heavy,  Wooled, South Dakota, Direct. . . . . . .National Carcass Lamb Cutout,  FOB. . . . . . . . . . . . . . . . . . . . . . . . . .$84.76113.0094.86135.2056.8270.0056.4997.75249.90$89.44124.54102.00150.3472.26       *74.93       *266.78$97.12131.01110.61163.4773.52       *73.87       *283.15Crops,  Daily Spot PricesWheat, No. 1, H.W.  Imperial, bu. . . . . . . . . . . . . . . . . . . . .Corn, No. 2, Yellow  Omaha, bu. . . . . . . . . . . . . . . . . . . . .Soybeans, No. 1, Yellow  Omaha, bu. . . . . . . . . . . . . . . . . . . . .Grain Sorghum, No. 2, Yellow  Dorchester, cwt. . . . . . . . . . . . . . . . . .Oats, No. 2, Heavy  Minneapolis, MN , bu. . . . . . . . . . . . .5.303.939.776.022.043.843.549.125.642.263.623.359.215.292.08FeedAlfalfa, Large Square Bales,   Good to Premium, RFV 160-185  Northeast Nebraska, ton. . . . . . . . . . .Alfalfa, Large Rounds, Good  Platte Valley, ton. . . . . . . . . . . . . . . . .Grass Hay, Large Rounds, Premium  Nebraska, ton. . . . . . . . . . . . . . . . . . .Dried Distillers Grains, 10% Moisture,   Nebraska Average. . . . . . . . . . . . . . .Wet Distillers Grains, 65-70% Moisture,   Nebraska Average. . . . . . . . . . . . . . .190.0077.5085.00129.5049.25135.0087.50       *101.0038.00135.0087.50       *98.0035.00*No MarketThe Waxman-Markey Bill is a comprehensivenational climate and energy legislation designed toreduce global warming pollution and transition to aclean energy economy. In order to accomplish the firstgoal, the bill introduces a cap-and-trade program. Cap and TradeThe cap and trade program establishes a limit“cap” on the total amount of greenhouse gas (GHG)emissions that would be allowed from specificeconomic activities. Entities conducting such activities called “coveredentities,” would be required to hold, as of April 1,2013, emission permits or allowances for theirprevious year’s GHG reported emissions. Under the Waxman-Markey Bill covered entitieswould include:• Electricity plants• Fuel producers and importers• Industrial gas producers and importers• Industrial stationary sources (only since 2015)• Industrial fossil fuel-fired combustion devices• Local distribution companies (LDCs)Consequently, Nebraska corn ethanol plants andelectricity generating plants would be capped underthis bill (with some exceptions). Agriculturalexploitations on the other hand, would not be capped,except for large units emitting more than 25,000 of2CO  or its equivalent annually.Extension is a D ivision of the Institute of Agriculture and Natural Resources at the University of Nebraska–Lincolncooperating with the Counties and the U.S. Departm ent of Agriculture.University of Nebraska Extension educational program s abide with the non-discrim ination policies of the University of Nebraska–Lincoln and the United States Departm ent of Agriculture.To achieve the desired decrease in GHG emissionsthe cap would be reduced annually. Compared to thelevel of GHG emissions registered in 2005, thecutback would reach three percent by 2012, 17 percentby 2020, 42 percent by 2030 and 83 percent by 2050.The “trade” component of the cap-and-tradeprogram results from the fact that anyone could sell,exchange, transfer or hold for compliance an emissionallowance, without restriction.Clearly, it will be cheaper or easier for somecompanies to reduce their emissions below theirrequired limit than others. These more efficientcompanies, who emit less pollution than theirallowance, can sell their extra permits to companiesthat are not able to make reductions as easily. Thiscreates a system that guarantees a set level of overallreductions, while rewarding the most efficientcompanies and ensuring that the cap can be met at thelowest possible cost to the economy.The supply and demand of pollution permitswould create a market that would ultimatelydetermine a price for the permits. The EnvironmentalProtection Agency (EPA) has estimated that a permitto emit one ton of carbon dioxide or its equivalentwould be worth from $11 to $15 in 2012, $22 to $28in 2025, and $70 in 2050 (in 2005 dollars).The valueof all permits would be about $60 billion in 2012 androughly $113 billion in 2025. Revenue Opportunities for Farmers and RanchersCovered entities would be allowed to satisfy apercentage of their compliance obligations by using“offset credits.” These would be created (supplied) bypractices that avoid or reduce greenhouse gasemissions or sequester greenhouse gases, such as:L Agricultural, grassland and rangeland seques-tration and management practices, including:# Reduction of nitrogen fertilizer use or increasein nitrogen use efficiency;# Reduction in greenhouse gas emissions frommanure and effluent; and# Reduction in greenhouse gas emissions due tochanges in animal management practices,including dietary modifications.Changes in carbon stocks attributed to land useLchange and forestry activities, including:# Afforestation or reforestation of acreage that isnot forested;# Management of peatland or wetland;# Conservation of grassland and forested land;# Reduced deforestation or avoided forestconversion; and# Agroforestry.L  Manure management and disposal:# Waste aeration;# Biogas capture and combustion; and#Application to fields as a substitute forcommercial fertilizer. The bill would grant farmers and ranchers revenueopportunities through the supply of (GHG) offsets.Clean Energy and Energy EfficiencyThe bill would also require the implementation ofa federal combined efficiency and renewable energystandard. Its main purpose would be to stimulate amore efficient use of energy and the production ofrenewable energy, such as wind energy, solar energyand renewable biomass, biogas or biofuels.Additionally, it establishes a National BioenergyPartnership to support the infrastructure needed tofacilitate the deployment of sustainable biofuels andbioenergy technologies.Other important provisions of the bill include a2 CO emissions standard for coal-fueled power plants,requirements for retail electric suppliers and efficiencyprograms and standards for buildings, lighting andappliances.Diego Alvarez, (402) 570-4461Graduate Research AssistantDepartment of Agricultural EconomicsUniversity of Nebraska-Lincolnalvarezrdiego@gmail.comRichard K Perrin, (402) 472-9818Roberts ProfessorDepartment of Agricultural EconomicsUniversity of Nebraska-Lincolnrperrin@unl.edu 

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Climate Change Policy: The Waxman-Markey Bill

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