THE CLEAR ACT: A SIMPLE, TRANSPARENT, AND EQUITABLE APPROACH TO
ENERGY INDEPENDENCE AND CLIMATE CHANGE MITIGATION
How the CLEAR Act Works:
Beginning in 2012, the President sets the initial target amount of carbon from fossil fuels
that can be emitted to the atmosphere without disrupting the economy, using a gradually
declining “cap.” The concept is to gradually accelerate emission reductions.
Revenue generated by carbon permits comes from producers and importers of coal, natural
gas and oil. In other words, a power plant that burns coal does not buy carbon permits; it is
paid by the mining company that mined the coal.
The level of carbon emissions remains at the level set by the President for the first three
years. After that, the carbon cap increases by a quarter of a percentage point each year,
from the previous year.
o For example, the cap on pollution increases in year 4 by 0.25%; 0.50% year 5; 0.75%
year 6; 1.00% year 7, and so on.
This formula, combined with spending from the Clean Energy Reinvestment Trust Fund, will
achieve the mandatory greenhouse gas emission reductions of:
o 20% lower global warming pollution by 2020 (relative to 2005)
o 30% lower global warming pollution by 2025 (relative to 2005)
o 42% lower global warming pollution by 2030 (relative to 2005)
o 83% lower global warming pollution by 2050 (relative to 2005)
Those goals are achieved by the specified carbon reductions and reductions in additional
greenhouse gases that harm the atmosphere, such as methane and hydroflorocarbons, and
by investment in carbon sequestration projects.
The cap works by limiting the amount of fossil fuel carbon that producers and importers of
coal, natural gas, and oil can sell into the U.S. economy.
o The CLEAR Act’s “upstream” point of regulation means that only 2,000 to 3,000
fossil fuel producers and importers will face any new compliance obligations,
greatly reducing any regulatory bureaucracy.
Carbon permit prices will be determined b