Potential Impacts of Climate Change

(Cap and Trade) Legislation on Ports

September 2009

Congress is considering legislation that would create a “cap and trade” system for greenhouse gas (GHG) emissions in order to respond to global climate change concerns. This means that there would be an economy-wide upper limit set for GHG emissions, which would become more stringent over time. The purpose of the program is to raise the cost of GHG emissions in order to provide an economic incentive to decrease emissions. Legislative efforts target primarily large stationary sources of emissions andoil and gas refineries by setting goals for these and other sources. Emissions allowances would be distributed among a variety of sectors to try to offset the cost of the program to consumers. Because ports are not stationary sources, the direct impact of the cap and trade program on ports may be minimal, though there may be indirect impactsrelated to port expansion projects and increased energy costs.

On June 26, 2009, the House of Representatives passed climate change legislation in the form of the American Clean Energy and Security (ACES) Act, H.R. 2454, also known as the Waxman-Markey bill.

The Senate Energy and Natural Resources Committee approved its portion of climate change legislation, the American Clean Energy Leadership Act, S. 1462, on June 17, 2009. Other Senate committees with jurisdiction over the issue are expected to take up the legislation this fall.

H.R. 2454

  • As passed by the House of Representatives, this billwould set a standard that requires utilities to supply an increasing percentage of their demand from a combination of energy efficiency savings and renewable energy.
  • The bill (section 128) extends the Diesel Emissions Reduction Act (DERA) authorization from its original sunset date of 2011 to 2016. AAPA has been extremely supportive of DERA, which is authorized at $200 million annually. Ports have received and used DERA grants to fund projects to reduce emissions from cargo handling equipment, trucks and marine vessels.
  • While not part of the cap and trade program, EPA would be required (section 221) to set GHG standards for mobile sources, including heavy-duty trucks, new marine vessels and locomotives. This process would be similar to the process already used by EPA under the Clean Air Act to regulate particulate matter (PM) and oxides of nitrogen (NOx).
  • The bill (section 222) requires EPA to set greenhouse gas emissions reduction goals for transportation. This has the potential to function like a Transportation Implementation Plan (TIP) or a State Implementation Plan (SIP) under the Clean Air Act, where a state sets allowances and port projects may be forced to exist within those allowances or pay

for mitigation.The SmartWay program is authorized in section 223. EPA launched

SmartWay in 2004, but it has not been authorized in law. The program focuses on

certifying energy-efficient vehicles and getting shippers to pledge to transport a certain

percentage of their goods via SmartWay certified fleets.

  • Section 301 requires the EPA to report to Congress on the proposed effects of sea level rise and other global warming aspects. The report to Congress would also have to focus on socioeconomic issues like the effect of global warming on “coastal infrastructure” and “transportation.”
  • The bill also imposes tariffs on “carbon-intensive imports,” which the U.S. Chamber of Commerce argues could limit trade and cause a potential World Trade Organization violation.

S. 1462

  • This legislation is not as comprehensive as the House bill. It is meant to be one piece of a larger Senate effort that will require the action of several committees.
  • The bill’s primary focus is on the development of clean energy technology and increased energy efficiency. It would require utilities to use increasing amounts of alternative energy sources.
  • It does not establish a cap and trade program for GHG emissions.

For more information

  • The Chamber of Commerce opposes HR. 2454 as passed by the House of Representatives, arguing that fuel costs will go up because refiners will be forced to pass on to consumers the cost of purchasing emissions credits. Information is available on the Chamber’s website at
  • The PewCenter on Global Climate Change is a strong supporter of H.R. 2454 and disputes the notion that the average household would see a significant increase in fuel costs. Information is available through the PewCenter’s website at
  • The Government Accountability Office delivered testimony before the Senate Finance Committee on August 4, 2009, regarding climate change policy. The testimony notes that a cap and trade program would increase the cost of burning fossil fuels and other activities that generate emissions and potentially raise costs for consumers. The impact will depend on how the government offsets these costs. The testimony is available through GAO’s website at

For additional information, contact Meredith Martino ().

To learn more, visit AAPA’s website at