A long-awaited Senate energy and climate change bill is being introduced Wednesday by John Kerry, D-Mass., and Joe Lieberman, I-Conn., with several tax provisions that would benefit nuclear power plants.

The American Power Act is the product of months of negotiations between Kerry, Lieberman and Lindsey Graham, R-S.C., who dropped out as a co-sponsor recently after expressing dismay over reports that the Obama administration intended to try to pass immigration reform legislation ahead of the energy legislation. However, Graham issued a statement earlier this week expressing support for the work of his two colleagues. “I appreciate the work of Senators Kerry and Lieberman, who have been good allies in trying to move this debate in a new, more productive direction,” he said. “I am particularly proud of the efforts we have made in creating a renaissance in nuclear power which leads to energy security and fosters job creation.”

The House narrowly passed its own energy bill last June, but action was stalled in the Senate while the health care reform bill took center stage.

Among the accounting and tax-related provisions for nuclear power, according to a summary of the bill leaked Tuesday evening, are a five-year accelerated depreciation period for new nuclear power plants, a 10 percent investment tax credit for the construction of nuclear power facilities, the inclusion of nuclear power facilities in qualifying for the advanced energy project credit, and modification of the credit for production from advanced nuclear power facilities to allow allocation of the credit to private partnerships with public power. The bill also allows tax-exempt bonds to be used for public-private partnerships for advanced nuclear power facilities, and provides grants for qualified nuclear power facility expenditures in lieu of tax credits.

The proposed bill would also double the current federal tax credits available for the purchase of natural gas-powered fleet vehicles for the next 10 years, including heavy-duty trucks and certain fleets of shuttle vans.

In addition, the bill would provide $6 billion worth of tax credits for energy efficiency projects and green transportation, plus $5 billion to extend clean energy manufacturing tax credits.

The bill aims to reduce carbon emissions in the U.S. by 17 percent by the year 2020 compared to 2005 levels, 42 percent by 2030 and 83 percent by 2050. It would set a price of $12 per ton for allowances to emit carbon dioxide. That rate would rise 3 percent each year with inflation until hitting a cap of $25 per ton.

The bill would create a system of carbon offsets and credits that would allow a price to be set for carbon emissions. “In the bill, we finally start to bring down carbon pollution by sending a clear price signal on that pollution,” said Kerry in a blog post. “This market is tightly controlled, with only folks who need the permits able to buy the permits in the initial auction. No Wild West of speculation, no big banks coming in to buy up permits.”

Officials would have to conduct random audits of offset projects, offset credits and the practices of third-party verifiers on an ongoing basis.

The bill would also establish an annual tonnage limit on greenhouse gas emissions from specified activities. It would provide funding for carbon capture and sequestration projects, and set new performance standards for new coal-fired power plants. The bill directs states and metropolitan planning organizations to address transportation-related greenhouse gas emissions by developing emissions reduction targets and strategies to meet those targets.

Under the proposed legislation, the administration would develop a pilot program and a national transportation low-emission energy plan that projects the near- and long-term need for and location of an electric vehicle refueling infrastructure, while identifying the needs of electricity providers, vehicle manufacturers, and electricity purchasers.

In the wake of the BP oil spill in the Gulf of Mexico, the bill would also allow states to veto offshore oil-drilling projects.

The bill has attracted support from some environmental groups, but others object to provisions that would hamper the ability of the Environmental Protection Agency to regulate carbon emissions under the Clean Air Act and allow the federal government to pre-empt state agencies in controlling emissions.

The proposed Kerry-Lieberman bill is expected to undergo considerable revision in the Senate, and the prospects for its passage this year are uncertain. It is also competing against another Senate bill, the CLEAR Act, sponsored by Maria Cantwell, D-Wash., which is favored by some environmental groups.

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