Cheat Sheet: The Energy Bill

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With healthcare reform a pressing and contentious issue in Washington, it appears climate change legislation has been put on the back-burner for the moment.

Barbara Boxer (D-California), Senate Environment and Public Works Committee chairwoman, says that her goal of having a bill on climate change legislation finished by August has been pushed back to September.

Although the Waxman-Markey American Clean Energy and Security Act was passed in the U.S. House of Representatives, it will likely be delayed from further legislative action in the Senate until healthcare reform can be solidified.

Photo: Breakthroughgen.wordpress.com

Though the Energy Information Administration reported the U.S. carbon dioxide emissions from fossil fuel fell 2.8 percent in 2008, the need for additional carbon reduction is being emphasized worldwide. Photo: Breakthroughgen.wordpress.com

Many Senators involved in the climate change legislation—which lays down the fundamentals of the cap and trade system as well as new standards and targets for energy efficiency and renewable energy sources—are involved in constructing the new healthcare legislation as well.

With key Senators working on two very ambitious bills, something had to be postponed. Boxer maintains it will still be possible to have climate change legislation passed by December, when President Obama plans on attending the U.N. Climate Change Conference in Copenhagen.

As the world waits to see what the U.S. will do in terms of regulating its carbon emissions that contribute to global climate change, there is pressure from all sides, at home and abroad.

Some U.S. Congressmen and constituents worry that the proposed cap and trade legislation will be equivalent to an energy tax and make for markedly higher energy costs for consumers. Others, including rotating EU president and Swedish Environment Minister Andreas Carlgren say they welcome the proposals already made in the Waxman-Markey bill, but that the U.S. must commit to even greater reductions in carbon emissions if global warming is to be combated.

With a temporary break in the climate change legislation action and many important environmental issues at stake, it’s a good time to break down the current House version of the American Clean Energy and Security Act to see what it all entails.

The Bare Bones

According to govtrack.us, a civic project to track Congress, H.R. 2454, the American Clean Energy and Security Act of 2009, seeks to:

  • Create clean energy jobs
  • Achieve energy independence
  • Reduce global warming pollution
  • Transition to a clean energy economy

Sounds good, right? But accomplishing these goals will prove no easy task. And with the current bill narrowly passing the House (219 ayes to 212 nays), it will likely mean a heated battle in the Senate.

Changing the Way the U.S. Does Energy

If the bill were to be passed by Congress and signed by President Obama as it currently stands, the sweeping proposals that currently exist would ensure that business as usual is not an option.

Ed Markey, co-sponsor of the bill, asserts that $190 billion would be invested into clean energy technology. These funds would go towards some big projects:

Energy Efficiency and Renewable Energy – A key component of the bill requires public utilities supplying electricity to become more energy efficient and fulfill their customers’ energy demands with more renewable sources as time goes on.

This combined “efficiency and renewable electricity standard” will be 6 percent in 2012, 9.5 percent in 2014, 13 percent in 2016, 16.5 percent in 2018 and 20 percent in 2021-2039. Requiring utilities to source with more renewable energy sources can help reduce the U.S.’s dependence on foreign oil, as well as help cut carbon emissions by moving away from a fossil fuel based energy economy.

Storing Carbon – The Waxman-Markey bill would also amend the Clean Air Act to require the Administrator of the EPA to set forth a national strategy to address the barriers, research and regulations necessary for the commercial-scale deployment of Carbon Capture and Sequestration technologies for the mitigation of CO2 emissions from coal-fired power plants.

Smart Grid – Amending the Energy Policy and Conservation Act, the bill wants to include information indicating smart grid compatibility on energy labels for appliances.

By promoting the smart grid as well as appliances with smart grid capacity, it is expected that peak energy demands will be lessened and consumers will be made more aware of the energy demands of their household appliances. The bill also offers rebates to consumers who purchase appliances with smart grid features.

Electric Vehicles – Waxman-Markey seeks to establish a large-scale vehicle electrification program as well as provide financial assistance to promote the manufacturing of plug-in electric vehicles.

The Big One: Cap and Trade

Capping and then reducing GHG emissions is one of the most important provisions included in the bill. In summary, cap and trade would set limits on the amount of carbon companies could emit.

The “cap” would set the upper limit of greenhouse gases that could be emitted into the atmosphere, and it would be lowered over time. The “trade” creates a market for carbon allowances.

This is a very important day for our country. A day in which this Congress can declare itself a Congress for the future.  -- House Speaker Nancy Pelosi, Photo: House.gov

"This is a very important day for our country. A day in which this Congress can declare itself a Congress for the future." - House Speaker Nancy Pelosi in response to the House passing the bill Photo: House.gov

Because the cap is lowered over time, the trade comes allows a company that pollutes less carbon to sell their allowances to a company that pollutes more carbon. Over time, as the cap is lowered, it is expected that companies would emit less carbon because it is more expensive to pollute than to find low – or zero – carbon forms of energy. As the Environmental Defense Fund puts it, “The less they emit, the less they pay, so it is in their economic interest to pollute less.”

At a national level, the Waxman-Markey bill uses the year 2005 as its baseline for GHG emissions. If passed, the permissible percentage of GHGs that could be emitted in the U.S. would be:

  • 97 percent (of 2005 levels) in 2012
  • 83 percent 2020
  • 58 percent 2030
  • 17 percent in 2050

According to the World Resources Institute, the first step in reducing greenhouse gas emissions is to measure them. With that rationale, the bill seeks to establish a federal GHG registry where data collection on the various economic sectors’ GHG emissions could be compiled.

The World Waits

The establishment of a cap and trade system, in addition to the other revolutionary proposals included in the bill, would steer the U.S. energy economy in a new direction. Renewable, low-carbon and zero-carbon energy sources would be preferred and the reigning fossil fuels slowly edged out because of a lowered carbon cap over time.

In the interim of climate change and energy reform legislation, more provisions and revisions are likely. How the U.S. regulates its carbon emissions will likely have an impact on what other countries decide to do. In the meantime, the world waits to see if the legislation will be passed in time for the U.N. conference in December.

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