Carbon Trading Core of Clean Energy Bill

$300+ per month increase in your electric bill! Yay!

WASHINGTON, DC, March 31, 2009 (ENS) – Congressional Democrats today released clean energy legislation that establishes a market-based cap-and-trade program for reducing global warming pollution from electric utilities, oil companies, and factories that together are responsible for 85 percent of U.S. greenhouse gas emissions.

Henry Waxman of California, who chairs the House Energy and Commerce Committee and Edward Markey who chairs the Energy and Environment Subcommittee introduced a discussion draft of the American Clean Energy and Security Act of 2009, or ACES, which they say charts a new course toward a clean energy economy.

Congressman Henry Waxman (Photo by Amy Manuel)

“This legislation will create millions of clean energy jobs, put America on the path to energy independence, and cut global warming pollution.” said Chairman Waxman. “Our goal is to strengthen our economy by making America the world leader in new clean energy and energy efficiency technologies.”

“This legislation will create clean energy jobs that can’t be shipped overseas, reduce our dependence on foreign oil, and make America the global leader in energy technology,” said Chairman Markey, who has held many hearings on the major issues in the bill.

Markey said, “We will create jobs by the millions, save money by the billions, and unleash energy investment by the trillions.”

“Chairman Waxman and I will work with our colleagues to ensure that we are protecting American consumers and that our clean energy future helps all parts of the country,” he said.

The legislation has four sections:

• A clean energy title that promotes renewable sources of energy, carbon capture and sequestration technologies, low-carbon fuels, clean electric vehicles, and the smart grid and electricity transmission
• An energy efficiency title that increases energy efficiency across all sectors of the economy, including buildings, appliances, transportation, and industry
• A global warming title that places limits on emissions of heat-trapping pollutants
• A transitioning title that protects U.S. consumers and industry and promotes green jobs during the transition to a clean energy economy

The section that limits greenhouse gas emissions provides that entities emitting more than 25,000 tons per year of carbon dioxide equivalent must have tradable federal permits, called allowances, for each ton of gas emitted into the atmosphere.

Chesterfield, the largest fossil-fueled power station in Virginia, burns coal, oil, and natural gas. (Photo courtesy Dominion Virginia Power)

The program sets a cap on available allowances and reduces the number of allowances issued each year.

The program aims to ensure that emissions from the covered entities in total are reduced by three percent below 2005 levels in 2012, 20 percent below 2005 levels in 2020, 42 percent below 2005 levels in 2030, and 83 percent below 2005 levels in 2050.

The legislation directs the U.S. Environmental Protection Agency to achieve additional reductions in greenhouse gas emissions by entering into agreements to prevent international deforestation. By 2020, these agreements are expected to achieve reductions equal to 10 percent of U.S. emissions in 2005.

The draft establishes a new low-carbon transportation fuel standard to promote advanced biofuels and other clean transportation fuels. It authorizes grants or loan guarantees to cities, states, or private companies for large-scale demonstrations of electric vehicles and authorizes financial support to car companies to retool their plants for electric vehicles.

The draft facilitates the deployment of a smart grid, including measures to help promote smart grid capabilities in new home appliances. It directs the Federal Energy Regulatory Commission to provide for new transmission lines to carry electricity generated from renewable sources.

U.S. Senator Barbara Boxer, a California Democrat who chairs the Senate Committee on Environment and Public Works, called the measure “a giant leap forward” and said, “I am very excited about it.”

The U.S. Climate Action Partnership, a coalition of 25 major corporations and five environmental NGOs, called the draft legislation “a strong starting point for enacting legislation to reduce greenhouse gas emissions” and “a solid foundation to create a climate strategy that both protects our economy and achieves the nation’s environmental goals.”

A wind turbine is installed at Minnesota’s Redwood Falls wind farm. (Photo courtesy of Southern Minnesota Municipal Power Agency)

But USCAP says the section on allocation of emissions allowances needs revision. “USCAP recommends that a significant portion of allowances be initially distributed free to entities covered by the cap in order to mitigate costs to consumers and particularly vulnerable sectors of the economy. This free distribution should then be phased out over time,” the coalition said.

“Firm limits on global warming pollution will drive investment to recharge our economy today and enhance our economic stability tomorrow. This discussion draft recognizes that we must act quickly to avoid the worst impacts of climate change and jump-start our economy with clean jobs,” said Frances Beinecke, president of the Natural Resources Defense Council, a USCAP member.

“Action this year to pass effective climate legislation will stimulate investments here at home and help the United States to regain its leadership in the international community as it works to secure a strong global climate agreement,” she said.

Bill Becker, executive director of the National Association of Clean Air Agencies, said his member agencies in 53 states and territories are pleased with the draft, calling it “a welcome national response to the urgent threat of global warming.”

Becker said the measure “strikes an appropriate balance among divergent interests while staying true to the scientific basis for action.”

“The approach taken in the bill is both effective and realistic, applying aggressive emission reduction targets and a market-based approach to the sources that account for 85 percent of U.S. greenhouse gas emissions,” Becker said.

At the same time, the bill acknowledges the important role of state and local climate policies by ensuring flexibility for states and localities to continue to serve as laboratories of innovation,” he said.

Carbon emissions trading already is taking place.

On a regional level, 10 Northeastern and Mid-Atlantic states are participating in the Regional Greenhouse Gas Initiative, the first mandatory, market-based effort in the United States to reduce greenhouse gas emissions.

On a voluntary level, the Chicago Climate Exchange operates North America’s only cap-and-trade market for all six greenhouse gases governed by the Kyoto Protocol.

Congressman Waxman said the Energy and Commerce Committee will complete consideration of the legislation by Memorial Day. House Speaker Nancy Pelosi said she intends to bring the legislation to the House floor this year.

Click here to see an Executive Summary of the draft American Clean Energy and Security Act of 2009.

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