Congress Pushes Climate Legislation
The Energy and Commerce Committee of the U.S. House of Representatives is in the midst of four days of hearings discussing comprehensive climate change legislation. Introduced by Representatives Ed Markey, D-Mass., and Henry Waxman, D-Calif., the American Clean Energy and Security Act of 2009 would establish a mandatory cap and trade program designed to reduce American greenhouse gas (GHG) emissions 83 percent by 2050. The bill also sets renewable-energy production and energy-efficiency standards for electric utilities, and contains a variety of provisions intended to promote clean technologies.
The cap and trade program
The core of the Waxman-Markey bill is a mandatory cap and trade program for reducing GHG emissions. Under this program, covered entities must acquire tradable federal emissions “allowances” for each ton of carbon dioxide (CO2) or CO2 equivalent emitted. Covered entities include electric utilities, suppliers of GHG-producing fuels and chemicals, and industrial facilities with annual GHG emissions greater than 25,000 metric tons of CO2 equivalent, such as large food processors and glass manufacturers.
The program would begin in 2012 by distributing allowances to covered entities in an aggregate quantity
3 percent below 2005 levels. Allowances would be reduced each subsequent year in order to achieve a
20-percent reduction below 2005 levels in 2020, 42 percent in 2030, and 83 percent in 2050. The bill does not address how allowances will be initially distributed.
The Waxman-Markey cap and trade program represents an alternative to Environmental Protection Agency (EPA) regulation of GHGs under the Clean Air Act. In the 2007 case of Massachusetts v. EPA, 549 U.S. 497, the U.S. Supreme Court held that GHGs are pollutants under the Clean Air Act and ordered the EPA Administrator to determine whether or not such gases cause or contribute to pollution that may endanger human health.
In response to the Court’s order, this month the EPA issued a proposed endangerment finding that, once finalized, will require the EPA to regulate GHGs under the Clean Air Act. The EPA also took another major step toward GHG regulation this month when it published a draft rule requiring reporting of GHG emissions. The Waxman-Markey bill would specifically prevent the EPA from regulating GHGs as criteria pollutants or hazardous air pollutants under the Clean Air Act.
Renewable energy and energy efficiency
The bill requires electric utilities to boost generation from renewable sources and to improve energy efficiency. Beginning in 2012, retail electricity suppliers must supply a certain percentage of energy from renewable sources. This requirement starts at 6 percent in 2012 and gradually rises to 25 percent in 2025. In addition, electricity and natural gas distribution companies must demonstrate that their customers have achieved certain levels of energy efficiency beginning in 2012.
The bill also provides incentives to promote energy-efficient buildings. Specifically, it provides for federal training and funding assistance to states that adopt advanced building-efficiency codes. Furthermore, the bill authorizes federal funding for retrofitting existing commercial and residential buildings to improve energy efficiency.
Other clean-technology provisions
The bill contains a variety of mechanisms to promote clean technologies including carbon capture and sequestration, biofuels, electric vehicles and the deployment of a smart electric grid.
The full text of the American Clean Energy and Security Act of 2009 can be found on Environment & Energy Publishing’s Web site.