Chairman Henry A. Waxman and Subcommittee Chairman Edward J. Markey introduced “H.R. 2454, The American Clean Energy and Security Act.” The Energy and Commerce Committee will begin markup of the bill on Monday, May 18, 2009, at 1:00 p.m., and will complete consideration before the Memorial Day recess.
“The legislation will create millions of new clean energy jobs, save consumers hundreds of billions of dollars in energy costs, promote America’s energy independence and security, and cut global warming pollution,” said Chairman Waxman. “In support of these goals, this legislation ensures that consumers and industries in all regions of the country are protected. I look forward to working with all members of the Committee to approve this legislation to make America the world leader in new clean energy and energy efficiency technologies.”
“This bill marks the dawn of the clean energy age,” said Subcommittee Chairman Markey. “This is a once-in-a-generation opportunity to revive our economy and create millions of good-paying clean energy jobs. After months of hearings and discussions with my colleagues, I am pleased that we have produced a bill that has widespread support from all regions of the country.”
[There is a newer version of this bill, passed by the House on June 26, 2009, available here.]
Here are the emission allowances proposed in the Waxman-Markey bill, issued this morning.
Emission allowances will be allocated to accomplish three primary goals: (1) to protect consumers from energy price increases; (2) to assist industry in the transition to a clean energy economy; and (3) to spur energy efficiency and the development and deployment of clean energy technology. A small amount of allowances will be allocated to prevent deforestation and support national and international adaptation efforts and for other purposes.
Consumer Protection
Protection from Electricity Price Increases: The electricity sector will receive 35% of the allowances, representing 90% of current utility emissions. Local electric distribution companies, whose rates are regulated by the states, will receive 30% of the allowances, which they must use to protect consumers from electricity price increases. Merchant coal and long-term power purchase agreements will receive 5% of the allowances. These allowances will be distributed according to a formula recommended by the utility industry and will phase out over a five-year period from 2026 through 2030.
Protection from Natural Gas Price Increases: Local natural gas distribution companies, whose rates are regulated by the states, will receive 9% of allowances, which they must use to protect consumers from natural gas price increases. These allowances will phase out over a five-year period from 2026 through 2030.
Protection from Home Heating Oil Price Increases: States will receive 1.5% of allowances for programs to benefit users of home heating oil and propane. These allowances will phase out over a five-year period from 2026 through 2030.
Protection of Low- and Moderate-Income Households: 15% of allowances will be auctioned each year and the proceeds of these allowances will be distributed to low- and moderate-income families to protect them from other energy cost increases. These allowances will be distributed through tax credits, direct payments, and electronic benefit payments and will not phase out.
Transition Assistance for Industry
Protection for Energy-Intensive, Trade-Exposed Industries: Pursuant to the Inslee-Doyle program, energy-intensive, trade-exposed industries will receive allowances to cover their increased costs from the global warming protection program. The number of allowances set aside for this program will equal 15% of the allowances in 2014 and then decrease based on the percent reductions in the emissions targets. These allowances will phase out after 2025 unless the President decides the program is still needed.
Protection for Domestic Energy Production: Oil refiners will receive 2% of allowances starting in 2014 and ending in 2026.
Energy Efficiency and Clean Energy Technology
Investments in Carbon Capture and Sequestration: 2% of allowances from 2014 through 2017 and 5% of allowances in 2018 and subsequent years will be allocated to help electric utilities cover the costs of installing and operating carbon capture and sequestration technologies.
Investments in Renewable Energy and Energy Efficiency: States will receive 10% of allowances from 2012 through 2015; 7.5% of allowances in 2016 and 2017; 6.5% of allowances from 2018 through 2021; and 5% of allowances thereafter for investments in renewable energy and energy efficiency. (The 5% of allowances from 2022 through 2025 will include some future year allowances.)
Investments in Advanced Automobile Technology: 3% of allowances through 2017 and 1% from 2018 through 2025 will be allocated for investments in electric vehicles and other advanced automobile technology and deployment.
Investments in Research and Development: 1% of allowances will be allocated to “Clean Energy Innovation Centers” at research universities and institutions for applied research and development on clean energy technologies.
Other Public Purposes
Supplemental Reductions from Preventing Tropical Deforestation: 5% of allowances will be allocated from 2012 through 2025 to prevent tropical deforestation and build capacity to generate international deforestation offsets. By 2020, this program will achieve additional emission reductions equivalent to 10% of U.S. emissions in 2005. From 2026 through 2030, 3% of allowances will be allocated to this program. In 2031 and thereafter, 2% will be allocated to this program.
Domestic Adaptation: From 2012 through 2021, 2% of allowances will be allocated for domestic adaptation purposes. The amount of allowances allocated for domestic adaptation will increase to 4% from 2022 through 2026 and to 8% in 2027 and thereafter. Half of these allowances will be used for wildlife and natural resource protection and half for other domestic adaptation purposes, including public health.
International Adaptation and Clean Technology Transfer: From 2012 through 2021, 2% of allowances will be allocated for international adaptation and clean technology transfer. The amount of allowances allocated for these purposes will increase to 4% from 2022 through 2026 and to 8% in 2027 and thereafter. Half of these allowances will be used for adaptation and half for clean technology transfer.
Worker Assistance and Job Training: 0.5% of allowances will be allocated for worker assistance and job training from 2012 through 2021. This amount will increase to 1% thereafter.
Unallocated Allowances
Some of the unallocated allowances will be auctioned to ensure budget neutrality. The remainder will be used for consumer protection.
It was possible tonight, for the first time, to see the broad outline — and some details — of the nation’s first major climate and energy bill.
Rep. Henry Waxman, point-man on climate & energy bill
A key component is a mandate that utilities must produce at least 20% of their electricity from renewable sources (such as solar, wind or biogas) by the year 2020. Actually, there’s a little wiggle room in there. The utilities can generate just 15% from renewables, if they can make up for the other 5% by increasing efficiency.
The bill will also grant US automakers a substantial, but as yet indeterminate, incentive (read: money) to spur production of electric vehicles.
A cap-and-trade program to lower emissions of CO2 also will come out of the committee. The all-important details of just how that system will work, is the subject of talks continuing this evening in Washington, a committee staffer tells the Phoenix Sun.
Even with these unknowns, many Democrats, and some environmental groups, are already applauding the bill.
At a press conference about the president’s health care initiative earlier today, President Obama began his remarks with praise for movement on the climate and energy front. The president said:
“I want to take a moment, before I start talking about health care, just to congratulate Chairman Waxman and the Energy and Commerce Committee Democrats, who’ve made such extraordinary progress in reaching a deal on comprehensive energy reform and climate legislation. This is a major step forward in building the kind of clean energy economy that will reduce America’s dependence on foreign oil.
“And I once again call on Congress to send me legislation that places a market-based cap on carbon pollution, which will then drive and incent for the kind of innovation and dynamic, new, clean energy economy that can create jobs and new businesses all across America.”
This afternoon, League of Conservation Voters president Gene Karpinski also praised the bill:
“Chairmen Waxman and Markey have worked tirelessly to bring forward a crucial and historic bill that will move America towards a clean, safe energy future. Their bill will create new clean energy jobs, improve our national security, and help protect the planet. We encourage the House Energy and Commerce Committee to quickly send this bill to the House floor, where we look forward to working with Members of both sides of the aisle to strengthen it, in particular by increasing energy efficiency and renewable energy provisions.”
House Speaker Nancy Pelosi added her support in a statement issued later in the afternoon:
“The bill will use the same bipartisan, American solution we used to successfully fight acid rain and protect our air and water. It will provide a framework that will unlock the power of private sector investment, which has been waiting for government leadership to match government investment.
“This bill will create entire new industries in the United States-while preserving the manufacturing base that has been the foundation of our economy, helping industries such as steel, glass, and cement remain competitive in the global marketplace, and pioneering cleaner coal technologies for use here and around the world.
“This bill will strengthen our national security and make America a strong world leader in the new technologies to fight climate change.
Representative Joe Barton of Texas, the senior Republican member on the panel, has vowed to fight any bill that includes a cap-and-trade provision. Barton, who has indicated he does not believe global warming has been conclusively linked to human behavior, is pushing to include nuclear power as a renewable resource.
The full committee is scheduled to begin marking up the bill next Monday, May 18. The session will be webcast live at www.energycommerce.house.gov.
