Congressional Committees Release Draft of Combined Climate and Energy Bill

Congressional Committees Release Draft of Combined Climate and Energy Bill

April 1, 2009 01:39

Congressional action on climate change and energy policy accelerated this week with the release by two influential committee chairmen of a bill that would establish a national renewable energy standard and target greenhouse gas (GHGs) emissions while enhancing energy efficiency and attempting to promote so-called green jobs.

Chairman Henry A. Waxman of the Energy and Commerce Committee and Chairman Edward J. Markey of the Energy and Environment Subcommittee announced the release of their “discussion draft” Tuesday, claiming the bill would “create jobs, help end our dangerous dependence on foreign oil, and combat global warming.”  Known as the American Clean Energy and Security Act of 2009 (ACES), they said the bill is a comprehensive approach to America’s energy policy that “charts a new course toward a clean energy economy.”

For years, Congress has struggled to agree on adoption of a national renewable energy standard, also known in the 29 states and District of Columbia as a renewable portfolio standard (“RPS”), which has led to a patchwork of state programs to promote clean energy and resulted in regulatory uncertainty that has challenged investments in renewable energy infrastructure.  The ACES attempts a coordinated approach by mandating a portfolio of renewable electricity that  begins with 6% in 2012 and gradually rises to 25% in 2025. ACES allows the governor of any state to choose to meet a fifth of this requirement with energy efficiency measures.

ACES ambitiously combines renewable energy, energy efficiency and clean jobs programs with the complex issue of climate change rather than attempting to legislate the issues in separate bills.  The 648-page draft features 4 main sections.

As for climate change, Title III of the draft, to be separately called the “Safe Climate Act,” amends the Clean Air Act by adopting a new Title VII of the CAA, called the “Global Warming Pollution Reduction Program.”  The Safe Climate Act essentially adopts proposals advocated by the U.S. Climate Action Partnership (U.S. CAP), a non-profit collaborative of major industrial sources of GHGs and environmental organizations that have been urging the federal government to adopt a unified approach that features a cap-and-trade system.

The Safe Climate Act would establish a market-based program for reducing GHG emissions from power generation facilities, oil refineries, large industrial sources, and other covered entities that collectively are responsible for 85% of U.S. global warming emissions.  Covered entities will be required to obtain tradable federal allowances for each ton of GHGs emitted. Entities that emit less than 25,000 tons per year of CO2 equivalent are exempted. The program ratchets down the number of available allowances issued each year to ensure that aggregate emissions from covered entities are reduced by 3% below 2005 levels in 2012, 20% below 2005 levels in 2020, 42% below 2005 levels in 2030, and 83% below 2005 levels in 2050.

Interestingly, the Safe Climate Act would attempt to put the brakes on the U.S. Environmental Protection Agency’s regulatory response to the landmark April, 2007 U.S. Supreme Court decision in Massachusetts v. EPA in that it states that CO2 and other greenhouse gases may not be regulated as criteria pollutants or hazardous air pollutants on the basis of their effect on global warming. The draft also provides that new source review does not apply to these global warming pollutants.  

Just weeks ago, the EPA requested White House approval of a draft endangerment finding that responded to Massachusetts v. EPA in proposing to find that GHGs emitted from new motor vehicle exhaust are pollutants on the basis of their effect on global warming.  That finding would be a precursor for regulating GHGs from mobile sources, such as motor vehicle exhaust, and stationary sources, such as power plants.  The Safe Climate Act clearly attempts to slow that regulatory development and coordinate it with the global warming program.

The draft provides for strict oversight and regulation of the new markets for carbon allowances and offsets. It ensures market transparency and liquidity and establishes strict penalties for fraud and manipulation. The Federal Energy Regulatory Commission is charged with regulating the cash market in emission allowances and offsets. The President is directed to delegate regulatory responsibility for the derivatives market to an appropriate agency (or agencies), based on the advice of an interagency working group.

Clearly, Congressional action is accelerating on these issues, especially as these Waxman and Markey pledge to complete their respective committees’ consideration of the legislation by Memorial Day.

For a copy of the full text of the discussion draft of the bill, click here: http://energycommerce.house.gov/Press_111/20090331/acesa_discussiondraft.pdf

For a copy of the bill summary, click here: http://energycommerce.house.gov/Press_111/20090331/acesa_summary.pdf

 

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