House Dems Introduce Draft for Comprehensive Clean Energy Act

House Democrats on Tuesday unveiled a 648-page discussion draft of the “American Clean Energy and Security Act of 2009,” a bill touted as a “comprehensive approach to America’s energy policy” because it seeks to establish, among other things, a carbon emissions reduction goal, a cap-and-trade program, and a federal renewable energy standard.

The draft legislation (PDF), introduced by Rep. Henry Waxman, chair of the House Energy and Commerce Committee, and Edward J. Markey, chair of the House Energy and Environment Subcommittee and Select Committee on Global Warming, is broken down into four titles: “Clean Energy,” “Energy Efficiency,” “Global Warming,” and “Transitioning.”

According to the draft summary (PDF), the Clean Energy title pushes renewables, carbon capture and sequestration (CCS) technologies, low-carbon fuels, and smart grid technologies. The Energy Efficiency title seeks to increase efficiency across all sectors. The Global Warming title looks to place limits on emissions of greenhouse gases, and the Transitioning title issues protections for consumers and industry while promoting green jobs.

The Energy and Commerce Committee plans to complete consideration of the legislation by Memorial Day. Per the preliminary schedule, hearings by the Energy and Environment Subcommittee will be followed by two markup periods. Democrats in the Energy and Commerce Committee outnumber Republicans 36–23, which means that even if six Democratic votes were lost, the bill could still pass.

A National Renewables and Efficiency Standard

The bill would establish under the Clean Energy title a national renewable energy standard that could require retail electricity suppliers to meet 6% of their load in 2012 with renewable generation. This percentage would gradually rise to 14% by 2019 and 25% in 2025. It also would provide state governors the option of meeting a fifth of this requirement with energy efficiency measures.

It also would establish an “energy efficiency resource standard,” which sets nationwide minimum levels of electricity and natural gas savings to be achieved through utility efficiency programs, building energy codes, and related efficiency measures. By 2014, electricity savings must reach 3.25% and gas savings must be 2.5%. By 2020, those savings must grow to 15% for electricity and 10% for natural gas.

A Carbon Emissions Reduction Goal and Cap-and-Trade Program

The legislation would also require that U.S. carbon emissions be reduced by 20% from 2005 levels by 2020, 42% by 2030, and 83% by 2050. This target is more aggressive than President Obama’s suggested cut of 14% by 2020 as set out in his  2010 budget this February.

The Waxman-Markey draft also calls for a carbon cap-and-trade program starting in 2012, when a 3% reduction from 2005 levels would be required. It sets several measures to curb the costs of the program, including a strategic reserve of allowances monitored by the Environmental Protection Agency. It also designates the Federal Energy Regulatory Commission to oversee the new carbon markets, including emission allowances and offsets.

However, it does not address how to allocate the tradable emission allowances that restrict the amount of carbon dioxide emitted by electric utilities, oil companies, and other sources. “This issue will be addressed through discussions among Committee members,” the House committee said in a statement Tuesday.

The carbon reduction targets and proposed cap-and-trade program were received warmly by House Democrats. But Energy and Commerce Committee Ranking Member Joe Barton (R-Texas) said Tuesday in a statement that it was “ignorant of the daily economic reality faced by working people,” and that’s why it would not “survive a vote in either the House or Senate just now.”

 “Even the Democratic governor of West Virginia knows that cap-and-trade would clobber customers,” he said. “A proposed local rate hike of 43 percent, Gov. Joe Manchin said on Monday, is ‘a drop in the bucket compared to cap-and-trade.’ He warned his ratepayers that ‘you’ll pay twice what you do now.’ The administration has a cheerier scenario, which predicts that average electricity bills will rise by no more than 79 percent. That’s about $936 a year, and is deemed acceptable.”

Mitigating Carbon Emissions from Fossil-Fueled Plants

Along with a push for more renewable energy and energy efficiency, the draft promotes development of CCS technologies. It requires that an appointed panel identify key legal and regulatory barriers to the commercial-scale deployment of CCS while “establishing a coordinated approach” to certifying and permitting geologic sequestration sites.

It would also allow U.S. fossil-based electricity distribution utilities to hold a referendum on the establishment of a so-called “Carbon Storage Research Corp.” If approved by entities representing two-thirds of the nation’s fossil fuel–based electricity utilities, the corporation would be established under the auspices of the Electric Power Research Institute. It would then be allowed to collect assessments from retail customers of fossil-based power, using these fees to fund large-scale demonstration of CCS technologies in order to accelerate the commercial availability of the technologies.

According to Rep. Rick Boucher (D-Va.)—whose recently introduced critical bipartisan legislation (PDF) to advance the development and deployment of CCS technologies was incorporated into the Waxman-Markey draft—that fee would increase average residential consumer bills by $10 to $12 annually.

In defining what constitutes a “hazardous air pollutant,” the legislation also tackles a key concern in the landmark Supreme Court case Massachusetts v. EPA (2007), saying that “No greenhouse gas may be added to the list of hazardous air pollutants … unless such greenhouse gas meets the listing criteria … independent of its effects on climate change.”

However, power plants that derive at least 30% of their heat input from coal or petroleum coke will be subject to strict performance standards under the legislation. Those plants that receive their final permits after Jan 1, 2009, and until Jan. 1, 2015, can emit no more than 1,100 pounds of carbon dioxide per megawatt-hour, while emissions for those permitted after 2020 will be limited to 800 pounds per megawatt-hour. The draft contains a clause that allows these standards to be changed upon review.

Sources: House Energy and Commerce Committee, Rep. Rick Boucher, Rep. Joe Barton