Cap-and-Trade Bill Clears House Committee
After a week of long and heated arguments, the House Energy and Commerce Committee on Friday passed by a vote of 33 to 25 the American Clean Energy and Security Act of 2009, a massive 946-page bill that would set up a cap-and-trade program and a federal renewable energy standard.
H.R. 2454 now heads to the House Ways and Means Committee, which will review the tax and trade implications of the bill. That committee could make more revisions to the bill.
It remains unclear whether the bill will reach the House floor this year. As many as eight other House committees have jurisdiction over portions of the bill. Several committee chairmen have signaled they would like to modify it; House Agriculture Chairman Collin Peterson (D-Minn.), for example, said at a hearing earlier this month that he wants significant concessions for lawmakers from farm states, and threatened to bring together up to 40 Democrats to vote nay on the bill unless that happens. Other lawmakers have said they would like to see passage of health care legislation given priority over the climate change debate.
The bill seeks, among its key provisions, to reduce greenhouse gas emissions by 17% from 2005 levels by 2020, and 83% by 2050. It sets up an elaborate cap-and-trade program to reach these goals, conferring onto greenhouse gas–emitting entities the right to emit one metric ton of carbon dioxide. In 2016, the first full year of the cap-and-trade program, the Environmental Protection Agency (EPA) would distribute 5.48 billion permits. By 2020, the EPA would distribute 5.06 billion permits to enforce the greenhouse gas target for that year.
About 85% of these greenhouse gas emission allowances would be given away, while 15% would be auctioned off. Some 30% of the free permits have been earmarked for local electric distribution companies, but those companies would have to protect consumers from power price increases. Utilities that employ carbon capture and storage technologies could get up to $100 billion in bonus permits.
The bill also establishes a federal renewable standard, forcing utilities to generate 15% of their electricity from renewable sources and to show a 5% energy efficiency gain by 2020. States unable to meet this standard would be permitted to lower the 15% target to 12% with an 8% gain in energy efficiency.
Similar to provisions in the European carbon trading system, U.S. companies would also be able to offset up to 2000 million tons of carbon emissions by funding renewable projects in the U.S. and internationally.
Sources: House Energy and Commerce Committee, EU ETS