By Daniel J. Weiss, Daniel Wagener
WASHINGTON, DC—The House Energy and Commerce Committee today will begin consideration of the American Clean Energy and Security Act of 2009, sponsored by Committee Chair Henry Waxman (D-CA) and Energy and Environment Subcommittee Chair Edward Markey (D-MA). This bill is a huge step forward in the effort to achieve a clean-energy economy transformation and has attracted broad support from legislators and businesses nationwide.
The ACES establishes a three-part program to transition to a low-carbon economy: increase energy efficiency; invest in clean-energy resources such as the wind and sun; and reduce global warming pollution. While the original draft of the bill reduced emissions sooner and had a separate national energy efficiency resource standard, the current version represents enormous progress after eight years of stasis. Passage of the bill in the Energy and Commerce Committee is an essential first step to policies that will accelerate economic recovery and achieve long-term growth.
On May 13, President Obama praised the draft legislation as “a major step forward in building the kind of clean-energy economy that will reduce America’s dependence on foreign oil.”
The bill includes many critical steps to transform the United States to a low-carbon economy. Here are 10 key reasons to support it.
1. The Waxman-Markey bill will create jobs by spurring investment in renewables and efficiency.
The bill includes a renewable electricity and efficiency standard of 20 percent by 2020. This requires utilities to provide 15 percent of their electricity from renewable energy sources such as wind and solar power. They would also have to reduce annual electricity use by 5 percent through efficiency measures. Investments in clean energy and efficiency would create jobs, particularly in struggling sectors such as manufacturing and construction, by increasing demand for steel for wind turbines and construction of energy-efficient buildings.
2. Boosting investments in low-carbon energy will help the United States regain the lead in the manufacture and sale of clean-energy technologies.
A February analysis by HSBC Global Research in Hong Kong projects that nearly 40 percent of China’s proposed $586 billion stimulus plan—$221 billion over two years—is for clean energy investments, including an advanced electric grid, low-carbon vehicles and high-speed rail. The leading global consumer of coal for electricity, China has emerged in the past two years as the world’s leading builder of more efficient coal power plants capable of capturing and storing carbon, mastering the technology and driving down the cost.
The European Union committed to 20 percent renewable energy by 2020. As of 2006, the United States had less absolute renewable power capacity than either China or the 27 EU countries. While renewable energy deployment in the United States is lagging, 66 other countries worldwide have committed to national standards.
Establishing a market price on carbon pollution would make investments in renewable energy sources and efficient technologies economically competitive. Investments in their research, development, and production would help make the United States a global leader in the export of clean energy.
3. The global warming threat is growing, and we have no more time to lose.
Global warming has major human impacts, posing health, economic, and security threats. Margaret Chan, the director-general of the World Health Organisation, states “Climate change will affect, in profoundly adverse ways, some of the most fundamental determinants of health: food, air, water."
A recent study by the University of Washington found that higher temperatures will exacerbate asthma attacks and allergy symptoms because they will prolong pollen seasons, expanding the range of bee habitats and increasing airborne mold and other irritants. Higher health care costs and lower productivity will negatively affect the economy.
In February, Governor Arnold Schwarzenegger (R-CA) declared a state of emergency in California because of the drought. The state faces nearly $3 billion in economic losses this year from the lack of rainfall. The dry conditions also worsen the state’s perennial wildfires. Research suggests that wildfires are a significant contributor to global warming by depleting carbon-absorbing vegetation while releasing more carbon emissions into the atmosphere.
There has also been an outpouring of new evidence that unchecked pollution has caused harmful changes. Rising temperatures have caused the 18,000-year-old Chacaltaya glacier in Bolivia to completely vanish, and scientists predict that the North Pole will have almost no summertime ice as soon as 2020. The melting of polar ice would allow the release of vast deposits of methane, a greenhouse gas 25 times more powerful than carbon dioxide.
4. The bill would cut greenhouse gas emissions enough to equal pollution from half a billion cars.
Waxman-Markey aims to reduce U.S. global warming pollution by requiring a 17-percent reduction in greenhouse gas emissions from 2005 levels by 2020. This is like removing greenhouse gases from 500 million cars—about half the world’s cars in 2020.
This cut would reduce emissions at a faster rate than the proposal President Barack Obama made in his budget request. The cuts would increase over time to a 45-percent cut by 2030, 65 percent by 2040, and 85 percent by 2050. While the 2020 reduction is lower than first proposed, the later targets are the same as in the original draft.
5. It would increase new building efficiency by 50 percent.
Nearly half of American’s energy powers our buildings, and too much of this energy is wasted. The Waxman-Markey bill would attack this waste by requiring new buildings use 50 percent less energy by 2016.
Many studies point toward these benefits from building energy efficiency. According to a 2009 study by the Environmental Defense Fund on efficiency investments in Texas, efficiency investments in buildings can avoid over 50 million metric tons of greenhouse gas emissions and avoid $17 billion in electricity bills annually by 2030.
And an analysis from McKinsey and Company suggests that the United States can achieve savings of $33 billion per year by 2030 from cumulative buildings-sector efficiency improvements.
6. It limits impacts from energy costs on families and would make emitters pay to pollute.
Currently, greenhouse gas emitters can pollute the sky without paying any cost. The Waxman-Markey bill would put an end to this practice. Large emitters would have to annually purchase a permit for every ton of carbon dioxide they release into the atmosphere. Charging companies for what was once free will create an economic incentive to produce less of it.
Nearly a third of all U.S. greenhouse gas pollution comes from coal-fired electric power plants. To limit the impacts of higher energy costs from the new price on carbon, the Waxman-Markey bill would give 30 percent of the pollution permits to regulated electric companies (“local distribution companies,” or LDCs). The LDCs could sell the pollution permits on the open market to emitters, and state public utility-service commissions would be responsible for ensuring that the revenue is used to offset the higher electricity prices.
The bill would also provide allowances for consumers of natural gas and heating oil. In addition, revenue from 15 percent of the allowances would 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.”
7. It provides a smooth transition for energy-intensive industries.
To smooth the transition for energy- and trade-intensive industries such as steel and cement, the Waxman-Markey bill would grant them 15 percent of all pollution permits for free starting in 2014 and with a phase-out beginning in 2025. Companies would receive allowances equal to the average emission rate for their industry. Firms that produce less pollution than average could sell their extra permits, so they have an economic incentive to clean up.
The auto industry would also receive incentives to manufacture electric and other advanced technology vehicles. The bill would give the auto industry “Three percent of allowances from 2012 through 2017, and after that will receive 1 percent of allowances through 2025.”
The bill’s “cap-and-trade” system is different than the EU’s Emissions Trading System, which distributed too many pollution permits. The companies sold their excess permits, kept the money, and raised rates anyway. After the European Commission corrected the mistake, the system functioned properly, and in 2008 carbon dioxide emissions were cut by 3.1 percent, while the economy grew by 0.8 percent. The Waxman-Markey system would avoid the early mistakes of the EU system.
8. Opponents of action would continue the status quo of doing nothing, which cost the average family a $1,000 increase in energy bills over the past eight years.
Opponents of the Waxman-Markey bill would continue the pro-big oil energy policies developed by Vice President Dick Cheney and vigorously pursued by President George W. Bush. Billions of dollars in subsidies were plowed into extremely rich big oil and energy companies, and efforts to remove these payouts were mostly blocked by conservatives. Clean-energy policies—such as a renewable electricity standard—were also blocked.
The result of these pro-industry policies? Spiraling gasoline and electricity prices for families, and a nation more dependent on coal and oil. Between 2001 and the recession that began in December 2007, the typical annual American household expenditure for energy rose by $1,130. Bill detractors may use dilatory tactics to thwart the majority’s support and retain the status quo.
In addition, Ranking Republican Joe Barton (R-TX) plans to offer a substitute energy bill from last year that would invest heavily in nuclear power while allowing oil companies to freely develop dirty, water-consuming oil leases. It is an expensive, dirty proposal that ignores
global warming while enriching big oil and energy companies.
9. Investments in carbon capture-and-sequestration research and development to reduce global warming pollution from coal-fired power plants.
Technology currently exists to capture CO2 emissions from coal-fired plants—which provides half of U.S. electricity —and to sequester that CO2 in underground geologic formations. The technology is not yet commercially available, however, and widespread deployment of CCS systems will not be easy. Recognizing this, the Waxman-Markey bill provides a financing mechanism to set the stage for deployment of carbon capture-and-sequestration technology at a scale that would significantly reduce coal plant emissions.
Widespread CCS deployment—in combination with other policies to reduce CO2 emissions and diversify energy sources—could be invaluable in meeting our emission reduction goals for greenhouse gases and would encourage the export of CCS technology around the world, particularly to developing nations that depend on low-cost coal to fuel economic growth.
10. The bill has critical industry support.
Many CEOs from big energy and manufacturing companies realize that we must reduce oil use and cut greenhouse gas pollution, or face devastating economic and national security consequences. Some of these leaders have joined together with a handful of nonprofits to form the U.S. Climate Action Partnership. Their proposal to cut greenhouse gases by 14 percent to 20 percent by 2020 was the starting point for the Waxman-Markey bill.
Jim Rogers, the CEO of Duke Energy, (a U.S. Climate Action Partnership member) recently praised the Waxman-Markey bill during an Energy and Commerce Committee hearing. He said, “If we design this bill right, if we get the transitions right, it will put us in a position to be stronger. It will not weaken our economy over time.”
Another U.S. CAP member, Charles Holliday, Jr., chairman of DuPont, testified that, "I believe that this may be the single greatest opportunity to reinvent American industry, putting us on a more sustainable path forward… A federal climate program has the potential to create real economic growth through innovation."
Despite the forward-looking outlook of these and other leaders, many of their companies belong to trade associations that are vigorously lobbying Congress to retain the status quo. Duke Energy plans to leave the National Association of Manufacturers because of NAM’s campaign to block progress. Ten thousand small businesses petitioned the U.S. Chamber of Commerce to end its multifaceted campaign to stop the Waxman Markey bill.