Key points of the climate-energy bill before Congress
Lawmakers craft a bill that will move the US to a far cleaner energy policy.
First steps: If Congress passes the proposed climate-energy legislation, the US economy could move away from fossil fuels and toward renewable energy. Click through the following images for graphics and more information on where carbon emissions come from and how the new legislation would impact the next 40 years.
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New climate-energy legislation advancing in Congress would mark the biggest shift in US energy policy in 30 years, thrusting the economy toward renewable energy and away from fossil fuels.
If the bill, which cleared a key House committee May 21, is approved by Congress, it would be the biggest step by the United States – the world’s largest greenhouse-gas emitter per capita – toward curbing climate change.
If President Obama signs the bill ahead of December climate talks in Copenhagen, as some suggest is possible, it would give the US a major role in shaping a multinational response to the climate problem.
Because stemming carbon dioxide emissions from burning fossil fuels is central to the climate conundrum, the new American Clean Energy and Security Act of 2009 (ACES) approved by the House Energy and Commerce Committee addresses energy and climate in one bill. Here is a rundown of its key points:
What’s the bill’s aim?
The ACES bill focuses on the smokestacks that produce 85 percent of US greenhouse emissions. It follows a three-pronged path to shift the nation to a low-carbon economy by boosting energy efficiency, developing renewable energy sources like solar and wind, and curbing greenhouse-gas emissions (GHGs).
Together, these are intended to cut US emissions to 17 percent below 2005 levels by 2020 – a compromise from the previously set 20 percent cut. That should put the nation on a path to reach 83 percent below 2005 levels by 2050 to help avoid the worst effects of global warming.
The bill is intended to jump- start a US push into energy-efficient technologies and grow green jobs, while boosting national security by shifting the US vehicle fleet toward use of domestic electricity instead of imported oil.
How would this be accomplished?
The main mechanism would limit emissions using a market-based “cap-and-trade” system for industrial carbon dioxide (CO2) emitters.
Beginning in 2012, a national “cap” – or total maximum CO2 emissions – would be set and then ratcheted downward annually.
Electric utilities, cement and steel plants, and others would need one “allowance” for every ton of CO2 sent up smokestacks. Power plants emit about 2.4 billion tons of CO2 annually – nearly 40 percent of total US greenhouse-gas emissions.
What about renewable energy?
A key part of the bill is a national renewable-energy standard combined with an energy-efficiency standard. US electric utilities would have to get 20 percent of their power from a combination of renewable sources (15 percent) and energy efficiency (5 percent) by 2020. But in a major compromise, governors could petition to increase the amount of energy efficiency up to 8 percent, with just 12 percent coming from renewables. Reps. Henry Waxman of California and Ed Markey of Massachusetts, the Democratic co-authors of the bill, accepted the lesser standard to win support of Democrats from states where coal-fired power plants predominate.
What’s the price tag?
The total abatement cost would be $22 billion in 2015, rising to $31 billion in 2020 and $64 billion in 2030, the EPA reported in April. This would slightly curb average annual US economic growth from 2.71 percent to 2.69 percent. The cost per household is estimated at $98 to $140 per year.
But the final cost of the bill was set still lower by the House Energy and Commerce Committee compromise, which mandates a 17 percent (instead of 20 percent) emissions cut by 2020.
That change, the EPA says, would “likely result in lower allowance prices, a smaller impact on energy bills, and a smaller impact on household consumption.”
Critics say it will cost far more.
Rep. Joe Barton (R) of Texas warns that the bill will “impact every person, every family, and every business” to the tune of “trillions of dollars.”
But, says Natural Resources Defense Council economist Laurie Johnson, by the time abatement costs reach $64 billion a year in 2030, the US economy will have grown more than $9 trillion – about 150 times the amount spent on CO2 abatement.
Who pays the most?
As a candidate, President Obama proposed auctioning all carbon emission allowances – none given away – to avoid a windfall for polluters.
But to win congressional support, some 85 percent of the allowances would be given away (just 15 percent auctioned), according ClearView Energy Partners, an energy economics firm, a change decried by some environmental groups. Still, most of the freebies must be used specifically to blunt the impact of rising energy prices on households and energy-intensive industries. By 2020, the bill would increase the percentage of auctioned allowances to 90 percent.
In 2012, when the cap kicks in, electric utilities would get 44 percent of carbon allowances, according to Kevin Book, an analyst at ClearView. Again, the bill requires utilities to pass the benefit along to consumers.
Some 15 percent of the value of allowances would go to low- and moderate-income households to defray higher energy costs.
Energy-intensive industries like steel, cement, pulp, and paper would get 2 percent of allowances to soften competition from foreign rivals that don’t have to meet an emissions requirement.
The House bill is expected to pass. What happens in the Senate, where Republicans may be able to filibuster a companion bill, is an open question.