American Clean Energy and Security Act

Between draft and introduced legislation, the Waxman-Markey plan lost its low-carbon fuel standard. Its renewable electricity standard was weakened. And its midterm target for greenhouse gas reductions fell from an already weak 20 percent below 2005 levels by 2025 to 17 percent, with some lawmakers trying to push it even lower.

Waxman and Markey also announced their proposals for how the emission allocations would be doled out. President Obama had hoped to see a full auction. Instead, many of the allocations will be given away to polluters for free for the first decade under the plan. In the case of the electricity industry, the free allocations would cover 90 percent of the pollution credits the industry would need.

Republicans refused to support the bill, with some proposing alternatives that would allow more drilling and help the polluters continue their business as usual. Several Democrats on Waxman's House Energy and Commece Committee complained that their own states' coal operations, refineries and industries that would be effected without the free permits.

Others argued that the bill's renewable electricity standard — initially 25 percent by 2025 —would be unfair to states that don't have the wind of Texas or the sunshine of California. By the time the bill was introduced, the RES had been cut to 20 percent by 2020 with states allowed to make up as much as 8 percent of that from energy savings.

The initial draft was already a let-down for environmental groups. The introduced version was worse.

Greenpeace announced that it couldn't support the climate legislation as it was written. Friends of the Earth went farther, telling House members to either make it stronger or vote no. The bill fell short of even the IPCC’s most conservative recommendations for mid-term greenhouse gas reductions needed to avoid a more than 2-degree Celsius rise in global temperatures: at least 25 percent below 1990 levels by 2025.

Worse, the bill would offer power companies, industries and other emitters extensive offsets – 2 billion tons worth, equal to a quarter of all U.S. emissions. Greenpeace global warming campaign director Steven Biel points out:

“If all the offsets in the bill were used, the bill’s emissions reductions could be met without any reduction in fossil fuel emissions for more than 20 years. We cannot solve global warming by simply planting trees and continuing to pollute forever.”

The proposal would also pour about $60 billion of tax dollars into developing carbon capture and storage technology so perhaps in 20 or 30 years polluters could begin burying their greenhouse gas emission.

In addition, the legislation would undercut the EPA, which has so far led the charge to limit greenhouse gases in the Obama administration. The bill would eliminate the agency's authority to regulate carbon dioxide emissions, and, under a deal to win the support of farm-state Democrats, it would delay the EPA's new biofuels rules' use of land-use changes in calculating lifecycle emissions – rules that don't bode well for corn ethanol – and only allow them after that if the Department of Agriculture agrees.

While most environmental groups were unhappy with the lowered standards, they continued to support the ACES bill the grounds that it was a foot in the door for greenhouse gas regulation.

If ACES passes, they're counting on President Obama and future acts of Congress to strengthen the rules down the road.

Here are some highlights from the American Clean Energy and Security Act of 2009:

CLEAN ENERGY

Renewable Energy: Create renewable portfolio standards requiring electricity suppliers to generate a percentage of their power from renewable resources, reaching 20% in 2020. States can choose to meet one-fourth of this requirement with energy efficiency measures. Utilities could also get credit for some non-renewable resources, such as coal mine methane and municipal solid waste.

Carbon Capture and Sequestration: Support a demonstration program, provide incentives for wide-scale commercial deployment, and set performance standards for new coal-fired power plants. The bill doesn't start restricting new coal plants built over the next 10 years until 2025, when they must cut their emissions by 50 percent. New plants approved after 2020 would have to cut emissions 65 percent at startup.

Clean Fuels and Vehicles: Authorize grants or loan guarantees for large-scale demonstrations of electric vehicles, and authorize financial support to car companies to retool their plants to build electric vehicles.

Smart Grid and Electricity Transmission: Facilitate the deployment of a smart grid, including measures to reduce utility peak loads through smart grid and demand response applications and to help promote smart grid capabilities in new home appliances; direct FERC to reform the regional planning process to modernize the transmission system.

Federal Purchases of Renewable Electricity: Authorize federal agencies to enter into long-term contracts to purchase renewable electricity.

Research and Development: Create eight Clean Energy Innovation Centers involving universities to promote research and development of new technologies.

ENERGY EFFICIENCY

Building Energy Efficiency: Provide federal training and funding to states that adopt advanced building efficiency codes; authorize funding for energy efficiency retrofits; direct EPA to develop procedures for rating building energy efficiency.

Appliance Energy Efficiency: Codify four negotiated agreements on efficiency standards for lighting and four additional agreements for appliances; improve DOE process for setting energy-efficiency standard; create financial incentives to retailers who sell high volumes of “Best-in-Class” appliances.

Transportation Efficiency: Direct the president to work with the relevant agencies and California to harmonize fuel economy standards; direct EPA to set emissions standards for other mobile sources of pollution such as trains, marine vessels, and non-road sources; require states and metropolitan areas to establish goals for reducing global warming pollution from transportation.

Utilities Energy Efficiency: Set new energy efficiency resource standard requiring utilities to demonstrate that their customers are achieving required levels of cumulative electricity or natural gas savings. The efficiency standard would starts with a 1% electricity savings and 0.75% natural gas savings in 2012 and gradually increases to a 15% and a 10% by 2020.

Industrial Energy Efficiency: Direct Secretary of Energy to establish standards for industrial energy efficiency; create award program for innovation in increasing efficiency of thermal electric generation.

REDUCING GLOBAL WARMING POLLUTION

Global Warming Pollution Reduction Program: Establish a market-based program for reducing global warming pollution involving entities emitting more than 25,000 tons per year of CO2 equivalent. Available annual allowances would be bankable and would be reduced by 17% below 2005 levels in 2020, 42% below 2005 levels by 2030, and 83% below 2005 levels in 2050. Most allowances would be given away for the first 10 years: 35% to the electricity industry every year for the first decade, with a requirement to to pass the savings on to consumers; 15% to energy-intensive, trade-sensitive industries for 10 years; 9% to natural gas distributors for five years, also to be passed on to consumers; 3% to the auto industry for five years; 2% to oil refiners for 10 years; and 15% of the remaining to be auctioned with the proceeds going to help low- and middle-income families. Minimum price for auctioned allowances would start at $10 per ton.

Offsets: Allow covered entities to increase their emissions above allowances if they can obtain “offsetting” reductions at a lower cost from other sources.

Strategic Reserve: Direct EPA to create a “strategic reserve” of about 2.5 billion allowances as a cushion in case prices rise faster than expected.

Supplemental Pollution Reductions: Direct EPA to enter into agreements to prevent international deforestation. By 2020, achieve reductions equivalent to 10% of U.S. emissions in 2005.

Clean Air Act Exemptions: Provide that CO2 and other greenhouse gases may not be regulated by the EPA as criteria pollutants or hazardous air pollutants on the basis of their effect on global warming; new source review would not apply to these global warming pollutants.

TRANSITIONING TO A CLEAN ENERGY ECONOMY

Ensuring Domestic Competitiveness: Authorize companies in energy-intensive to receive “rebates” to compensate for competitive imbalances; if rebates are not enough, direct the president to establish a “border adjustment” program that would require foreign manufacturers and importers to pay for the carbon contained in U.S.-bound products.

Green Jobs and Worker Transition: Promote green jobs, including authorizing grants to universities and colleges to develop curriculum and training programs.

Exporting Clean Technology: Provide U.S. assistance to encourage widespread deployment of clean technologies to developing countries that have ratified an international treaty and undertaken nationally appropriate mitigation activities.

Adapting to Global Warming: Establish an interagency council to ensure an integrated federal response to the effects of global warming; direct NOAA to conduct vulnerability assessments and establish a National Climate Service; direct each agency to prepare an adaptation plan; establish a climate change adaptation fund to provide federal support for state and local projects; require the Secretary of Health and Human Services to promulgate a national strategy to deal with health effects due to climate change; create an International Climate Change Adaptation Program within USAID to provide assistance to the most vulnerable developing countries.