Waxman-Markey American Clean Energy and Security Act of 2009
Gail Tverberg, The Oil Drum
How does one address energy issues and climate change? Last week, the Democrats unveiled a draft version of proposed legislation, called the "American Clean Energy and Security Act of 2009" (ACES), sponsored by presentatives Henry Waxman (D-CA) and Ed Markey (D-MA) (download here). This legislation is praised by environmental groups, but is of major concern to conservative Republican groups.
The legislation has four titles:
Title 1: Clean Energy - Includes a Renewable Energy Standard that would require 6% of electricity come from renewable fuels by 2012, and 25% by 2025, but this obligation can be met by buying Renewable Energy Credits. Also includes Carbon Capture and Storage incentives, carbon standard on liquid fuel (encouraging cellulosic ethanol), assessments on electricity generated from fossil fuels, and requirements that utilities plan for smart grid and electrical vehicle recharging.
Title 2: Energy Efficiency - Sets higher energy efficiency standards for buildings, lighting, and appliances. Also encourages efficiency by utilities and by industry.
Title 3: Reducing Global Warming Polution - Sets goals of reducing global warming gases by 20% below 2005 in 2020; 40% below 2005 in 2030; and 83% below 2005 in 2050. Also includes Cap and Trade program, with parameters not yet specified.
Title 4: Transitioning to a Clean Energy Economy - Authorizes programs that may later be funded, including rebates to energy intensive industries (like cement and steel) which are essential but would suffer from competition under this legislation.
... What is Ahead?
The release of this draft legislation is just the beginning of a long process. Hearings will be held in the House Energy and Commerce Committee starting immediately after Congress gets back from its two-week Easter break. The plan is to have a final version of the bill voted on by the committee by Memorial Day, so that it can go to the House of Representative for discussion. According to Markey, this is "the beginning of an incredibly intense period of political debate in our country."
... My Views on Where the Legislation Is Headed
As I see it, there are two main groups who will support the legislation in its strongest form:
(1) Those who are very concerned about climate change
(2) Those who feel that they can make money from some aspect of the legislation (cap and trade; renewable energy, energy efficiency, carbon capture and storage, cellulosic ethanol, etc.)
In order to get support of the general population, it seems to me that costs paid by the consumer (electricity, gasoline) are going to have to be kept close to their current level. This means that if a cap and trade mandate is passed, the cost of carbon emissions in the cap and trade program will need to be kept low, perhaps with the idea of raising them in the future. This is likely to greatly reduce the effectiveness of the cap and trade program.
I think that there will also be a temptation to fill the bill to with lots of subsidies, but not much of a way to pay for them. This will ensure support from the groups who might get the benefit of the subsidies, with few concerning themselves about the ballooning deficit. (Perhaps I am too cynical.)
(4 April 2009)
Gail Tverberg is an editor/writer a The Oil Drum and a contributor to Energy Bulletin. By profession she is an actuaty. -BA
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