US House CO2 Bill Targets 20% Cut By '20 From 2005 Levels
March 31 2009 - 11:54AM
Dow Jones News
U.S. House lawmakers are targeting a 20% reduction in greenhouse
gases from 2005 levels by 2020 in a draft climate bill unveiled
Tuesday that promises to raise energy costs for the country, but
leaves many of the most important details for later
negotiations.
The draft document, published by the Energy and Commerce
Committee, omitted specifics on the percentage of carbon dioxide
credits to be auctioned off versus given freely to industry, a key
determinant of how much such a program will cost.
Facing a fierce political fight over a measure that will have a
wide-reaching impact across the economy, the decision by House
Energy and Commerce Committee Chairman Henry Waxman, D-Calif., will
buy time for further negotiations on the issue.
The draft bill - the American Clean Energy and Security Act -
establishes a decreasing cap on greenhouse gases and creates a
market where businesses could buy and sell the right to emit those
gases.
It also includes a federal mandate for an increasing percentage
of electricity to come from renewable sources, an efficiency
standard and new performance standards for coal-fired power
plants.
"This legislation will create millions of clean energy jobs, put
America on the path to energy independence, and cut global warming
pollution." Waxman said. "Our goal is to strengthen our economy by
making America the world leader in new clean energy and energy
efficiency technologies," he said in a statement.
Industry groups such as the U.S. Chamber of Commerce believe
that too aggressive emission cuts without safety valves that can
alleviate price pressures could force businesses overseas and will
raise energy prices to unsustainable levels.
Waxman's omission indicates that President Barack Obama's plan
for an auction of 100% of the credits is unlikely, and a later
version of the bill will most likely include allocation of credits
to energy-intensive industries such as the steel, aluminum, paper
and chemicals. In the President's 2010 budget proposal, Obama
estimated the auction could have raised nearly $650 billion in
climate revenue over the course of eight years, though Treasury
officials estimated it would likely raise two to three times that
amount.
Lawmakers - particularly those from manufacturing and
coal-powered states - are likely lock horns over the percentage
allocations distributed to industry and the distribution of climate
revenue.
Few believe that the Senate, where the biggest battle looms for
a climate change bill, will pass legislation this year to cut
greenhouse gases even if the House approves a version of Waxman's
bill.
But House passage would give the president substantial leverage
in international climate treaty talks to be conducted through the
year. Waxman has said he wants to pass the bill out of his
committee by the end of May, and the House could approve the bill
before a meeting of major economies in July, leading up to the
December United Nations negotiations in Copenhagen.
One of the key measures to mitigate costs will be the "offset"
program, which allows firms to offset their emissions through other
emission-reduction projects such as re-forestation or updating
technology at foreign power plants. The offset program is designed
to leverage greater emission reductions, however, and requires a
certain amount of emission cuts to buy offset credits.
Waxman's draft includes:
- A new source performance standard for coal-fired power plants
that cuts carbon dioxide emissions by 50% by 2015 and 65% by
2020
- Renewable electricity standard from 6% by 2012 up to 25% by
2025
- An energy efficiency standard, up to 15% in electricity
savings and 20% in natural gas savings by 2020.
- A low-carbon fuel standard designed to drive development of
electric vehicles and biofuels
- A required $10 billion utility charge to fund carbon dioxide
sequestration projects
- A mandate for a 30% increase in building efficiency for new
buildings by 2012 and a 50% increase by 2016
- By Ian Talley, Dow Jones Newswires, 202-862-9285;
ian.talley@dowjones.com