House Dems Unveil Climate Plan: Carbon Cuts, National RPS and More $$$


Clean energy, cap-and-trade, energy efficiency and green jobs — those are the four policy areas that the House Energy and Commerce Committee aims to work on in the coming months with a new bill unveiled today in draft form. Committee chairman Henry Waxman and Edward Markey, who chairs the Energy and Environment Subcommittee, crafted the bill, dubbing it the American Clean Energy and Security Act of 2009.


Some of the most heated debates over this bill will likely center on Waxman and Markey’s proposal to mandate a cut in U.S. greenhouse gas emissions by 20 percent by 2020 and 80 percent by 2050 — a more aggressive timeline than President Barack Obama’s call for a 14 percent emissions reduction by 2020. As expected, today’s draft does not include a scheme for allocating emissions credits — whether through auction or freebies — which means committee members will be hashing that out over the next several weeks.

For the clean energy industry, key proposals include a renewable portfolio standard, or RPS, that would require electricity suppliers to generate 6 percent of their energy from clean sources by 2012, gradually increasing to 25 percent by 2025 (see chart above for proposed benchmarks). As we’ve noted before, this kind of federal standard could help grease the wheels for a national power grid. Since a national RPS was cut out of the 2007 Energy Bill, states have been picking up the slack.

Efficiency also has a role in Waxman and Markey’s plan for utility portfolios. They propose allowing governors to petition the Energy Secretary for a go-ahead to meet up to 20 percent of the renewable requirement with improved efficiency (in other words, renewables can make up a smaller percentage of a utility’s portfolio if it slashes demand through efficiency measures).

There’s also a carbon capture and storage proposal in today’s draft, and incumbent energy companies, as well as carbon recyclers like Ternion Bio and GreenFuel Technology (which we’ve written about before) have large stakes in the outcome. Markey and Waxman call for Congress to fund a demo program and incentives for large-scale deployment of the technology, which has seen a flurry of funding activity at the state and federal level over the last few months but remains unproven at commercial scale. The draft also includes performance standards for new coal-fired power plants.

Piling onto the $2.4 billion in stimulus money already in the pipeline for electric cars, Waxman and Markey propose that Congress authorize funding for grants or loan guarantees to cities, states and private companies for large-scale EV demonstration projects, including charging infrastructure. (The draft calls out two examples: fast-charging infrastructure and battery exchange stations — a possible boon for Better Place.)

Additional funds are proposed to help automakers retool existing plants to build electric vehicles or buy U.S.-made vehicle batteries. The Department of Energy’s existing $25 billion Advanced Vehicles Technology Manufacturing loan program, created in 2007, was also designed to help automakers switch over gas guzzler factories to make smaller, cleaner and more fuel efficient cars. While more than 70 applications have rolled in and DOE chief Steven Chu plans to move funds ASAP, the agency has not finalized any loans or grants under the program.

For the policy wonks among you: The full text and summary of the draft can be downloaded at the House Committee on Energy and Commerce site.


Michael Harder

It is true that a carbon tax adds to the cost of domestic goods and thus has a decided anti-competitive feature. However, just as Larson has proposed making the carbon tax revenue neutral to consumers, the cost impact of a carbon tax on domestic industrial users also can be neutralized. We would “recycle” the carbon tax revenue imbedded in their products back to them—but not in direct proportion to their carbon emissions. That way the anti-competitive cost impact is offset while the incentive for efficiency/alternative fuels remains. This would also save us from the competing idea of imposing fees on imports to offset the carbon tax they did not pay.

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