After very much ado, Senators John Kerry and Joseph Lieberman on Wednesday unveiled their proposal for a climate and energy bill. Dubbed the American Power Act, or APA, the 987-page bill represents a jumping-off point for debate in the Senate over regulations, government investments and incentive programs that could shape the market for green technologies for years to come.
The basic goal laid out in the draft is to reduce greenhouse gas emissions 17 percent below 2005 levels by 2020 and 83 percent by 2050. Venture capitalist John Doerr said today he deems the bill a “pragmatic framework” that will be “crucial to the success of American entrepreneurship.”
It has taken nearly eight months of negotiations with lawmakers and interest groups to get to this point, drawing tens of millions of dollars in lobbying efforts, and many hurdles remain for actual enactment of the comprehensive climate legislation. Senator Lindsey Graham, who originally joined forces with Kerry and Lieberman to draft the legislation but pulled back from the effort last week, said today he does not expect the Senate to act on the bill this year.
Here are five areas with implications for greentech innovators and startups to keep an eye on as the political wrangling runs its course.
Vehicles & Transportation
The Kerry-Lieberman proposal includes significant provisions for electric vehicle development, manufacturing and infrastructure. It calls for the Secretary of Transportation to create a “national transportation low-emission energy plan,” for identifying near- and long-term needs for vehicle charging infrastructure.
The bill also would establish a Clean Vehicle Technology Fund within the Treasury with the goal of enabling the EPA to provide grants for automakers and component suppliers to refurbish or expand factories for advanced technology vehicles. Grants could also be used to “support engineering integration of certain vehicles and components such as plug-in electric drive vehicles.”
David Vieau, President and CEO of A123 Systems, a Watertown, Mass.-based startup that’s backed by the Department of Energy and working on batteries for electric vehicles and grid storage, praised the legislation, saying it, “holds one of the keys to meaningfully accelerate the transition to clean energy solutions for transportation and the grid.”
Texas oil baron and natural gas advocate T. Boone Pickens also praised the bill for its “focus on a broad energy package that includes replacing foreign oil/diesel/gasoline with cleaner, abundant domestic natural gas in America’s heavy duty fleets.” The proposal calls for tax incentives to convert fleets of trucks and heavy duty vehicles to natural gas vehicles.
In the larger scheme of greener transportation, the bill would require states and metropolitan planning organizations to develop targets and strategies for reducing emissions, and provide funding through the Department of Transportation to help finance approved programs — potentially a boon for companies working on services and systems for smarter, more efficient urban transit.
Among the highlights for renewable energy ventures is a proposal to establish a Clean Energy Technology Fund for development of energy technologies, and to increase the clean energy manufacturing tax credit by $5 billion. Denise Bode, chief executive for the American Wind Energy Association, said the industry group is looking forward to enactment of a renewable electricity standard — which is not included in Kerry and Lieberman’s draft.
Utilities & the Smart Grid
Utilities including PG&E, National Grid and Exelon cheered what they see as protections for ratepayers in the legislation — “such as a firm price collar and free emissions allowances to local delivery companies,” as Exelon CEO John Rowe put it in a statement. PG&E chief executive Peter Darbee also suggested that if provisions in the bill go into law, it could serve as a green light for companies to invest in the innovations that so many cleantech startups are toiling away to produce. The bill, he said, “provides business with the incentives, clarity and support needed to spur investment in new technologies.”
Not everyone shares the utilities’ perspective that Kerry and Lieberman’s proposal will protect consumers. The American Council for an Energy-Efficient Economy (ACEE) criticized the legislators for “gutting the energy efficiency provisions in their bill,” which could mean unnecessary costs for consumers.
According to ACEEE Executive Director Steven Nadel, a pair of key provisions included in the House version of the climate bill have been either “dramatically reduced” or dropped altogether. He notes that the draft unveiled today provides less than a quarter of the emission allowances that would fund state energy efficiency programs under the House bill. And a requirement for natural gas utilities to use a portion of their free emission allowances to provide energy efficiency programs to customers did not make the cut in the Kerry-Lieberman proposal.
In addition, the Senators have proposed for consumers to get rebates through their energy bills (according to the bill summary: “two-thirds of revenues not dedicated to reducing our deficit are rebated back to consumers through energy bill discounts and direct rebates”). ACEEE believes the move will hide the costs of inefficiency and hamper conservation. “While we support consumer rebates to offset costs,” said Nadel, “these rebates should be provided in other ways, rather than directly on energy bills.” Ultimately, he said, the plan, “will result in only limited energy savings, and without these savings, costs to consumers will be higher.”
The Valley of Death
Jonathan Wolfson, CEO and co-founder of Solazyme, an algae fuel developer that has a development deal with Chevron, commented in a statement that Kerry and Lieberman’s plan, “will allow companies to continue to develop and bring to scale innovative, low carbon technologies.”
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