Climate bill breakdown
We’ve taken a good long look at CEJAPA, the 801-page Clean Energy Jobs and American Power Act that was introduced recently by Sens. John Kerry (D-Mass.) and Barbara Boxer (D-Calif.). Now, it’s time to see how the Senate bill compares with ACES. the American Clean Energy and Security Act co-sponsored by House members Henry Waxman (D-Calif.) and Edward Markey (D-Mass.).
Be forewarned that even CEJAPA’s biggest supporters say that much about the Senate bill will change. The first markup on Boxer’s Environment and Public Works committee is tentatively scheduled for Oct. 15. Until then, here’s how the two climate bills stack up against each other, and against some of the other climate and energy bills percolating in the Senate.
• Waxman-Markey: ACES would put a cap on greenhouse gases and require industries that emit high amounts of greenhouse gases to reduce their output. Using the 2005 emission levels as a baseline, ACES would cut emissions by 3 percent in 2012, 17 percent in 2020, 42 percent in 2030, and 83 percent by 2050.
• Boxer-Kerry: CEJAPA would start by requiring a similar 3 percent cut in emissions by 2012, but it would require a sharper cut of 20 percent by 2020. Otherwise, the CEJAPA emission cuts are the same as those written up in ACES.
• Waxman-Markey: ACES would require regulated industries to acquire permits (also called carbon credits or pollution allowances) for their emissions. At first, a large percentage of permits would be given out to affected industries and to other groups with a stake in the game. But eventually a fairly lively carbon-trading market is supposed to develop. This new carbon market would allow companies to purchase extra credits or bank and borrow credits. A company would also be allowed to sell their excess credits if they’re able to limit their emissions more than they’re required to. There would be a minimum price of $10 per unit for each carbon credit, starting in 2012. Government regulators would establish a maximum price of no more than 60 percent above a rolling average. If the concept sounds complicated and not terribly certain, many inside the industries that would be regulated tend to agree.
• Boxer-Kerry: CEJAPA would try to create a similar system with the use of tradable credits. As with ACES the market for carbon credit trading would be fairly open — to a point. A key difference between the two proposals is the Senate bill’s attempt to manage any carbon market volatility that could hurt emitters struggling to control costs. While the Waxman-Markey version doesn’t offer any real limits on the maximum cost for a credit, CEJAPA would set a ceiling price (what Boxer calls a “soft collar”) of $28, adjusted for inflation. Once that market price is hit, federal regulators would have reserves of permits they could release into the market to try and control the cost.
Who gets the permits and money
• Waxman-Markey: Some permits will be given away to various affected industries and others to groups that can help manage the cost of these changes for consumers. ACES has a fairly detailed description of how the give-aways will be handed out. For example, 15 percent will go to energy-intensive industries and 30 percent to local electricity distribution companies to help them keep the cost to consumers low. Some industries, like the auto industry, would get a share of the credits to develop a specific clean technology. Other groups would get credits to help fund transmission and efficiency projects.
In the first years of the cap-and-trade program, the federal government would sell 15 percent of the permits, and ACES has a fairly well fleshed out explanation of who will benefit from the proceeds of those sales. A big chunk of the revenue would go to help soften the blow of increased energy costs to low and moderate income households. Smaller percentages would be distributed to combat international deforestation, research advanced-clean energy, and help our country and others adapt and transition to a less carbon-dependent world.
• Boxer-Kerry: How CEJAPA would divvy up the giveaways and the proceeds from the sale of the remaining permits is still unknown — it’s an area of the legislation with a lot of placeholders. In coming weeks the blanks will start to be filled in, but the hope is that by leaving the numbers blank for now, it gives lawmakers the flexibility to get industry backing by negotiating with major stakeholders. That said, one of the few firm numbers that is already written into CEJAPA is a provision to spend 25 percent of the revenues on federal deficit reduction — a dramatic increase from the roughly 8 percent ear-marked in ACES. Boxer began to fill in the details in an interview that aired on Sunday, Oct. 4, where she announced that up to 70 percent of the giveaways will go to making it easier for consumers to pay.
• Waxman-Markey: One way carbon emitters can deal with tough carbon caps is to buy into offsets. Basically, if you emit three tons of carbon too many, exceeding the limit, you’d be able to compensate by planting enough trees to absorb those three tons (or at least some of it.) Waxman-Markey had fairly well outlined explanations for the tradeoffs — listing certain types of offsetting activities (at home and abroad) and naming the EPA as the adjudicator of what qualifies as a good offset and whether it’s being used.
• Boxer-Kerry: Also includes an opportunity for carbon emitters to invest in offsets to help meet caps, but offers much less precise instructions as to what qualifies as an offset. What it does offer, in more precise terms, are the tools to scrutinize what will and won’t eventually qualify as an offset.
Renewable electricity standard
• Waxman-Markey: ACES creates a renewable electricity standard (RES) that would require that an increasing percentage of the nation’s electricity come from renewable sources — as much as 20 percent by the year 2020. One major caveat was that as much as 5 percent could actually be accounted for by improvements in energy efficiencies.
• Boxer-Kerry: CEJAPA offers no federal renewable energy standard. There is, however, a provision to empower the EPA to give grants and other assistance in an effort to help various states meet their own renewable energy standard. The legislation also includes a separate grant program for bio-fuels and gives the EPA the power to set a national energy efficiency building code standard and assistance in retro-fitting older buildings to meet newer efficiency code standards. It is important to note that in most cases where CEJAPA omits key energy areas, the missing pieces can be found in the American Clean Energy Leadership Act (ACELA). This bill was written by the Senate’s Energy Committee in June, as the “energy” portion to CEJAPA’s “climate.” The ACELA draft proposes a 15 percent renewable energy standard, and allows 4 percent of that to come from energy efficiency savings.
Getting off carbon
• Waxman-Markey: ACES is a true climate and energy bill, so it does include ample money for investment in renewable energy — as much as $190 billion by 2025. This counts investments in energy efficiency, renewable energy, electric vehicles, and a number of technologies that do not make environmentalists happy, but do make coal state Dems smile, like, $60 billion in so-called “clean coal” research money.
• Boxer-Kerry: At this point, CEJAPA is just the “climate” side of things, so it is thin on investments in new technology. That doesn’t mean it will stay that way. Its mate ACELA, the “energy” half of the equation, would create a clean energy investment fund, specifically for investing in new clean energies. That said, the provisions already penciled into CEJAPA that do deal with technology don’t particularly favor either clean/renewable energy, or coal — they offer some helping hands to three other energy sources — nuclear, natural gas, and biofuels — that boosters all felt were left out of ACES. Natural gas in particular gets a boost from CEJAPA, which would establish an incentive to help convince big coal burners to switch to natural gas, which emits about half the CO2 of coal. It’s significant that there is a nuclear title at all in CEJAPA. ACES didn’t bother with nuclear even though many conservatives like to think of nuclear as the ultimate clean energy. Obviously, this is a bone of contention, but it’s one that CEJAPA apparently is willing to deal with.
• Waxman-Markey: Even before the Cash for Clunkers program struck such a chord this summer, the House passed a version of ACES that would provide one million vouchers to help consumers trade in older, less fuel efficient vehicles. The bill also had provisions to help support electric vehicles and plug-in hybrids — and the improvements to our transmission grid needed to support an expanded use of electric cars.
• Boxer-Kerry: The Boxer-Kerry draft includes provisions to push states and municipalities into looking at how to plan for mass-transit and more carbon-friendly transit — think building trails and sidewalks to encourage bikers and pedestrians, and even plans for telecommuting. So does ACES, but with less emphatic language. CEJAPA requires using the money from credit auctions to support green transit planning, while ACES just allows it. CEJAPA also takes an interest in cleaning up taxis, a major source of carbon in metro areas that some more pro-active cities are already trying to tackle. CEJAPA wants stricter emissions standards for cabs than for other cars.