Q&A with ECA

Q: Can you please explain what is in the Waxman-Markey Bill?

A: The Waxman-Markey Bill, officially known as the American Clean Energy and Security Act (ACES) or H.R 2454, colloquially known as “cap and trade,” is actually so much more than that. The house is set to vote on the bill today, and if it passes it will be the first legislation of its kind in the U.S.

It seems that the House took the idea of a cap and trade bill and used it as an opportunity to stuff every possible clean energy project into one place. As a result this mammoth bill includes almost every element of energy policy—the good and the bad. The part that has been most talked about is the “cap and trade” element. Basically, certain high emission industries like electricity generation would become subject to regulations on how much carbon they emit. The emission levels would be capped with the ultimate goal to get below 2005 carbon levels. The main idea is that entities that emit a lot of carbon will have to pay for it through permits, or “carbon credits”. If they end up with more credits than they need through efforts like conservation, then they can sell them to another company who needs more credits. If they emit more than they are permitted, they pay a hefty fine, so it is in their best interest to either cut emissions or buy enough credits.

The credits themselves will be both given away (85%) and auctioned off (15%). As the program progresses, those numbers will gradually invert so that the majority of credits are being auctioned. Some credits will be given to regulated industries to get them started, while others will be given to non-regulated industries with stipulations that revenue from their sale be applied to energy efficiency projects, renewable energy, transportation planning, clean car projects and transmission projects—basically initiatives that will save money for consumers.

Revenue from auctioned credits will go to mitigating climate change in any number of ways ranging from offsets to low and moderate income families to helping other nations adopt climate change strategies.

This legislation establishes a national Renewable Portfolio Standard (RPS), which requires specific percentages of U.S power generation to come from renewable sources. Many states already have RPS laws that are more stringent than the one in the Waxman-Markey bill, so environmentalists say that the targets of 6% by 2012 and 20% by 2020 fall much too short of the kind of strong standards that we need.

The bill also makes a substantial investment in energy technologies like renewable energy, carbon capture and sequestration, electric vehicles and general research and development. It creates a new entity called the Clean Energy Deployment Administration that will be separate from the existing Energy Department and is meant to provide loans and help spur investment.

Coal snuck into the bill in a big way through a provision that allows more coal fired power plants to be built but mandates that they adopt carbon capture and sequestration technology. The bill stipulates increasing percentages of carbon that these plants will have to capture as the program progresses. I want to note here that currently carbon capture and sequestration is not a proven technology and no coal fired power plant has yet successfully used it to mitigate carbon emissions.

A few other random, but important elements that made it into the bill are increased standards for lighting, furnaces and other appliances. It also provides for new building standards that mandate a 30% improvement by 2010 and a 50% improvement by 2016. There is money for retraining workers for clean energy industries, a cash for clunkers program, electric cars, and money to create a more efficient transmission infrastructure, called a “smart grid.”

As you can see, this bill has a lot in it, some good and some bad. Most environmentalists agree that although the bill isn’t perfect, it is a step in the right direction and that improvements can be made to it through amendments in the future. Many people worry that if we don’t use the current momentum behind climate change issues to pass this bill now, the next version will be even weaker.

To find out more nitty gritty details of the bill check out this fabulous article on grist.org.

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