House Climate Legislation Evolution Favors Utilities

May 14, 2009

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As climate legislation evolves in the House of Representatives, utilities and other large emitters are breathing a bit easier.

Recent compromises by Democrats on the House Energy and Commerce Committee mean that legislation may call for a reduced 2020 emissions target. Initial versions of the legislation called for a 20 percent cut by then. Now, the committee is calling for a 17 percent reduction, reports Reuters.

Proponents of renewable energy, however, have less to like in the new legislation. Whereas the previous version called for 25 percent of electricity to come from renewables by 2025, the newer legislation calls for a target of just 15 percent by 2020, with a five percent gain in efficiency across the grid.

The plan also is at odds with President Obama’s desire to auction 100 percent of the emissions permits.

The House bill would give an undefined number of free permits to utilities, heavy manufacturers, the automobile industry, research and development and others. About 35 percent of all free permits would go to utilities, an amount that would cover “90 percent of their needs,” said Representative G.K. Butterfield, a North Carolina Democrat, in a Bloomberg article. The amount to be given to oil refineries has not yet been determined.

House Democrats hope to move the bill out of committee next week.

Utilities and oil companies have spent heavily to fight climate legislation, with more than $76 million spent on advertising and PR to date this year.

One utility executive is hopeful about a compromise to allow states to meet some renewable power requirements by boosting efficiency gains in conventional electricity generation from 5 percent to 8 percent.

Such a compromise is necessary because some states have better natural ability to generate wind or solar electricity, the executive said.

Essentially, utilities in each state would be mandated to get 15 percent of their electricity from renewable sources, while showing annual energy savings of 5 percent. States unable to reach the renewable target would be permitted to decrease their target to 12 percent, provided their show an 8 percent reduction in energy use.

Henry Waxman, the California Democrat who leads the climate change legislation, said the new 17 percent figure is “smack in the middle” of the 14 percent to 20 percent range put forth by the U.S. Climate Action Partnership, an industry and environmental coalition, reports Bloomberg.

The reduced U.S. goal is not likely to sit well with the European Union, which has a more aggressive stance on reducing carbon emissions. The EU wants to cut emissions 80 percent by 2050.

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