The House narrowly passed landmark climate change legislation (H.R. 2454) with a 219-212 vote, delivering a major victory for President Barack Obama and House Speaker Nancy Pelosi (D-Calif.), reports Roll Call.
The cap-and-trade bill, called the American Clean Energy and Security Act, which mandates reductions in carbon dioxide emissions and sets a national standard for renewable electricity, now heads to the Senate, where its prospects are uncertain.
One potential problem is a provision that would impose tariffs on goods imported from countries that don’t match U.S. carbon-dioxide restrictions, which some say could provoke a trade war with China and India, reports the Wall Street Journal Online.
Senate passage will be in the hands of California Democratic Sen. Barbara Boxer, a proponent of cap-and-trade limits on greenhouse gases, reports the San Francisco Chronicle. Her opponents say that the legislation is economic suicide, and the “most colossal mistake ever in the history of the United States Congress,” reports the newspaper.
Opponents to the bill believe putting caps on carbon dioxide will raise energy prices and force more manufacturing to China and other nations that do not limit greenhouse gases while doing little to limit global warming, according to the SF Chronicle.
The cap-and-trade bill creates a market for trading pollution permits as a way to curb the emissions, and calls for the U.S. to reduce its greenhouse gas emissions by 17 percent from 2005 levels by 2020, reports Bloomberg News.
In addition, the bill mandates that 15 percent of the nation’s electricity come from renewable sources such as wind and solar power by 2020, potentially expanding the market and profit potential for companies in those sectors, reports the WSJ Online.
According to the Committee on Energy and Commerce, the bill contains the following key provisions:
- Requires electric utilities to meet 20 percent of their electricity demand through renewable energy sources and energy efficiency by 2020.
- Invests $190 billion in new clean energy technologies and energy efficiency, including energy efficiency and renewable energy ($90 billion in new investments by 2025), carbon capture and sequestration ($60 billion), electric and other advanced technology vehicles ($20 billion), and basic scientific research and development ($20 billion).
- Mandates new energy-saving standards for buildings, appliances, and industry.
- Reduces carbon emissions from major U.S. sources by 17 percent by 2020 and over 80 percent by 2050 compared to 2005 levels. Complementary measures in the legislation, such as investments in preventing tropical deforestation, will achieve significant additional reductions in carbon emissions.
According to the Congressional Budget Office (CBO), the U.S. cap-and-trade program will cost $22 billion annually, or about $175 per household, by 2020.
Reuters reports that the U.S. Environmental Protection Agency estimates the bill would cost American households between $80 and $111 per year, which equals 22 cents to 30 cents per day, and the American Council for an Energy-Efficient Economy projected the bill’s energy provisions would save U.S. households up to $1,050 cumulatively and produce more than 300,000 jobs by 2020.
Republicans and some business groups that oppose the 1,200-page legislation label it a “national energy tax,” reports Bloomberg News. They believe the bill will cost much more.
Several Democrats from coal producing or big manufacturing states voted against the bill, afraid of what higher energy prices may mean for their constituents, reports CNN Money.
Whitney Stanco, an energy policy analyst at Concept Capital, told CNN Money: “In a year when we haven’t seen much of an economic recovery, going forward with a bill that will raise prices is probably going to be difficult.”
The bill’s chief sponsors, Democratic Representatives Henry Waxman of California and Edward Markey of Massachusetts, agreed to reduce its environmental mandates and increase aid to polluters, including coal-fired power plants, to help companies meet the measure’s clean-air regulations.
This has resulted in some Democrats and environmental groups such as Greenpeace to oppose the “weakened” bill in its current form. Greenpeace stated the Waxman-Markey bill sets emission reduction targets far lower than science demands, due to industry lobbyists that have weakened the bill, then undermines even those targets with massive offsets. The environmental group believes the bill will spur a new generation of nuclear and coal-fired power plants to the detriment of real energy solutions.
Businesses and industry groups are split on the climate bill.
Key backers include The Edison Electric Institute, which represents investor-owned utilities and the AFL-CIO, along with several environmental groups and others with investments in alternative energy.
Bryan Ashley, vice president of Suniva, Inc., a Georgia-based solar cell manufacturer, told the WSJ Online: “The House has taken an important first step on a road that will help the industry scale to a point at which we no longer need government incentives.”
Nonprofit Green For All, based in Oakland, Calif., which was a driving force in securing green job training funds in the American Recovery and Reinvestment Act, told Reuters the bill is a significant step forward in creating a more equitable and secure country. The bill includes an $860 million allocation to the Green Jobs Act, according to the news agency.
Phil Angelides, chairman of the Apollo Alliance, also told Reuters: “The American Clean Energy And Security Act is a giant leap forward to establish energy security, reduce harmful carbon emissions, and create millions of green jobs that will put our citizens back to work and get our economy back on track.”
Those opposed to the bill include agricultural and manufacturing associations.
Bloomberg News reports that the American Farm Bureau, the nation’s largest farm lobby, opposes the bill, as well as a coalition of food processing groups including the National Chicken Council and the National Meat Association.
The WSJ Online reports that groups that represent airlines, oil producers and mining companies said the bill would lead to new costs to consumers. The U.S. Chamber of Commerce, National Association of Manufacturers and National Mining Association are all opposed to the passage of the bill.
“It will affect every aspect of the American economy, harming our ability to compete in the world and provide secure and affordable energy to American consumers and businesses,” the National Mining Association said in a statement, reports the WSJ Online.
The National Association of Manufacturers (NAM) expects natural gas, coal and oil prices to increase under the proposed bill.
Keith McCoy, a spokesman for the National Association of Manufacturers in Washington, D.C. told Medill Reports that prices will be driven up dramatically. “With these short timelines, coal-based utilities will have to switch to natural gas. That’s a very valuable commodity for manufacturers, and the price will get bumped up.”
Other critics include billionaire investor Warren Buffett, head of Omaha, Nebraska-based Berkshire Hathaway Inc., who believes the plan would increase the price of energy, and U.S. Chamber of Commerce executive vice president Bruce Josten, who said it wouldn’t ensure development of enough renewable energy sources to make up for the required reduction in fossil-fuel emissions, according to Bloomberg News.
Here’s a sampling of statements from organizations that support the bill.
The AFL-CIO stated in a letter to Congressman: “The AFL-CIO supports climate change legislation that will create new economic opportunities and preserve existing jobs while achieving the important objectives of reducing greenhouse gas emissions and reducing our dependence on foreign energy.”
Susan Bass, senior vice president for programs and operations, at Earth Day Network, said: “The climate bill passed by the House is an historic and reasonable measure that will move the U.S. closer toward a new green economic future. The bill goes a long way toward creating an economic model based on renewable energy that will reduce greenhouse gases.”
Bass also hopes the Senate will deliver a stronger bill “by increasing the amount of reductions of carbon emissions, providing for auction of 100 percent of carbon permits, providing more money for green job training and displaced workers, and requiring a higher renewable energy standard.”
She believes the bill will create millions of new clean jobs, save consumers hundreds of billions of dollars in energy costs, and drive America’s energy independence.
The American Wind Energy Association (AWEA) congratulates House leadership for adopting energy legislation that includes a Renewable Electricity Standard (RES). Denise Bode, AWEA CEO said this is a “key first step in balancing our electric generation mix by expanding America’s renewable energy generating capacity and creating thousands of new American manufacturing jobs.”
“We look forward to continuing to work with the Senate and Congressional leadership to strengthen and pass a national RES. As the global wind power industry makes decisions on locating investment and manufacturing capacity, our nation needs a strong RES to remain competitive in the international race to secure renewable energy investment and jobs,” Bode stated.
Here’s a sampling from organizations that oppose the bill.
The U.S. Chamber of Commerce believes the climate bill will further harm the economy and lose American jobs. “The last thing this country needs is fourteen hundred new job-killing regulations and mandates,” said the Chamber’s senior vice president of Environment, Technology and Regulatory Affairs William Kovacs.
“The American public deserves a robust, transparent debate on this legislation, which will raise fuel and electricity costs and have a negative impact on every family’s budget,” said Karen Harbert, president and CEO of the Chamber’s Institute for 21st Century Energy. “Re-writing legislation in the middle of the night and then forcing a vote on it the next day is certainly not the right way to tackle this complicated issue.”
The Air Transport Association of America (ATA), the industry trade organization for the leading U.S. airlines, also believes fuel costs will rise, “hindering the ability of U.S. airlines to continue to improve their environmental performance through fleet modernization and technological advances, weakening their ability to compete in the global markets.”
“The nation’s airlines have an impressive environmental record and are committed to working with the administration to address climate change, but we have strong concerns about the Waxman-Markey bill and its punitive one-size-fits-all approach,” said ATA president and CEO James C. May. “This cap-and-trade bill creates an onerous fuel tax on the airline industry.”
The National Federation of Independent Business says the second biggest problem faced by small business owners is the cost of natural gas, propane, gasoline, diesel and fuel oil.
“At a time when our nation faces near 10 percent unemployment and stalled economic growth, now is not the time to impose an $846 billion energy tax on small business. Instead of investing in their businesses and creating new jobs, this cap and trade proposal will force small business owners to pay higher energy prices,” stated Susan Eckerly senior vice president, public policy for the National Federation of Independent Business.
“We commend the House of Representatives for taking action in this critical area. However, H.R. 2454 falls short of providing a roadmap to an environmentally and economically sustainable future,” said John J. Castellani, President of Business Roundtable. “The bill ignores the role that oil and natural gas must play in the transition to a low-carbon future, as well as nuclear energy’s central role in reducing America’s carbon footprint. To achieve the GHG reductions called for in the bill, we not only need to use energy more efficiently, but also must deploy a balanced, comprehensive portfolio of new low-energy technologies.”