Climate, Politics, & Tea

The House of Representatives is most likely going to vote on a major piece of energy and climate change legislation within the next couple of weeks (the American Clean Energy and Security Act, a.k.a. the Waxman-Markey bill). There is a ton of stuff in this bill, so I figured I’d spend this week’s blog post going through some of the highlights – and lowlights. This is mainly for my own amusement; I’m sure there are lots of other better analyses of this bill out there.

1. Renewable Energy:
– The bill would require 20% renewable electricity by 2020, although up to 5% could be met by reducing demand through efficiency measures instead and this could increase to 8% from efficiency at individual states’ requests. This is pretty weak – and the original version of the bill was stronger. They also somehow include coalbed methane as a renewable fuel, which is a rather odd definition to say the least.
– The bill requires utilities to develop plans for integrating plug-in hybrid electric cars & requires the Secretary of Energy to establish a demonstration program in several regions to integrate plug-in electric vehicles into the grid.
- It requires research into smart grid technologies, coordination of smart grid planning, and requires major utilities to set peak demand reduction goals.
- Finally, it requires coordination of electricity transmission planning with the goal of building out the grid to facilitate deployment of renewables.
2. Energy Efficiency:
- Requirement of 50% reduction in energy use relative to today’s standards by 2014 for new residential buildings and 2015 for new commercial buildings
- Requires the Department of Energy to work with states to improve efficiency of existing residential and commercial buildings through retrofitting.
- Stronger efficiency standards for lighting and appliances
3. Climate Change:
- Emissions reductions targets are 17% reduction in greenhouse gas emissions from 2005 levels by 2020 and 83% by 2050 to be achieved through a cap and trade system (the standard market-based mechanism where emissions are capped and in order to pollute the company has to purchase pollution permits, which can be traded between firms). One of the big debates in cap and trade is how the permits should be distributed – given away to firms, auctioned, or some combination? And if they are auctioned, what do you do with the revenue? This bill gives a fraction (about a quarter) of the permits directly to energy intensive companies. A large fraction (about a third) is given to “local distribution companies” (essentially electric utilities); the idea is that they won’t have to raise prices as much if they get the permits for free. Although this is one way of protecting consumers against rising electricity prices, it’s not really my favorite, but I think I’ll save that for another post. The remaining money from auctioning the permits is split among investment in renewables and efficiency research, state energy efficiency programs, climate change adaptation programs, programs to benefit low-income households, and federal deficit reduction.
- Unfortunately the bill allows 2 billion tons per year of carbon offsets, i.e. companies can by “offsets” instead of reducing their own emissions. Experience to date with offsets suggests pretty strongly that they don’t usually result in the emissions reductions that they claim, so this basically means that the bill won’t be as effective. (Note that 2 billion tons of carbon dioxide is nearly 30% of U.S. 2005 emissions).

Lots of people are concerned by how much this bill has been weakened so far and potentially further in the House floor debates. Some environmental groups are considering withdrawing support for the bill, which I think would be a huge mistake for a couple of reasons (see also ClimateProgress.org for more elaboration on some of these points). The first is that this bill really does have a lot of very good energy efficiency provisions that aren’t getting much attention. But the main reason is that if the U.S. doesn’t have some sort of national climate policy on the books before December, the international climate change negotiations in Copenhagen are likely to be a disaster. I can’t imagine China and India being willing to undertake binding commitments to reduce emissions if the U.S. isn’t doing anything. Although some people have argued that Obama could still reduce emissions by requiring the EPA to regulate carbon dioxide as a pollutant, there are two downsides to this strategy: (a) it could easily be overturned by a subsequent administration; and (b) it would still send a signal to the international negotiations that the U.S. is unlikely to be able to ratify an international treaty. So, to make a long story short, I really hope this bill passes.