Block’s Indicator of Sustainable Growth

by Ray Block

The Waxman-Markey Climate Change Bill, formally known as American Clean Energy and Security Act (ACES) H.R.2454 passed its first major hurdle, being approved by the House Committee on Energy and Commerce (May 20 2009).

 

The House bill is nearly 1000 pages in length, was described by one critic, Roger Pielke Jr of the Prometheus Institute as a “massively complex, sprawling and confusing piece of legislation.”   

 

The Committee vote in favour was 33 to 25. Only one Republican Party member, Mary Bono Mack of Calif. voted for the bill, with other minority party representatives solidly voting against. Republicans put up an almost endless stream of amendments, the effect of which would have destroyed the Bill. But fortunately their steamroller impact was brushed aside by the majority Democrats, who stood firm.

 

The Bill would provide for:

Ø      15 per cent renewal energy target by 2020.

Ø      17 per cent reduction in GHG (greenhouse gases) from 2005 levels by 2020.

Ø      42 per cent reduction in GHG from 2005 levels by 2030.

Ø      80 per cent reduction in GHG from 2005 levels by 2050.

 

The Bill goes to the floor of the House of Representatives in September, or possibly as early as June, for a vote to approve the measure. By this time, The Senate version of the climate change bill being determined will then be reconciled with the House version.

 

Currently, time is on the side of the Democrats, as they have an effective 59 votes in the Senate in a chamber of 100 Senators. This is made up of 57 Democrats, including the recently converted Democrat Arlen Specter, who changed parties. The majority also has the support of the Independent Democrat Joe Lieberman and the Independent Bernard Sanders.

 

The legislative clock will change dramatically depending on the outcome of a court case over the disputed election result in Minnesota. Democrat Al Franken appears to have won over Republican Norm Coleman, and the local media thinks the Democrat will get the Court’s nod. In which case, the majority party will be able to count on 60 votes in the Senate for climate change.

 

If the court’s decision goes to the Republican Coleman, the minority party will have the trigger to delay the climate change bill indefinitely. This is due to the time honoured filibuster tradition, which means that a senator can speak for as long as he or she can stand upright and continue to talk, unless a majority can muster 60 votes (three fifths of the chamber vote) and overcome the opposition.

 

The reality is that the Republicans will do anything they can to get the legislation defeated or delayed.

 

The extreme purists on the left, the tree hugging environmentalists, including Greenpeace won’t have a bar of the Waxman-Markey bill, because it gives too much away in pollution permits and extensive use of international and domestic offsets.

 

But the moderates say that is the price to pay for getting the legislative changes needed in Congress to give the Obama Administration a realistic legislative commitment to carbon pollution reduction, particularly in the December round of the UN Climate Change conference in Copenhagen.

 

Originally Al Gore, the Nobel Peace Prize recipient and former Vice President, now a roving ambassador for clean energy, along with other climate change advocates, wanted a carbon tax instead of the more complicated cap and trade system. But in the interests of forming an international agreement with the Europeans and hopefully other nations, Gore agreed to the cap and trade provisions.

 

In order to get the public onside, Al Gore and his two grassroots groups of volunteers in the Climate Project, and its partner association, the Alliance for Climate Protection, with what Grist calls “multi hundred million dollar campaigns” will be getting behind the Democrat legislation.

 

The US EPA (Environment Protection Agency) will design and organise the running of the auctions, which will begin by 2012. Initially, the cap and trade auctions will apply to only 15 per cent of the total allowances needed to meet the targets. Auction revenues will be allocated to low and moderate income families, as compensation for the higher energy prices inevitable under the scheme.

 

The EPA will allocate 85 per cent of the pollution allowances on a free basis to the following:

Ø      30 per cent to electric distribution companies –allocations to be updated in 2013.

Ø      9 per cent to gas distribution companies.

Ø      5-10 per cent (declines over time) to states to fund renewables and energy efficiency.

Ø      15 per cent to energy intensive industries- paper, steel, cement etc.

Ø      2-5 per cent for CCS (carbon capture and storage) applications.

Ø      2 per cent to oil refineries.

Ø      Balance to other interests.

 

The free basis of allowances generally last until the mid 2020s, at which time they phase out between 2026 and 2030, when the price of carbon permits is expected to rise faster.

 

The American Energy and Security Bill contains provisions similar to the (CDM) Clean Development Mechanism of the Kyoto Protocol.  Energy Intensive companies covered by the legislation, including utilities with power plants, oil refineries, aluminium producers etc are allowed to use up to a total of one billion tons of international emissions reductions, that is the offsets, to be used each year instead of necessarily reducing their own domestic emissions.

 

This will enable heavy emitters to delay the time before large scale costly pollution control equipment will have to be installed in their domestic operations. This explains why large energy intensive companies, such as Alcoa, with extensive operations in developing countries, are understandably supporters of the legislation, because they have a lot to gain from it.

 

The Bill also allows up to one billion tons of additional offsets each year, sourced from  domestic industries, such as agriculture and forestry, which do not fall under the pollution cap. If suitable supplies of domestic emissions offsets are unavailable, the limit on the use of international offsets may be raised to 1.5 billion tons annually at the discretion of the EPA Administrator.

 

 

 

 

 

 

 

Posted under Carbon Abatement Scheme, Climate Change, Renewable Energies