Block’s Indicator of Sustainable Growth

by Ray Block

There’s many a slip between the cup and lip, so says the old proverb. Friday June 26’s vote in the US House of Representatives for ACES- American Clean Energy and Security was very close.

The Congress Daily had suggested a photo finish, which finished up at 219 in favour to 212 against. To get the required numbers, the bill needed 218 votes, so there wasn’t much in it.

Henry Waxman, chairman of the House Energy and Commerce Committee, which with subcommittee chairman Ed Markey, described the  measure as “this landmark bill will revitalize our economy by creating millions of new jobs, increase our national security by reducing  our dependence on foreign oil, and preserve our planet by reducing the pollution that causes global warming.”

Now the hard bargaining commences all over again, with the Senate intending to move forward with their own bill going through the committee stages in September for a floor vote in October. Hopefully, the conference process of reconciling the two houses’ bills will be a short one, and the final measure will emerge for presentation at Copenhagen in December.

To move things forward at a faster rate, Senator Barbara Boxer, the California Democrat who is chairman of the Senate Environmental and Public Works Committee said that her committee will not “differ that much” from the ACES legislation, and that she will “take into account” many of the compromises made to pass the bill.

ACES in its House’s version is weighty 1,201 pages, and there’s a further 49 page amendment from the Agriculture Committee. The vote was on party lines, with Republicans opposed and some Democrats defecting.

The main provisions of the legislation are:

Ø      Requires electric utilities to meet 20 per cent of their electricity demand through renewable energy sources and energy efficiency by 2020.

Ø      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).

Ø      Mandates new energy saving standards for buildings, appliances, and industry.

Ø      Reduces carbon emissions from major US sources by 17 per cent by 2025, and over 80 per cent by 2050 compared with 2005 levels. Complementary measures in the legislation, such as investments in preventing tropical deforestation, will achieve significant additional reductions in carbon emissions.

Ø      Protects consumers from energy price increases. According to recent analyses from the Congressional Budget Office and Environmental Protection Agency, the legislation will cost each household less than 50 cents per day in 2020 (not including energy efficiency savings).

Fiona Harvey, the environmental writer in the Financial Times (June 26 2009) said the heavily modified bill now includes “major sops” to farmers, including agricultural credits based on the sequestration of carbon in soils.

 “Such credits are notoriously hard to do properly. It is extremely difficult to quantify how much carbon is being released from soils, to verify that farmers have followed the correct methods to conserve carbon dioxide in the soils, and to police the award of the credits.”

Mitchell Feierstein, the CEO of London based Glacier Environmental Funds, which specialises in buying and selling carbon credits, is quoted as saying “it’s crucial to establish credible base lines and robust methodologies ensuring any credits generated are quantifiable, real, permanent, verified and certified by an independent third party, are given unique serial numbers and stored in a credible custodial registry maintained by a creditworthy counterparty. These criteria are imperative and not flexible.”

Otherwise, you are creating a way for farmers to arbitrage the system “and/ or opening the door to green wash.”