Major Breakthroughs Welcomed On Waxman-Markey ACES Bill

May 13: Following yesterday's official announcement that the full Committee on Energy and Commerce will begin formal markup of the American Clean Energy and Security Act of 2009 (ACES) bill on Monday, May 18, the Committee released details of an agreement on a Combined Efficiency and Renewable Electricity Standard (RES); an agreement on allocation of allowances to the automobile industry; and an agreement on a major provision for the allocation of allowances to major energy-intensive, trade-exposed industries.

Following the announcement of the agreements House Speaker Nancy Pelosi (D-CA) issued a statement saying, “I commend all the Members of the House Energy and Commerce Committee who have been working in good faith to find the first meaningful common ground on this landmark legislative effort to create millions of clean energy American jobs. Chairman Waxman and Chairman Markey have led this effort and have shown, with the diversity on their committee, that this Congress can craft national legislation that creates millions of jobs, puts us on a path toward energy independence, reduces the pollution that creates catastrophic climate change, and recognizes the regional differences that give this country its character and will provide a strong and diverse foundation for economic recovery. . .

“This bill will create entire new industries in the United States -- while preserving the manufacturing base that has been the foundation of our economy, helping industries such as steel, glass, and cement remain competitive in the global marketplace, and pioneering cleaner coal technologies for use here and around the world. This bill will strengthen our national security and make America a strong world leader in the new technologies to fight climate change. Perhaps most importantly, this bill makes sure that hard-working Americans reap the rewards of a clean energy economy, instead of paying the price.”

Representatives Henry Waxman, Edward Markey (D-MA), John Dingell (D-MI), Rick Boucher (D-VA), Bart Gordon (D-TN), and Mike Doyle (D-PA) released the details of the agreement on a Combined Efficiency and RES. The agreement provides for a combined 20% renewable energy and energy efficiency standard by 2020. By 2020, utilities would be required to obtain 15% of their electricity from renewable energy sources and demonstrate annual electricity savings of 5% from energy efficiency measures. If the governor of a state determines that utilities in the state cannot meet the 15% renewable requirement, the governor may reduce the renewable requirement to 12% and increase the efficiency requirement to 8%.

Representatives Waxman, Markey, and Dingell released the details of the agreement on allocation of allowances to the automobile industry. Under the agreement, the automobile industries will be provided incentives to make electric and advanced technology vehicles. The industry will receive 3% of allowances from 2012 through 2017, and after that will receive 1% of allowances through 2025.

Representatives Waxman, Markey, Doyle, and Jay Inslee (D-WA) released the details of the agreement on a major provision for the allocation of allowances to major energy-intensive, trade-exposed industries. Under the agreement, energy-intensive industries that compete in global markets will be provided incentives to improve their energy efficiency, as well as assistance to address the costs of transitioning to a clean energy economy. The incentives will be based on the amount of domestic production. Under the agreement: 15% of allowances in 2014 will be distributed to U.S. manufacturers that are in energy-intensive, trade-exposed industries; Manufacturers will receive allowances based on the average carbon emissions from the sector, scaled by the manufacturer's U.S. production; and to provide adequate transition time, the industries will receive allowances through 2025, at which time the President will determine whether they are still needed.

The announcement of the markup meeting and the agreements reached was also welcomed by the President. At the daily White House press briefing, press secretary Robert Gibbs responded to questions regarding the what was called, a "pretty substantial watering down of what the President wanted" in a bill and what the Democrats on the Committee had agreed to. Gibbs said, ". . .an overall emission target for 2050 is what the President campaigned on. Some of the intermediate standards for -- I think is it 2020 or 2025, the target instead of a 20 percent reduction below the 2005 levels is a 17 percent reduction. . . There's some slightly smaller targets in a renewable electricity standard, but . . . I think we would argue that while we may have intermediate hurdles, different slight changes in the hurdles along the path, we're addressing the need to do something about harmful greenhouse gas emissions; that we are incentivizing the creation of clean-energy jobs to meet both those emission targets as well as that renewable energy standard or electricity standard target.

"And finally, we're creating a market incentive to deal with pollution by setting that standard at a certain level and decreasing that standard so that the market can decide the actions that individual companies and businesses might take to deal with those changing standards. . . "

On a question about free allowances as opposed to auctioning them, Gibbs responded, "I think if this week for energy independence represents the clearing of a fairly large hurdle in getting a bill through committee and getting the House of Representatives on its way to getting something through to the Senate to the point where the President can sign a bill into law that creates a market incentive to create clean-energy jobs, a market incentive to reduce the amount of greenhouse gas we emit, and puts us a path toward energy independence, the President will find that to be a great success even if there are some slight changes in what he campaigned on. . . I think that represents quite a change in the way this debate has been conducted. And again, if we can look back at this being the beginning of something that we get on down the road, I think the President will believe it to be a tremendous success."

Access a release from Speaker Pelosi (click here). Access a statement and further details on the Combined Efficiency & RES agreement (click here). Access a statement and further details on the auto industry allowances agreement (click here). Access a statement and further details on the trade-exposed industries agreement (click here). Access the transcript of the White House press briefing (click here).