Publications

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By a vote of 219 to 212, the US House of Representatives has passed the American Clean Energy and Security Act (H.R. 2454) (ACES), with 44 Democrats voting against the bill and only 8 Republicans voting with the majority.

As both an energy bill as well as a climate change bill, ACES would dramatically alter the US economy by:

• Requiring a 17 percent reduction in carbon emissions from major US sources by 2020 and over 80 percent by 2050, as compared to 2005 levels, through a cap-and-trade program that allows carbon allowances to be bought and sold among eligible parties;
• Requiring electric utilities to meet 20 percent of their electricity demand through renewable energy sources and energy efficiency by 2020;
• Mandating new energy-saving standards for buildings, appliances and industry; and
• Imposing tighter performance standards on new coal-fired power plants and providing significant funding for the development of carbon capture technology for these plants.

The bill, which has now moved to the Senate for consideration and, most likely, amendment, contains several controversial provisions:

• Coal – Performance standards would be imposed on new coal-fired power plants. Industry considers these proposals extremely onerous and believes that such standards could stop the construction of new coal-fired power plants.
• Competitiveness – Beginning in 2020, a border-adjustment charge will attach to energy-intensive goods imported from countries with less stringent greenhouse gas emission standards. This has prompted critics to characterize the bill as protectionist.
• Allowance allocations – Free allocations of allowances are granted to particular industries, which are considered by some to represent a disproportionate allocation.

Senate May Have Floor Debate in the Fall

It is not clear what the successful House vote means for the bill’s chances in the Senate. Senator Barbara Boxer, chair of the Environment and Public Works Committee, has said she would like to mark up the bill in committee before the end of July. And Senate leadership has indicated that the bill will likely reach the floor of the Senate in the fall, at the earliest. Republicans question whether there will be significant consensus in the Senate even then. The Senate bill is expected to have key differences from the House version and, assuming the bill passes the Senate, reconciliation of the competing bills is likely to be difficult and time consuming.

Despite the expected opposition, climate and energy legislation remain a priority of the Obama Administration, and we can expect to see continued attention on this legislation by the executive and legislative branches throughout 2009 and 2010.