14th May 2009

Bridges Trade BioRes - Landmark US Climate Bill Set to Pass Key Committee Vote

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A major US climate change bill will pass its first hurdle on the way to becoming law by 22 May, according to the House Democrat who helped introduce the proposed legislation. “We will have the votes for passage of this bill next week,” Henry Waxman, Chair of the House Energy and Commerce Committee told reporters on 12 May.

But while the House Energy and Commerce Committee has enough Democrats on board to push one of the most significant US environment bills in decades through, Republicans say they will fight hard for amendments to mitigate the adverse economic impacts they say will likely arise from the bill.

The 648-page American Clean Energy and Security Act of 2009, introduced by Waxman and Edward Markey, who chairs the Energy and Environment Subcommittee, was praised by environmentalists for its aggressiveness when it was introduced on 31 March (see Bridges Trade BioRes, 3 April 2009, http://ictsd.net/i/news/biores/44634/). But after weeks of wrangling, the targets for renewable energy and cap-and-trade that exceeded President Barack Obama’s stated goals have been scaled back somewhat.

Initial draft scaled back

Initially, the Waxman-Markey bill aimed to reduce economy-wide greenhouse gas emissions by three percent below 2005 levels by 2012, 20 percent by 2020, 42 percent by 2030, and 83 percent by 2050. But domestic industry, such as the steel sector, has been outspoken on the issue, saying that their products would be undercut by foreign competitors who may not be subjected to the same environmental standards.

Initially, comments from Energy Secretary Stephen Chu at a House hearing in early March suggested that industry could be protected by a border tax or tariff on goods from countries such as China. But US Trade Representative Ron Kirk later downplayed this possibility in a letter to Republican Congressman Joe Barton (see Bridges Trade BioRes, 17 April 2009, http://ictsd.net/i/news/biores/45217/).

The draft bill also called for a national renewable portfolio standard, or RPS, which would have required electricity suppliers to generate six percent of their energy from clean sources by 2012, gradually increasing to 17.5 percent by 2020 and 25 percent by 2025. But the numbers met resistance from lobbyists and some politicians, who argued that certain states would have trouble conforming.

The plan primarily targets electric utilities, oil companies, and factories that together are responsible for 85 percent of US greenhouse gas emissions. Industry has been investing heavily in efforts to ‘green’ their image in the face of the pending legislation. The Guardian reports that the oil, gas, and coal industries boosted their lobbying budgets by as much as 50 percent, spending some US$44.5 million in the first quarter of 2009 alone.

This week, House Democrats reached a tentative agreement on both the greenhouse gas and renewable energy issues. New numbers call for a 17 percent reduction of greenhouse gas emissions from 2005 levels by 2020 - down from 20 percent, but still higher than Obama’s initial target of some 15 percent.

Renewable energy targets have dropped from 17.5 percent by 2020 to 15 percent. The 15 percent target will be combined with a requirement to boost energy efficiency by 5 percent, for a total of 20 percent. If certain states are able to show they lack access to renewable energy sources, they could be responsible for a target of only 12 percent with 8 percent efficiency gains for a total of 20 percent.

Republicans seek further amendments

But despite the scaled back numbers, Republicans are demanding further revisions. A chief opponent in the process has been senior Republican on the House panel Joe Barton, who claims that despite the fact that the House Energy and Commerce Committee is dominated by Democrats, not all of them fully support the Waxman-Markey plan.

Barton argues that the bill would be a bad move for the US economy as industry would be held back by higher operating costs. “We are not prepared to accept unilateral economic disarmament of the US economy, and cap-and-trade does that,” Barton told the Washington Post.

Waxman counters that because half of the carbon offset permits will initially be provided for free to sensitive industries, increased energy costs will be substantially offset.

Barton says he would like to see nuclear power and ‘clean coal’ included as acceptable alternative energy sources for electric utilities, rather than more traditional renewables like solar and wind energy. Republicans say they also plan to renew attempts to vastly expand offshore oil drilling and other domestic energy production initiative.

Republican Congressman Fred Upton says his party plans to target Democrat fence sitters as the vote approaches. “We’ll give swing Democrats lots of opportunities to improve the bill,” Upton said.

Still, if the tentative deal holds, passage of the bill through the Committee is likely and could take place before the country’s Memorial Day Weekend kicks off on 23 May. This would set the stage for a full House vote by early August, which is also likely to pass.

Nevertheless, more amendments are likely down the road as many observers have cautioned that Senate approval of the bill in its current state is unlikely.

World watching

Climate change negotiators around the world are watching US climate policy closely this year as they prepare for December’s UN Framework Convention on Climate Change (UNFCCC) conference in Copenhagen, Denmark.

Many countries, particularly in the developing world, have explicitly said they are waiting to see the Obama Administration’s cards before formulating their own position on a successor to the Kyoto Protocol, which is set to expire in 2012.

ICTSD Reporting; “US House Democrats Near Agreement On Climate Bill,” REUTERS, 14 May 2009; “Republicans push changes to U.S. climate bill,” WASHINGTON POST, 13 May 2009; “House Dems settle on 15% renewable energy target,” NEW YORK TIMES, 13 May 2009; “Round #1 Compromise on Climate Bill: Cut Clean Energy Requirements,” REUTERS, 13 May 2009; “Waxman Confident ‘Cap and Trade’ Will Pass Energy Committee by Memorial Day,” FOX NEWS, 12 May 2009.

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