Bill Making Big Inroads on Free Emissions Credits Passes

By Published On: May 22, 2009

The House Energy & Commerce Committee passed on a 33-26 vote late May 21 comprehensive energy legislation. The bill, H.R. 2454, which includes elements of a cap-and trade market, went through a long, drawn-out committee markup session May 18-21. During that time, the committee entertained hundreds of amendments to the 937-page measure, known as The American Clean Energy & Security Act. The biggest issue appeared to be whether to auction emissions credits expected to be traded in a carbon cap-and-trade market, in which case money would be raised for government’s support of lower emissions. President Obama’s administration supported that approach. States with coal interests and heavy manufacturing supported the alternative of issuing credits for free. Free credits won the day. Over 20 years, up to 85 percent of credits could be given away. “The bill takes the right approach by requiring that emissions allowances be allocated instead of auctioned,” Ted Craver, Edison International chair, stated May 20. Southern California Edison’s parent company, Edison International, owns several coal plants, including the 2,000 MW Homer City plant in Indiana. The basic bill calls for utilities across the nation to include renewable power in their energy portfolio. The requirement begins with 6 percent in 2012 and marches up to 20 percent in 2020. If utilities choose to include efficiency as a portion of compliance, they are required to demonstrate achievement “relative to business-as-usual projections,” according to the committee. In an effort to reduce the nation’s contribution to global warming, the legislation targets a national greenhouse gas emissions reduction to 97 percent of the 2005 level in 2012 and then ratchets down to 17 percent of that level by 2050. Other components of the proposed Act address carbon capture and sequestration, transportation fuels, peak power reduction, and establishing an Offset Integrity Advisory Board--along with requiring the U.S. Environmental Protection Agency to create a greenhouse gas offset program. An example of the barrage of amendments was one that would have undermined the global warming portion of the bill. It was denied 19-30 May 21. The proposal, by Representative George Radanovich (R-CA) would have provided an “off ramp” if the price of electricity increased 100 percent over 2009 rates. The Fresno politician based his plan on the current cost of energy for manufacturers and the California Manufacturers & Technology Association’s claim that the state’s greenhouse gas reduction law, AB 32, is causing business flight from California. The amendment was among many aimed at deleting that portion of the bill in certain scenarios. “You’re trying to put out all sorts of awful situations,” said Representative Henry Waxman (D-CA), panel chair. “I don’t want an automatic off ramp. We don’t anticipate rates increasing.” Among the amendments passed was a California change that included allowing credits for cogeneration facilities. Proposed by Representative Jerry McNerney (D-CA), it allows free emissions allowances for cogeneration. Meanwhile, the Senate Committee on Energy & Natural Resources marked up its energy legislation May 21. The 21st Century Energy Technology & Deployment Act, S. 949, includes a provision to require a 3 percent renewable portfolio component in 2011, rising to a 15 percent in 2021. Efficiency measures would contribute to that mandate. A bid to strike that part of the bill lost on a 9-to-13 vote. Also included in the Senate bill is a provision to study alternates for storing high-level radioactive waste from nuclear power plants. As the proposed site at Yucca Mountain, Nevada, remains stalled, this part of the legislation would initiate studies for another site, or sites, for burying the nation’s nuclear waste.

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