Energy and Climate Bill Advances

Congress is moving forward on legislation that would address both energy efficiency and climate change in a single bill, creating requirements for the use of renewable energy and introducing a cap on carbon dioxide emissions. A draft of the American Clean Energy and Security Act of 2009 was released at the end of March. Congressman Edward Markey from Massachusetts, one of the sponsors of the bill, said that hearings on the legislation will begin next Tuesday to help shape the bill into its final form.

Representatives from the Obama administration and one of the authors of the draft bill discussed it at a forum held at MIT on Monday. They said that two things have brought a sense of added urgency to the process. The first is that the Environmental Protection Agency (EPA) is moving toward regulating carbon dioxide emissions even if Congress does not act. The second is the United Nations Conference on Climate Change, which will be held in Copenhagen in December. At the event, countries will meet to negotiate a new global climate-change treaty. Congressional leaders hope to have the bill passed by the House of Representatives by August, and have the finished version ready for the president to sign before the conference. President Obama has said that he hopes to make the United States a leader in addressing climate change at the meeting.

“The positions we can take at Copenhagen will be driven by what we’re prepared to do domestically,” said Carol Browner, who oversees policy on energy and climate change across federal agencies as a special assistant to the president, at the MIT forum. The bill and the hearings in the next weeks are “absolutely essential to our position and what we ultimately hope to achieve.”

In its current form, the bill includes a renewable-energy standard, which would require states to produce one-quarter of their energy from sources such as solar panels or wind turbines by 2025. It also includes incentives for developing technologies for capturing and permanently storing carbon dioxide, improving the electrical grid, and reducing overall energy consumption. Furthermore, the bill outlines a cap-and-trade system for reducing carbon dioxide emissions from major industries by 83 percent by 2050, compared with 2005 levels. Under the cap-and-trade system, a set number of allowances for carbon dioxide emissions will be issued for each year. Companies that emit more than their allowance will need to buy more from companies that emit less than their allowance.

One key element conspicuously absent from the bill, however, is a description of how the allowances will be distributed. President Obama has said that he supports a system where 100 percent of the allowances are auctioned off to polluters to ensure that each company pays for all its carbon emissions. But many in Congress and industry are concerned that the cost of these permits could hurt the steel and paper industries, among others, by putting them at a disadvantage compared with countries that don’t regulate carbon dioxide emissions. At the MIT forum, Congressman Markey said that to protect these industries, some of the allowances will be given away rather than auctioned off.

Eventually, he said, the goal is to auction off all of the allowances, but achieving this could first require ensuring that China and India are also limiting carbon dioxide emissions. Other participants in the forum emphasized that bringing technologies for reducing emissions to these countries could require research and development to lower the cost of renewable energy and of capturing and storing carbon dioxide.

Cap-and-trade legislation has failed in the past. But this year, the possibility of the EPA regulating carbon emissions could push legislators to pass a bill that would give them more control over how such emissions are regulated, Markey said. In 2007, a Supreme Court decision paved the way for the EPA to regulate greenhouse gases. “The only way to avoid that is to have Congress act,” he said. “Industries across the country will have to gauge how lucky they feel, if they kill the legislation, in terms of how the EPA will treat them.”