"Landmark" Cap-and-Trade Bill Passes in U.S. House Energy and Committee

The U.S. House Energy and Commerce Committee yesterday approved landmark legislation that, if enacted by Congress and signed into law by President Barack Obama, will for the first time in the U.S. establish a cost for emitting carbon and other greenhouse gases

H.R. 2454, "The American Clean Energy and Security Act" as amended, was passed by a vote of 33 to 25. According to the Democratically controlled committee, "This legislation is a comprehensive approach to America's energy policy that charts a new course towards a clean energy economy."

According to a story in today's Wall Street Journal ("House Panel Clears Plan to Cut Greenhouse Gases," May 22, 2009), the approval of the proposal bolsters "prospects that the government will put a price on carbon for the first time [thus] portending a major shift in how the U.S. uses energy." The European Union has had similar legislation in place since January 1, 2005, and thus the U.S. efforts in this regard are several years behind what the EU is already doing.

The bill as amended would cut U.S. GHG emissions about 17 percent below 2005 levels by 2020 and by 80 percent by 2050. It also calls for about 85 percent of the emissions allowances to be given way for free (as opposed to auctioned off) to energy intensive sectors in the economy. President Obama has called for complete auctioning of the allowances, but clearly that is not going to happen and it now appears the president is flexible on this issue. The remaining 15 percent of allowances would be auctioned at a starting price of $10 per metric ton.

Diane Cappiello, national environment reporter for the Associated Press, explained on the NewsHour tonight, more about why such a large percentage of allowances will be distributed for free: 

"This bill would actually give 85 percent of those credits away for free to a variety of industries. And they did that for the sole purpose [of] assuaging some of the concerns of moderate Democrats who say, hey, listen the coal plants in my state are going to have a really hard time getting there if they have to buy these [credits] and also reduce emissions.  So that's exactly why it was done."

Despite passing in the House Committee, formidable challenges lie ahead for any eventual passage. The challenge lies not so much in the U.S. House where the Democratic majority is likely to pass the bill this summer but in the U.S. Senate. Despite a big Democratic majority in the Senate, bill advocates will need 60 votes in favor of the measure in order to avoid a filibuster. The bill does not lend itself to strictly "party-line" thinking, since Democratic senators from "rust belt" states are likely to want even more concessions before approving the measure.

A good overview of the bill can be found by clicking here, "House Panel Approves Climate Bill," (NPR Morning Edition, May 22, 2009).

However, it is way too early for green advocates to cheer since yesterday also brought news that the Chinese government is calling for far more aggressive greenhouse gas emissions cuts than either the American bill or EU law has called for. The Chinese have proposed that western nations cut their emissions by 40 percent by 2020 with a baseline of 1990. Washington and Brussels are not likely to agree with this proposition.