Major Energy-Related Legislation Introduced in U.S. House

The introduction yesterday of "The American Clean Energy and Security Act of 2009" marks the official beginning of Congressional consideration of issues ranging from encouraging clean energy development to establishing a cap-and-trade system for greenhouse gas emissions.

The measure establishes a particularly important starting place since it was drafted by two key members of the U.S. House of Representatives, Henry Waxman (D-Cal), chairman of the powerful House Energy and Commerce Committee, and Edward Markey (D-Mass), chairman of the Committee's Energy and Environment Subcommittee. Both congressmen are enthusiastic supporters of a cap-and-trade system.

The Act, which totals more than 600 pages, contains four titles:

• Title I: Clean Energy
• Title II: Energy Efficiency
• Title III: Reducing Global Warming Pollution Through a Cap-and-Trade System
• Title IV: Transitioning for a Clean Energy Economy

Among other things, the Act calls for:

• Retail energy suppliers to generate 25% of their electricity from renewables by 2025
• Establishment of a cap-and-trade system for electric utilities, oil companies, large industrial sources, and other entities that are responsible for 85% of the country's greenhouse gas emissions
• The cap-and-trade system will reduce the number of emissions "allowances" issued each year to meet a combined target of 20% below 2005 levels in 2020 and 42% below 2005 levels in 2030

The importance of this measure cannot be understated since it reflects the House leadership's view of how a total energy package should be implemented.

On the other hand, the House Republican leader, John Boehner (R-Ohio), was quick to describe the bill as "the Democrats' national 'cap and trade' energy tax legislation." However, the reality is that with a big Democratic majority in the House whatever the House leadership wants is likely to make its way into the final bill passed in the House. When the measure moves to the Senate, it may be tougher sledding. Stay tuned...

More U.S. Nuclear Power on Deck?

As the U.S. government moves closer to some type of carbon management regime, one industry player -- nuclear power generators -- is very interested in the eventual outcome.  For example, J. Wayne Leonard, Chairman and CEO of Entergy Corp., the number two generator of nuclear power in the country, is fully in support of a cap and trade or tax on carbon emissions.

In a recent Wall Street Journal interview ("The Carbon Cap Dilemma," March 28, 2009), Mr. Leonard says that America sees itself "as a market economy, and that's created great wealth for society over time.  But we're a market economy that doesn't have price signals for carbon dioxide."  As such, Mr. Leonard supports the Obama Administration's goal of an 80 percent reduction in carbon emissions by 2050.

The catch, and not surprisingly since this was published in the quintessential pro-business Wall Street Journal, of course is what to do with the waste generated by nuclear power plants.  Are there lessons that could be learned from France, where nearly 80 percent of electricity is generated from nuclear?  Perhaps so, but it's worth noting that in France the government largely owns and operates the nuclear plants while in the U.S. the private sector has taken on that role.  As a Frenchman once said, "We're comfortable with the nuclear industry since the government runs it and what benefit would the government possibly have from cutting corners.  In America, with your economic system, private businesses are constantly looking for ways to lower their costs and in some instances this means cutting safety-related corner."

Stay tuned. The role of nuclear in a carbon managed economy is only beginning to be debated.      

In Today's News...

For those interested in the matter of environmental justice:
Naomi Schaefer Riley, "How Can Greens Make Themselves Less White?" The Wall Street Journal, March 20, 2009

And for those interested in the concept of "clean coal technology:"
Jeffrey Ball, "Coal Hard Facts: Cleaning it Won't be Dirt Cheap," The Wall Street Journal, March 20, 2009

Also, the greenhouse gas-related challenges ahead for the Obama Administration: "Sins of emission: Barack Obama is keen to curb greenhouse-gas emissions with a cap-and-trade scheme. Can Congress come round to his way of thinking," The Economist, March 14-20, 2009