US sets the standard with Federal renewable electricity Bill

Don C. Smith

For the first time in history, a US Congressional committee has approved legislation that would establish a federal renewable electricity standard as well as a price for carbon emissions. Don C. Smith examines the Bill's most important provisions and assesses the reactions of the American renewables and energy efficiency communities towards the Bill.

The landmark American Clean Energy and Security Act, which if enacted would create a cap-and-trade system for greenhouse gas emissions, was passed in late May by the US House of Representatives Energy and Commerce Committee. Reaction to the Bill's passage through committee has been mixed. Some members of the renewable and energy efficiency industries are cautiously optimistic about the legislation, while others in the renewables policy community have expressed some measure of disappointment.

This legislation effectively means that after years of doing almost nothing to address global climate change, the United States may be poised to enact legislation that – while hardly perfect in the eyes of the renewables and energy efficiency sectors – at least confirms that the US is headed in the right direction.

The legislation, introduced by Congressmen Henry Waxman (California Democrat), and Edward Markey, (Massachusetts Democrat), made history when it was approved on a 33-26 vote in the House Energy and Commerce Committee. The vote, which was almost totally along party lines (with Democrats mostly voting in favour while all but one Republican voted against), was not exactly a surprise. But it did provide a preview of the legislative struggle that lies ahead for the measure.

At the outset, it is worth explaining the geographic make up of the House Energy and Commerce Committee. From a political perspective, it contains 36 Democrats and 23 Republicans. However, despite being chaired by the extremely “green” Congressman Waxman, the committee's membership includes a sizable number of Democrats from northern “rust belt” as well as southern states. These areas are largely dependent on coal-fired power and manufacturing facilities.

Over time, these Congressional members have not been particularly supportive of climate change legislation since they perceive it would hurt their constituents. Thus, in order to get the Bill “reported” out of the committee and to the floor of the House where it could be approved and sent to the US Senate, some changes to the Bill as introduced were expected. (It is worth noting that while there are other related Bills pending in the US Senate, none has yet made it through committee. Consequently, the focus of this column is the House Bill.)

As originally introduced, the Waxman-Markey Bill established a 25% renewable electricity standard (RES) by 2025. While calling for a cap-and-trade system for greenhouse gas emissions and an overall goal of reducing these emissions by 20 percent on 2005 levels by 2020 and 83 per cent by 2050, the Bill made no provision for whether the emissions allowances should be auctioned or given away or some combination of the two. The Waxman-Markey Bill, as introduced, enjoyed solid support from President Barack Obama.

Following committee amendments – mostly undertaken to assuage the rust belt and southern Democrats – the Bill as reported out of committee reduced the RES to 20 percent by 2025 as well as established that states can further reduce that number to 12 percent by means of energy efficiency-related projects. (States can have more aggressive targets than the federal measure, so in effect this Bill would establish a minimum nationwide RES.) It also reduced the greenhouse gas emissions target to 17 percent by 2020, left in place the 83 percent reduction goal by 2050, and handed out for free for the foreseeable future 85 percent of the emissions allowances.

How was the Bill received?

So was the final result – as reflected in committee passage – a victory, a disappointment, or something in between? Key industry groups have provided a lukewarm endorsement of the Bill's RES. The American Wind Energy Association said, “the US wind energy industry is pleased that Chairmen Waxman…prevented further weakening of the renewable electricity standard,” adding, “we look forward to working with the full House to enact an RES that will provide the certainty businesses need to invest in new factories, and ensure that the US does not cede manufacturing investment and jobs to other countries.”

On a slightly more positive note, the Solar Energy Industries Association said, “the House took a major step forward…in cutting pollution while putting our economy back on track,” while noting, “this Bill will invest in clean energy for the future, while creating jobs and fuelling investment in the solar industry.”

In commenting about the entire Bill, a spokesman for the World Resources Institute, a Washington, D.C.-based non partisan think-tank, said, “though the 2020 [emissions] target is slightly less stringent, the long-term targets are still intact setting the US on a pathway to cut emissions substantially from business as usual.” League of Conservation Voters' president Gene Karpinski said, “clearly, it's an unprecedented step forward in the critical effort to create millions of clean-energy jobs, reduce our dependence on oil and protect our planet from global warming pollution,” as reported by The New York Times.

On the other hand, Public Citizen, a consumer-oriented think-tank, characterised the Bill as “a disappointment” and said, “we strongly urge lawmakers to make major overhauls to this Bill or go back to the original climate change principles that Reps. Henry Waxman and Edward Markey distributed last year [and that were the basis of the original proposal].” A wide coalition of environmental campaigning groups – including Friends of the Earth and Greenpeace – were also critical of the Bill and asked, “who will benefit most from [the Bill]? Big business. Despite the best efforts of Chairman Waxman, the decision-making process was co-opted by oil and coal lobbyists determined to sustain our addiction to dirty fossil fuels.”

Bearing in mind the hopes of the renewables industry as well as the disappointments expressed by the policy community, is this a measure that merits support? An easy “ivory tower” conclusion is that the measure has been so watered down that Congress should abandon this Bill and start again. However, despite the good intentions of the policy community this may not be a realistic or wise path.

Who is to say that next year the political landscape will look more promising for passage of some improved measure? Typically the party of the president in power loses Congressional seats in off year elections, thus leaving the generally pro-RES Democrats with fewer seats than now. Moreover, it seems unlikely that Mr. Obama – who would have liked a stronger Bill but was agreeable to what was approved by the committee – will be more popular next year than he is this year.

An alternative is for the renewables community to pursue a stronger Bill through amendments made on the floor of the House. Preferably this would not have been necessary, but the reality of getting a Bill reported out of committee and onto the House floor is obviously not without its challenges. In this regard, many think that when the Bill is debated on the House floor, the votes will be available to pass a stronger measure.

Even after House floor action, however, the Bill will face considerable hurdles in the US Senate where 60 votes will be needed to avoid the procedural tactic known as “filibuster.” Consequently, while a majority of votes will move the measure through the House, a mere 41 senators can keep it from passing in the Senate. It is true that the Democrats have 59 of the Senate's 100 seats, but some of these Democrats represent rust belt and southern states. And as far as looking for Republican support, one would be better off looking for a rain forest in a desert. There are only two or three Republican senators who seem philosophically in tune with the Bill's objectives.

Observing legislation being made has been compared to watching sausage making, and this piece of legislation is no different. It is not perfect and it could be strengthened in many ways. However, aspirational goals need to be balanced with what is possible. For now, the Bill as written reflects what is possible and it is hardly perfect. Nevertheless, it is a start. And the only other real alternative is to do nothing, which would be an error of monumental proportions.

About the author
Don C. Smith is renewable energy focus' US correspondent. He serves as Director of the Environmental and Natural Resources Law & Policy graduate programme at the University of Denver Sturm College of Law, and as Editor in Chief of Utilities Policy, a peer-reviewed journal focusing on the performance and regulation of utilities. He can be reached on +1-303-8871-6052.


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