Implications
The draft of a comprehensive energy U.S. Congressional bill entitled the “The American Clean Energy and Security Act of 2009″ has been released. A bill of this nature is necessary for long-term investment in American clean energy and energy independence. This industry has been highly reliant on short-term subsidies and temporary incentives and requires significant government support to overcome current cost barriers and to stimulate confidence from critical financiers, which have pulled back from clean energy companies during the global recession.
Analysis
Chairman Henry A. Waxman of the Energy and Commerce Committee and Chairman Edward J. Markey of the Energy and Environment Subcommittee recently released the draft of a comprehensive energy U.S. Congressional bill entitled the “The American Clean Energy and Security Act of 2009 (ACES).” The legislation is expected to create millions of new clean energy jobs, save consumers hundreds of billions of dollars in energy costs, improve America’s energy independence, and significantly reduce the nation’s carbon output associated with global warming pollution. This bill is planned to accompany the $467 million from the American Reinvestment and Recovery Act that will be allocated to expand development, deployment and use of geothermal ($350 million) and solar energy ($117 million) throughout the United States.
Sponsors
Sponsors
Sponsors
The legislation has four subsections including: (1) “clean energy” focused on renewable sources of energy and carbon capture and sequestration technologies, low-carbon transportation fuels such as biodiesel, electric and/or hybrid vehicles, and the smart grid and electricity transmission; (2) “energy efficiency” emphasizing energy efficiency across all sectors of the economy, including buildings, appliances, transportation, and industry; (3) “global warming” focused on limits for the emissions of heat-trapping pollutants; and (4) “economic transitioning” that protects U.S. consumers and industry and promotes green jobs, during the transition to a clean energy economy.
The ACES bill also includes milestones such as reducing emissions in the United States by 80 percent in the next 50 years. This bill, H.R. 2454, is dedicated to creating clean energy jobs and generating energy independence and a clean energy economy, which is reiterated as a national security issue, especially as oil prices climb towards previous record highs. Many new guidelines and programs will be enacted to facilitate accomplishing this green agenda.
The ACES bill will be setting standards for electricity suppliers to dramatically increase the percentage of renewable energy utilized by customers; thereby reducing the amount of electricity produced by fossil fuel combustion. Moreover, the text of the bill requires that, starting in 2012, electricity suppliers would be expected to achieve a “total annual energy savings” of 6 percent. The savings will be supplied in the form of renewable energy credits, which ultimately will require electrical producers to invest in renewable energy. By 2021 through 2039, providers are expected to achieve 20 percent reductions. These credits will be mainly delegated to renewable energy sources such as: wind, solar, and hydro power; however biodiesel will be considered, along with recovered landfill or mine gas, fuel cells, and geothermal power.
Furthermore, the bill also encourages the establishment of a Carbon Storage Research Corporation, which would be an organization of private concerns established to support carbon sequestration research. An additional function of this board would be to establish a system for trading carbon credits, also known as “cap and trade.” One key issue that the discussion draft does not address is how to allocate the tradable carbon emission allowances for specific companies, which restrict the amount of global warming pollution emitted by electric utilities, oil companies, and other sources. This issue will be addressed through discussions among U.S. House Committee members.
Interestingly enough, the authors of this bill have not ignored the issue of land degradation, which is a major concern of environmentalists. The development of biomass for biofuels and the building of large-scale solar farms may cause deforestation and other negative impacts on land use; thus the bill provides renewable energy credits for land conservation.
This is an ambitious, comprehensive bill that includes environmental impact for the transition to new clean energy technologies. Carbon trading and renewable energy credits will aid in facilitating and monitoring the goals set forth by the ACES bill. It will enhance America’s position in the formerly booming solar industry, as it currently ranks only fourth in solar energy capacity.
A bill of this nature is necessary for long-term investment in clean energy and energy independence. In addition, the clean energy industry has been highly reliant on short-term subsidies and temporary incentives and requires significant government support to overcome current cost barriers and to stimulate confidence from critical financiers, which have pulled back from clean energy companies during the global recession.
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.