Hill Heat

By SolveClimate’s David Sassoon.

America’s future climate law began working its way through Congress this week, rewritten with new details and changes that were negotiated to give the coal industry generous incentives and the regulatory certainty to compete for a place in the nation’s energy future.

Here’s how Rep. Rick Boucher of Virginia, a lead negotiator for coal state Democrats on the House Energy and Commerce Committee, described the deal they worked out:

I’ve been working extensively to fashion a controlled program that Congress can adopt which will preserve coal jobs, create the opportunity for increasing coal production and keep electricity rates in regions like Southwest Virginia affordable. The compromise that I have reached with Chairman Waxman achieves those goals.

Boucher and fellow coal state Democrats cut those deals with the bill’s authors, Reps. Henry Waxman and Ed Markey, with President Obama – a “clean coal” supporter – giving them a free hand to arrive at the formula that would secure the votes needed for passage.

Although the president called for a polluter-pays 100% auction of carbon allowances when he asked Congress for a climate law, the now 932-page American Clean Energy and Security Act of 2009 does the precise opposite: It contains a formula that gives most of the allowances to polluters for free – with about a third of them going to the coal-dominated power industry at no cost.

The free allocations were one major reason that Greenpeace withdrew support for the bill within hours of its introduction, but most of those in the climate community who have weighed in so far have been willing to swallow compromises that would have been unthinkable in January. Al Gore’s support for the bill remains undiminished. Paul Krugman at The New York Times summed up the prevailing attitude best:

The legislation now on the table isn’t the bill we’d ideally want, but it’s the bill we can get — and it’s vastly better than no bill at all.

As climate actors start wading further into the details of the bill’s provisions, however, they may find themselves hard pressed to justify passive acquiescence while enduring the certain further weakening of the bill on the Senate floor.

Ground zero of the contention centers around coal, an embattled industry which emerged from the negotiations with a surprisingly good deal. The bill contains performance standards for new coal plants that are weaker than those in the original Waxman-Markey discussion draft, funnels billions in funds and incentives to the development of “clean coal,” and strips EPA of authority to proceed with development of regulations for smokestack CO2 produced by the industry.

Further, although the bill imposes a gradual economy-wide emissions cap, the penalty for non-compliance or failure to achieve target reductions would amount to no more than a slap on the wrist, given the low price permits are expected to fetch on the market for some time.

Mainstream environmental groups, however, are focused on what they would get in exchange — the holy grail of their climate campaign — the establishment of an economy-wide cap-and-trade system whose efficacy they believe can be increased over time. The bill also legislates valuable and groundbreaking support for clean energy, energy efficiency and green jobs, using federal law to erect economic pillars vital for eventually transitioning to a clean energy economy.

They seem satisfied even though the new bill also reduced the proposed national standard on renewable energy from 25% to 20%, compared to the first draft, diminishing its potential competitive pressure on coal.

All sides are now wading through the details of the massive bill, spinning messages and planning strategies for the political battle that is likely to continue for the duration of the year. It is unlikely that the parameters of coal’s good deal will substantially change during this week’s committee mark-up, but in the coming months, the future of coal will be a major topic of concern.

The continued growth and survival of coal brings three strikes against the bill in every climate campaigners handbook: It’s the source of the lion’s share of global CO2 emissions, it creates a weak negotiating position when across the table from China, and it fails to show the kind of leadership the world will want to see from the U.S. in Copenhagen.

Weakened Standards and Large Bonuses

The discussion draft of the Waxman-Markey bill contained performance standards for new coal plants that had some real bite. For starters, the draft stipulated that after January 1, 2015, no coal plants that emitted more than 1,100 pounds of CO2 per megawatt-hour would be permitted for construction. That’s a natural gas standard of performance, something that no coal plant can currently do, so it looked as if after 2015, no coal plants could be built unless they could capture and store their emissions. But the current bill has relaxed the standard in both definition and start date (see page 91).

Utilities may build coal plants permitted between now and 2020, as long as by 2025, these plants “achieve an emission limit that is a 50 percent reduction in emissions of the carbon dioxide produced by the unit.” The language stipulating specific rate of emissions per megawatt-hour has been removed.

At the heart of the standard is the assumption that carbon capture and sequestration technology will be available for commercial deployment so that industry can comply. The bill is silent on what happens if CCS technology is not ready or proves unworkable.

It is possible that these new coal plants would be permitted to continue operations through a relaxation of the legal standard, since EPA even now cannot enforce a technology standard that cannot be met. Companies in the UK are already negotiating for an opt-out clause there if CCS is not ready in time.

Following weeks of intense negotiations with industry-friendly Democrats on the House Energy and Commerce Committee, chair Henry Waxman (D-Calif.) and energy and environment subcommittee chair Edward Markey (D-Mass.) have released the complete text of their comprehensive energy and climate legislation. The American Clean Energy and Security Act (H.R. 2454) now runs 927 pages.

Download the American Clean Energy and Security Act.

From the Wonk Room.

The Hill reports that “House Energy and Commerce Committee leaders on Tuesday night announced a new agreement on a contentious climate change bill, assuaging the concerns of enough committee Democrats to get the bill out of committee.”

Former President Jimmy Carter “who presided over the oil crisis of 1979, told Congress Tuesday that America’s energy challenges are deeper and more urgent today than when he was president, but the solutions are the same.”

The Southern Alliance for Clean Energy has found that a “proposed energy efficiency goal would save Georgia $6.3 billion in costs and create 9,000 jobs over the next decade.”

From the Wonk Room.

According to Rep. Mike Doyle (D-PA), corporations would be subsidized for most of their global warming pollution for more than ten years, under terms being negotiated for the climate and energy bill being drafted by the House Energy and Commerce Committee. If this is true, the Waxman-Markey American Clean Energy and Security Act would violate a pledge by President Obama to fund tax cuts for working families through carbon market revenues and runs the risk of windfall profits for covered emitters. Doyle said most of the pollution permits created for a cap-and-trade system to reduce greenhouse gases would be given away:

While the exact numbers were still in flux, Doyle said, “The majority of the permits will be allocated (given away) at first.”

Asked what percentage would be sold to utilities, manufacturers and other firms, Doyle responded, “Not a big number initially…in the first 10 to 15 years.”

The Center for American Progress “supports auctioning 100 percent of the greenhouse gas emission permits from day one under a cap-and-trade program” and using the auction revenues to assist workers and industries to make the transition to a low-carbon economy:

This would include supporting new investments in green technology and energy efficiency; sheltering American households from any economic dislocations due to shifting energy prices; alleviating higher costs for energy-intensive industries; adapting to some of the effects of global warming that we are already experiencing globally; and creating good, “green jobs” and more vibrant, healthier communities in this process. A 100 percent auction will ensure that large polluters, and not the hardworking Americans least able to foot the bill, are financing the investments necessary to carry out these vital public projects.

Without any climate policy, the public is subsidizing all the present and future costs of climate change. President Obama has previously expressed his willingness to be flexible on the pollution subsidies in order to establish a cap-and-trade system. As President Obama explained to business leaders in March, he is flexible on his campaign pledge for full auction of pollution permits:

Now, the experience of a cap-and-trade system thus far is that if you’re giving away carbon permits for free, then basically you’re not really pricing the thing and it doesn’t work, or people can game the system in so many ways that it’s not creating the incentive structures that we’re looking for. The flip side is, you’re right, if it’s so onerous that people can’t meet it, then it defeats the purpose – and politically we can’t get it done anyway.

From the Wonk Room.

Speaking at an event meant to oppose Democratic clean energy legislation, Rep. Mike Pence (R-IN) warned corporations calling for the United States to take action on global warming to “keep their powder dry.” Grist’s Kate Sheppard asked Pence after the GOP mock climate hearing yesterday what he would say to the corporations in the U.S. Climate Action Partnership (US-CAP) who have testified that a mandatory cap on global warming pollution is needed. Pence told companies that support a green economy to “keep their powder dry” as the GOP attempts to preserve Bush-era energy policy:

Um. I, I just would say that any American who is prepared to endorse a national energy tax that there’s a better solution. Uh, that they should keep their powder dry. And uh, take their case to the American people that they don’t need, particularly during this very difficult time in the economic life of our nation, to raise the energy cost on our businesses and on American families.

Watch it:

As Grist noted, “the House heard the leaders of Duke Energy, ConocoPhillips, and DuPont ask for a cap as recently as April 22.” Politico reports that Nike has been telling the U.S. Chamber of Commerce “to take a more progressive stance on the issue of climate change.” And Exelon Corporation, one of America’s largest electric utilities and another US-CAP member, is featured in a new advertisement today from the Environmental Defense Action Fund calling for a carbon cap as a part of comprehensive clean economic policy:

From the Wonk Room.

Although Interior Secretary Ken Salazar made it clear he “likes coal,” the Interior Department “said on Monday it will try to overturn a Bush administration rule that made it easier for coal mining companies to dump mountaintop debris into valley streams.”

As Arctic carbon dioxide levels are growing at an “unprecedented rate,” an “area of an Antarctic ice shelf almost the size of New York City has broken into icebergs this month.”

Speaking about the Waxman-Markey clean energy bill, Rep. Gene Green (D-TX) called for free pollution permits to petroleum refiners and Rep. G. K. Butterfield called for free pollution permits to electric distribution companies. These companies have given more than $375,000 to energy committee members in the first three months of 2009.

From the Wonk Room.

As a wildfire in Myrtle Beach on the South Carolina coast “spread over thousands of acres by early Friday” and a “7,500-acre-plus blaze” raged in South Florida, scientists reported that “wildfires spur climate change, which in turn makes blazes bigger, more frequent and more damaging to the environment.”

Rep. Gene Green (D-TX), who “represents a district with several oil refineries, a huge source of greenhouse gas emissions, said about the Waxman-Markey clean energy bill, “they have to get our votes, and I’m not going to vote for a bill without refinery allowances.”

Sen. John Barrasso (R-WY), a prominent coal industry advocate, asked administration nominees whether they agreed with comments this week by Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission, that no new nuclear or coal plants may ever be needed in the United States.

By SolveClimate’s Stacy Morford.

The usual court jesters shot off verbal fireworks as a week of hearings got underway on the Waxman-Markey climate bill, but the real attention on Capitol Hill was tuned to a few moderate Democrats who have the power to make or break the bill.

House Energy and Commerce Committee Chairman Henry Waxman acknowledged their concerns this morning as EPA Administrator Lisa Jackson, Energy Secretary Steven Chu, and Transportation Secretary Ray LaHood were being questioned by the committee.

Praising one of those moderates, former committee chairman John Dingell (D-Mich.), Waxman said he had hoped to see his legislation pass with something like the committee’s 42-1 vote that had secured amendments to the Clean Air Act in 1990. But he added,

“I have my suspicions after listening to the opening statements here that we may not be able to succeed in the same way.”

The statements and questions so far from the committee’s moderate Democrats suggest that winning enough votes will likely mean rewriting the bill’s proposed renewable energy standard to account for regional differences. It may also require free emissions permits and other aid for industries – particularly automotive and energy – that will need to evolve to survive in a carbon-constrained world.

The RES currently proposed in the draft legislation would require utilities to derive 25 percent of their power from renewable sources by 2025.

Mike Ross (D-Ark.) and Bart Gordon (D-Tenn.) both expressed concerns that that level would penalize states like theirs that lack the wind power of Texas and the sunshine and geothermal reserves of California. G.K. Butterfield (D-N.C.) said his state could probably reach its current target of 15 percent by 2025, and possibly do better if nuclear and biomass could count, but 25 percent was out of the question.

Jim Matheson (D-Utah) asked Chu if he thought Congress would be overprescribing if it required both an emissions cap and a national renewable energy standard.

Chu has been outspoken in his desire to restore the United States’ place as the world’s leader in energy technology. The RES, he said, is a necessary interim driver of innovation and renewable energy use. The cap won’t start until 2012, and industry will need time to adjust. The RES, meanwhile, will drive renewable energy development by guaranteeing a marketplace. Energy executives who testified later in the day echoed that argument, saying federal rules would create stability and expectations that businesses could bank on.

That doesn’t mean that that the RES has to be uniform nationwide, though. A few committee members questioned whether Congress could instead require each state to set a minimum standard, which could then be met in ways tailored to that state’s own resource mix. Twenty-eight states already have renewable energy standards.

From the Wonk Room.

On Earth Day, President Obama is visiting a “wind turbine manufacturer in Iowa” to “champion his push to cap greenhouse gas emissions and boost renewable alternatives to fossil fuels,” as top officials testify before Congress on behalf of action on green jobs for a green future.

Oil-patch and Blue Dog Democrats like Gene Green (D-TX) and Jim Matheson (D-UT) yesterday called for subsidies for the oil and nuclear industries to be added to the Waxman-Markey clean energy bill, while criticizing federal renewable energy and energy efficiency standards.

Sen. Ben Nelson (D-NE) criticized the Environmental Protection Agency for taking initial steps to obey a Supreme Court mandate to regulate global warming pollution, saying, “if alphabet agencies can do what they want without regard to what Congress believes, there’s something wrong with the system.”