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June 29, 2009 |
Climate Bill Narrowly Passes in U.S. House Late Friday, June 26, 2009, the U.S. House of Representatives passed by a narrow margin the American Clean Energy and Security Act, known as "ACES" or HR 2454. The 1250-page bill sets forth the nation's first comprehensive legislation to address climate change with emissions caps that will affect the entire U.S. economy. It is captioned as follows: "To create clean energy jobs, achieve energy independence, reduce global warming pollution, and transition to a clean energy economy." A tall order indeed. The Senate must act before the bill becomes law. Understanding how the current bill affects you may impact your decisions about whether to become involved in the legislative debate. The bill sets forth a reducing cap of carbon dioxide-equivalent emissions using the year 2005 as a baseline. The cap reduces every year between 2012 and 2050, with the following milestones: three percent reduction by 2012; 17 percent reduction by 2020; 42 percent reduction by 2030; and 83 percent reduction by 2050. The Purposes and Findings, Section 701, justify the far-reaching bill by stating, in part: "[C]ontrolling emissions in small as well as large amounts is essential to prevent, slow the pace of, reduce the threats from, and mitigate global warming and its adverse effects . . . Full implementation of the Safe Climate Act is critical to engage other nations in an international effort to mitigate the threat of and harm from global warming. . . Global warming and its adverse effects are occurring and are likely to continue and increase in magnitude, and to do so at a greater and more harmful rate, unless [the bill] is fully implemented and enforced in an expeditious manner." The climate change legislation is expected to have a profound impact on the types of fuels used to produce energy in the United States and elsewhere. Inevitably, the price for energy will rise, and the estimates for the increase in prices vary. Representatives fiercely debated whether the U.S. economy could withstand the cost pressures created by the bill. While the bill contains numerous provisions that attempt to lessen the cost impact on ordinary households, the expected cost on industry will be great. The manner in which the "allowances" are distributed to industry sectors and energy efficiency program support for homes, appliances and transportation will impact cost both to the consumer and to industry. Notable other aspects include Federal Energy Regulatory Commission (FERC) oversight of the allowance market, renewable energy portfolio standards, electric vehicle infrastructure improvements, carbon sequestration and storage provisions, smart grid and other electric grid improvements, green building and national energy efficiency building codes, numerous financing provisions, nuclear and other non-fossil fuel based energy support, and a host of reporting obligations to monitor the "carbon economy" and how the U.S. fares as opposed to the international community. For a complete and unbiased summary written by the Library of Congress' Congressional Research Service, click here. If you would like to discuss ACES and its impact on your business, please call Jane Montgomery or another member of the Schiff Hardin environmental or energy practices. For questions regarding this Environmental Update, please contact any of the attorneys in Schiff Hardin's Environmental Group. RECENT ENVIRONMENTAL PUBLICATIONS
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