House fast-tracks major changes on energy and climate
But how much will they cost Americans, particularly during a recession?
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“This is a pragmatic bill that tries to balance a historic opportunity to unleash clean energy to rebuild our economy and stop the climate crisis, with the diversity of views on the Energy & Commerce Committee,” says Emily Figdor, director of the Federal Global Warming Program at Environment America, a coalition of environmental groups.Skip to next paragraph
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The draft bill includes strong clean-energy standards that reflect the latest climate science, Ms. Figdor notes. “But on the flip side, we’re disappointed that the bill includes sky-high levels of carbon offsets, which provide less-certain reductions in emissions, and lavish subsidies, including for ratepayers, for still-unproven carbon capture and storage technology.”
The bill draws heavily on recommendations by the US Climate Action Partnership (USCAP), a coalition of business groups favoring climate legislation. As a result, it may be more likely to attract moderate lawmakers.
The draft legislation is “a strong starting point for enacting legislation to reduce greenhouse-gas emissions,” according to a statement from USCAP, which includes Alcoa, ConocoPhilips, Duke Energy, and General Motors, among other corporations.
“A number of compromises and proposals were already hammered out,” says David Doniger, policy director of the Natural Resources Defense Council (NRDC). “It’s not a bill crafted just by environmentalists, but with all the interests in mind.”
The cost of cap-and-trade
"It would be reasonable to anticipate that, overall, the climate portion would cost, at most, 1 percent of GDP [gross domestic product],” says Robert Stavins, an environmental economist and director of Harvard’s environmental economics program. “That’s a big number, but I don’t see it pushing us into another recession.”
"Still,” he adds, “it will be difficult to deal with during an economic downturn.”
A big facet of the cap-and-trade portion of the legislation involves the allocation of pollution permits – one permit per ton. Many environmental groups have supported the idea of auctioning 100 percent of the permits.
But the bill, while it avoids specifying how the permits would be allocated, does set aside 15 percent of them to be allocated to energy-intensive industries such as steel, concrete, paper, and glass, which would be immediately hit by higher energy prices and foreign competition.
“Our view is that some measure of free allocation to companies that can’t pass along their cost – [that] are very energy-intensive and trade-exposed – is appropriate,” says Mr. Doniger of the NRDC.