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Sweeping climate-energy bill clears first big hurdle in Congress

The compromise measure would mandate reductions in greenhouse-gas emissions and require greater use of renewable energy. The Senate could be a major stumbling block.

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“This vote showed [that] the nation has reached a major tipping point on energy and climate,” says Kevin Book, managing director of ClearView Energy Partners, an energy research and consulting firm. “Historically, the problem has always been getting this kind of environmental bill through Congress the first time. After that, the laws just ratchet tighter.”

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But some business groups criticized the bill. Its "inequitable approach, by itself, will produce additional unemployment," warned the American Petroleum Institute in a statement. "While the bill has laudable environmental and economic goals, its inequitable system of allocations remains intact," API said, "and if enacted would have a disproportionate adverse impact on consumers, businesses, and producers of gasoline, diesel fuel, jet fuel, crude oil and natural gas."

Democrats beat back GOP amendments

Despite an onslaught of Republican amendments, the Democratic bill won broad support from Democrats in various regions of the US – including those from coal-reliant states in the Midwest and the South. The Republican alternative, which proposed more nuclear and hydropower, was handily defeated.

The ACES bill focuses on smokestacks that pump out 85 percent of US greenhouse emissions. It follows a three-way path to shift the nation toward a low-carbon economy: boosting energy efficiency, developing renewable energy sources like solar and wind, and curbing greenhouse-gas emissions (GHGs).

Together these are intended to cut US emissions to 17 percent below 2005 levels by 2020 – a major compromise from the previously suggested 20 percent cut. Still, it would launch America down a 30-year path of continual emissions cuts – reaching 83 percent under 2005 levels by 2050 – to help avoid the worst effects of global warming. The bill is also intended to jump-start a US push into energy-efficient technologies, grow green jobs, and advance national security by shifting the US vehicle fleet toward use of domestic electricity instead of imported oil.

'Cap-and-trade' the key

To do that, the bill’s main mechanism to limit emissions is a market-based “cap-and-trade” system for industrial CO2 emitters. Beginning in 2012, a national “cap” – or total maximum CO2 emissions – would be set and then ratcheted downward annually. Electric utilities, cement and steel plants, and others would need one “allowance” for every ton of CO2 sent up smokestacks. Power plants emit about 2.4 billion tons of CO2 annually – nearly 40 percent of total US greenhouse-gas emissions.

In addition to GHG limits, the bill combines a national renewable energy standard combined with an energy efficiency standard. By 2020, US electric utilities would be required to get 20 percent of their power from a combination of renewable sources (15 percent) and energy efficiency (5 percent).

But in a major compromise, governors would be permitted to petition to increase the energy-efficiency share up to 8 percent, with just 12 percent coming from renewables. Waxman accepted the lesser standard for renewables to win support of Democratic lawmakers from states where coal-fired power plants predominate, Mr. Book says.