Democratic leaders of the House Energy and Commerce Committee today unveiled a 648-page draft global warming and energy bill (pdf) that is being praised by environmental groups but presents significant political challenges.

The bill by Reps. Henry Waxman of California and Ed Markey of Massachusetts would establish a cap-and-trade program curbing U.S. emissions 20 percent below 2005 levels by 2020, with a midcentury target of 83 percent reductions of the heat-trapping gases. It also creates a nationwide renewable electricity standard that reaches 25 percent by 2025, new energy efficiency programs and limits on the carbon content of motor fuels, and requires greenhouse gas standards for new heavy duty vehicles and engines.

Statements from the two congressmen now atop the powerful House panel included a seven-week schedule leading to a final committee vote on the measure before the Memorial Day recess. They also insisted their proposal -- the "American Clean Energy and Security Act of 2009" -- would reduce U.S. dependence on foreign oil, curb global warming and help stabilize the economy.

"This legislation will create millions of clean energy jobs, put America on the path to energy independence, and cut global warming pollution," said Waxman, the committee chairman. "Our goal is to strengthen our economy by making America the world leader in new clean energy and energy efficiency technologies."

In a press release, House Speaker Nancy Pelosi (D-Calif.) welcomed the draft, calling it a "strong starting point" in a debate that would also include other committees with jurisdiction over the issue.

Pelosi repeated her plan to bring an energy and climate bill to the House floor this year, marking the first time ever the chamber would consider cap-and-trade provisions specifically. "The scope of this effort is historic and overdue," she added.

Now, the hard part.

Waxman and Markey have a 36-23 advantage over Republicans in their committee, meaning the chairman can only lose votes from six members of his own party and still pass the bill, absent surprise GOP defections.

Committee Democrats represent a cross section of regional interests, including coastal state members who prefer aggressive environmental limits for global warming and moderate and conservative lawmakers who prefer proposals that take into account their local industries.

"It's time for us to prepare, fill in the blanks, and submit what we think are areas of concern for us," said Rep. Charles Gonzales, a six-term Democrat from San Antonio, in an interview yesterday. "It's going to be all regional."

"It's going to be probably an impossible challenge to make everyone happy in such complex and important legislation," added Rep. Tammy Baldwin, a six-term Democrat from Madison, Wis. "But I think the efforts are building upon successful collaborations that have occurred prior to this time, and that will aid us greatly."

Another committee Democrat, Rep. Rick Boucher of Virginia, pushed for provisions in the bill that would promote the wide-scale commercial deployment of carbon capture and storage projects at coal-fired power plants. In an interview, Boucher was optimistic about the overall measure's prospects while also promising to push for revisions.

"While I'm not endorsing the draft and will seek changes to it, I strongly endorse the process that he's putting into place to report a bill," Boucher said of Waxman.

By contrast, senior House Republicans challenged the premise of moving climate legislation amid low public approval for action on warming in opinion polls and increasingly dire news about the economy.

The bill "marks a triumph of fear over good sense and science, and it couldn't come at a worse time, because it proposes to save the planet by sacrificing the economy," said Rep. Joe Barton of Texas, the ranking Republican on the Energy and Commerce Committee.

"This cap-and-trade plan is a priority for the Obama administration and the Democratic party's congressional leaders," Barton said, "but it is so proudly ignorant of the daily economic reality faced by working people that I do not believe it could survive a vote in either the House or Senate just now."

Cap-and-trade details

On cap and trade, the Waxman-Markey draft seeks to curb emissions by 2020 on a slightly more aggressive scale than the limits proposed by Obama.

Obama's budget released in February suggested a 14 percent cut at the end of the next decade, whereas Markey and Waxman call for a 20 percent cut. Both the Waxman-Markey draft and Obama's plan do line up on a midcentury target curbing emissions by 83 percent.

But the House lawmakers offer more specifics than the new administration when it comes to the cap-and-trade program's start in 2012. The Democrats call for a 3 percent emissions cut from 2005 levels. They also include a 42 percent reduction in 2030.

The Waxman-Markey draft sidesteps some of the critical details on allowances and auctions, instead leaving the issue open for negotiations with their fellow Democrats and any interested Republicans over the coming weeks.

But the measure does take a stab at how to assist industries considered most vulnerable to international competition, such as iron and steel, aluminum, cement, glass, ceramics, chemicals and paper. In a separate title -- "Transitioning to a Clean Energy Economy" -- the Democratic committee leaders incorporated a proposal from Reps. Jay Inslee of Washington and Mike Doyle of Pennsylvania that would set aside a certain number of allowances for industrial sectors as determined by U.S. EPA.

Elsewhere, the Democrats' draft directs EPA to enter into agreements designed to prevent international deforestation, which is the source of about 20 percent of annual greenhouse gas emissions. It also sets up several programs aimed at curbing the costs of the cap-and-trade program on the U.S. economy, including a "strategic reserve" of allowances that EPA can release into the market via an auction in the event credit prices rise faster than expected.

For oversight of the new carbon markets, the Waxman-Markey draft proposes placing the Federal Energy Regulatory Commission in charge of both emission allowances and offsets. And the discussion draft orders EPA to establish separate emission standards for hydrofluorocarbons, which are chemical products used in refrigeration, air conditioning, insulation, as well as black carbon, which is a major source of global warming in the Arctic.

The draft also addresses the hot-button issue of EPA regulations under the Clean Air Act, as required under the 2-year-old Supreme Court decision in Massachusetts v. EPA.

With their proposal, the Democrats specify that EPA cannot regulate carbon dioxide or other greenhouse gases as criteria air pollutants or hazardous air pollutants -- two sections of the law that could require sweeping regulations across the U.S. economy.

Vehicle-emission standards

The bill paves the way for federal greenhouse gas standards for a variety of vehicle types.

The measure requires EPA to promulgate standards for new heavy duty vehicles and engines by the end of 2010, and for new marine vessels and their engines by the end of 2012, and also provides the agency the right to set standards for other types of nonroad vehicles and engines as it sees fit. In addition, EPA would set airplane and engine standards.

Another provision would require the president, to the extent possible, to "harmonize" federal auto fuel economy standards with California's emissions standards and emissions standards that EPA may set using its Clean Air Act authority.

It says federal standards must achieve at least as much emission reductions as California's program and do not pre-empt that state's authority to adopt and enforce mobile source emissions standards.

Promoting plug-in cars

Elsewhere, the bill seeks greater use of plug-in electric vehicles, which are seen as a promising way to displace oil demand by using electricity in the transportation sector.

The bill calls for the Energy Department to create a program to "deploy and integrate plug-in electric drive vehicles in multiple regions."

State and local governments, possibly in concert with utilities, automakers and other partners, could apply to DOE for financial assistance to carry programs for integrating plug-in vehicles into their area.

The measure also requires utilities to develop plans to support use of plug-in hybrid electric and fully electric vehicles.

The plan may provide for deployment of electrical charging stations in public or private locations, including street parking, parking garages, parking lots, homes, gas stations, and highway rest stops," it notes. It authorizes state regulators and nonregulated utilities to recover costs from consumers from their efforts to integrate the vehicles.

In addition, the bill requires DOE financial assistance to automakers for retooling their facilities to producing plug-in electric vehicles and buying domestically produced batteries.

Renewable energy, efficiency standards, smart grid

As expected, the bill includes a nationwide renewable electricity standard that requires utilities to supply escalating amounts of power from sources such as wind, solar and geothermal.

The standard begins at 6 percent in 2012 and reaches 25 percent in 2025, although governors may use efficiency measures to meet a fifth of the mandate.

The bill also allows federal agencies to enter into long-term contracts -- up to 30 years -- for renewable power purchases.

It also includes a so-called energy efficiency resource standard that requires electricity and natural gas utilities to ensure customer demand drops by growing amounts relative to business-as-usual scenarios. By 2020, electricity savings must reach 15 percent and natural gas savings must be 10 percent.

The provision is a priority for energy efficiency advocates, who recently formed a new coalition to push for the measure that unites advocacy groups and several major companies. The American Council for an Energy-Efficient Economy, part of the group, estimates the standard would provide enough electricity savings in 2020 to power almost 48 million households and eliminate the need to build 390 power plants.

The bill also includes a suite of other efficiency measures aimed at improving building codes and creating new standards for industrial energy efficiency.

The measure also contains a suite of provisions to deploy use of a "smart" power grid that can enable greater efficiency and seeks to overhaul the federal transmission planning process to ensure that regional planning facilitates use of renewable and zero-carbon energy sources. FERC would be required to create grid planning principles.

Low-carbon fuels

The bill includes a "low carbon fuel standard" to ensuring lower greenhouse gas emissions from fuels used in on-road and off-highway vehicles and airplanes, and leaves EPA discretion to include ocean vessels.

Between 2014 and 2022, refiners, blenders and other fuels providers must ensure that the annual average lifecycle emissions from fuels sold in the United States are no greater than they were in the 2005 "baseline" year.

Between 2023 and 2030, the emissions must be at least 5 percent below baseline, while from 2030 onward they must be at least 10 percent lower than the 2005 baseline. It provides for credit trading and includes other provisions, including EPA's ability to waive the requirements to varying degrees.

Coal plant carbon standards, carbon sequestration

The bill creates performance standards for new coal-fired power plants that receive their final permits after Jan. 1, 2015. These plants must emit no more than 1,100 pounds of carbon dioxide per megawatt-hour, and the standards get tougher for plants that are approved in 2020 and later.

Plants that receive final permits after the first of this year and before 2015 would eventually have to meet emissions standards as well.

The bill also contains measures to accelerate carbon capture and storage, such as requiring EPA to create a "coordinated approach" to certifying and permitting sequestration sites, and measures to boost Energy Department and EPA efforts to deploy the technology.

Reactions

Even as they started digesting the mammoth bill, several environmental groups were quick to issue statements praising the measure.

"Chairmen Waxman and Markey are experienced legislators who have focused on exactly the right issues to quickly build consensus and allow Congress to pass a strong bill this year," said Fred Krupp, president of the Environmental Defense Fund.

Lance Pierce, director of the Union of Concerned Scientists' climate program, welcomed the idea of incorporating climate and energy language together into one broad legislative package.

"This is a truly comprehensive outline," Pierce said. "Congress is looking at a market-based cap on emissions that works alongside smart energy and transportation polices. This broad approach is the best way to promote renewable energy sources, curb our oil dependence and avoid the most expensive consequences of climate change."

Emily Figdor of Environment America called the draft 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 and Commerce Committee."

While she welcomed the draft's energy standards, Figdor also questioned "sky-high levels of carbon offsets, which provide less-certain reductions in emissions, and lavish subsidies, including from ratepayers, for still-unproven carbon capture and storage technology."

Raymond Offenheiser, president of international development organization Oxfam America, praised adaptation language aimed both domestically and internationally. "Supporting community resilience for those most vulnerable and hardest hit must be a cornerstone of any American effort on climate change," he said.

Click here (pdf) to read the draft bill.

Click here (pdf) to read the executive summary of the proposal.

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