Greenhouse Gas Legislation: Summary and Analysis of H.R. 2454 as Passed by the House of Representatives

Publication Date: July 2009

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Environment

Type: Report

Coverage: United States

Abstract:

H.R. 2454, the American Clean Energy and Security Act of 2009, was introduced May 15, 2009, by Representatives Waxman and Markey, and was subsequently modified (both technical and substantive changes) and ordered reported by the House Committee on Energy and Commerce on May 21, 2009. The bill was reported (amended) June 5 (H.Rept. 111-137, Part I). It was passed in the House on June 26, 2009, by a recorded vote of 219-212. H.R. 2454 contains provisions that would amend the Clean Air Act to establish a cap-and-trade system designed to reduce greenhouse gas emissions from covered sources 17% below 2005 levels by 2020 and 83% below 2005 levels by 2050. The market-based approach would establish an absolute cap on the emissions and would allow trading of emissions permits (allowances). The bill achieves its broad coverage through an upstream compliance mandate on petroleum and most fluorinated gas producers and importers, and a downstream mandate on electric generators and industrial sources, and a midstream mandate on natural gas local distribution companies (LDCs). The bill allocates a substantial percentage of the allowances for the benefit of energy consumers and low-income households. As the program proceeds through the mid-2020s it shifts to more government auctioning with most of the proceeds returned to households. The bills allocation scheme includes free allowance allocations to energy-intensive, trade-exposed industries, merchant coal-fired electric generators, and petroleum refiners. An important cost control mechanism in the cap-and-trade program is the availability of domestic and international offsets. The bill contains energy efficiency provisions that cover grants, standards, rebates and other programs for buildings, lighting and commercial equipment, water-using equipment, wood stoves, industrial equipment, and healthcare facilities. H.R. 2454 contains several provisions related to vehicles and fuels, including incentives to produce plug-in vehicles and other advanced technology vehicles. Three percent of allowances from the greenhouse gas cap-and-trade program would be allocated to the automotive sector to provide grants to refit or establish plants to build plug-ins and other advanced vehicles. The bill directs the Environmental Protection Agency (EPA) to establish greenhouse gas emissions standards for various transportation sectors. The bill would also significantly modify the definition of renewable biomass under the renewable fuel standard (RFS), expanding the allowable pool of agricultural and forestry feedstocks that could be used. The bill requires EPA to develop a unified national strategy for addressing the key legal and regulatory barriers to deployment of commercial scale carbon capture and sequestration. The legislation would amend the Public Utility Regulatory Policies Act of 1978 (PURPA) to create an integrated energy efficiency and renewable electricity standard starting in 2011, requiring retail electricity suppliers to meet 20% of their electricity demand through renewable energy sources and energy efficiency by 2020. The bill provides for smart grid technologies, including products that can be equipped with smart grid capability, requirements for electric power retailers to reduce their peak loads using smart grid and other energy efficient technologies, and requirements that power suppliers ensure that utility smart grid systems will be compatible with plug-in electric drive vehicles.