On June 26, 2009, the House will consider H.R. 2425, the American Clean Energy and Security Act (ACES), sponsored by Rep. Henry Waxman (D-CA) and Rep. Ed Markey (D-MA). The rule, H.Res. 587, self-executes the 309-page Manager's Amendment, and makes in order one Republican amendment. 224 amendments were submitted to the Rules Committee. There will be three hours of debate on the bill, and 30 minutes of debate on the amendment.
Manager's Amendment-Rep. Waxman (D-CA): The amendment:
- Provides FERC with citing authority for the construction of certain high-priority interstate transmission lines constructed in the Western Interconnection. The Western Interconnection is one of the two major power grids in North America.
- Directs the Secretary of Energy to carry out a high efficiency gas turbine research, development, and technology demonstration program. $65 million is authorized for each of the Fiscal Years 2011-2014 of this program.
- Allows the Secretary of Energy to provide additional lending authority (up to $3.5 billion) for federal agencies to assist certain geographic areas with investments in renewable power. Authorizes $25 millionin Fiscal Year 2010 for this purpose.
- Authorizes the Housing and Urban Development (HUD) to award grants (up to $1 million) to local building code enforcement departments for the purpose of implementing and enforcing energy efficiency building codes. Authorizes $20 million for Fiscal Years 2010-2014 for this purpose. Allows the EPA to provide financial incentives to State and local entities for investment in water efficiency. Authorizes $50 million for Fiscal Year 2010, $100 million for 2011, $150 million for 2012, $100 million for 2013, and $50 million for 2014 for this program.
- Establishes a Department of Commerce program that would provide States with grants (up to $500 million) for small- and medium-sized manufacturers to finance the cost of clean energy manufacturing products. Authorizes $15 billion for each of the Fiscal Years 2010 and 2011 for this purpose.
- Authorizes such sums as may be necessary to the Secretary of Energy for "consumer energy behavior research grants" for education institutions.
- Provides additional credit for Fannie Mae and Freddie Mac housing goals for energy efficient and location-efficient mortgages. Requires HUD to consider energy efficiency for underwriting purposes for Native American and Native Hawaiian loan guarantee programs.
- Establishes a residential energy efficiency block grant program for States, localities, and Indian tribes under the Department of Housing and Urban Development. $2.5 billion is authorized for these grants for Fiscal Year 2010, and such sums as may be necessary thereafter.
- Establishes a distribution system of emissions allowance rebates for certain eligible entities in the industrial sector for the years 2012-2035. The amount of rebates provided to industry would decline gradually and phase-out completely in 2035. This section would enable the EPA Administrator to calculate various distribution mechanisms for these rebates based on emission levels and other factors.
- Includes strategies to encourage greater energy efficiency and use of renewable energy sources in Affordable Housing. Appropriates $50 million over the years 2010 through 2014, for grants to advise and train youth service, service corps or community development organizations in improving energy efficiency, and to carry out energy efficiency improvements in affordable housing communities. Grants are awarded if they comply with the national Green Communities criteria and Green Buildings certification.
- Mandates that each federal financial institution's regulatory agency revise its standards for real estate appraisals in federally related transactions within 6 months to reflect appraisal standards that include consideration of renewable energy sources or energy efficiency or conserving improvements of the property and requires that requirements for State certification of real estate appraisers be established, and establishes guidelines for appraising and training to appraise solar energy cells.
- Authorizes appropriations of $5 billion for a fund established to provide loans to States and Tribes to incentivize home owners, commercial building owners and public buildings to provide renewable energy sources, improve energy efficiency and conservation and provide for electricity and hot water not otherwise present.
- Encourages Banks and Credit Unions to establish "green banking" centers which would provide those seeking mortgages, home loans or renewable energy leases with information on obtaining a home energy rating, financing for energy-saving property and beneficial financial terms for energy efficiency. Requires GAO to examine and report to Congress every 3 years whether this has limited the availability or affordability of mortgages in any area in the U.S.
- Provides for a determination of value to facilitate a secondary market for residential renewable energy lease instruments.
- Authorizes HUD to guarantee the repayment portions of single-family housing and multi-family housing where the amount of the loan does not exceed the cap to be set by HUD, and limits the guarantee to the amount of the principle used to finance sustainable building elements, not to exceed 10 percent of the loan or a dollar cap to be set by HUD. Provides for the collection of fees to cover costs and authorizes appropriations of $500 million each year for FY 2010 through 2014. Members may be concerned that the federal government is subsidizing home improvements and mortgages.
- Distributes .005 percent in 2012 through 2017 and .003 percent of emission allowances for 2018 through 2050 specifically to States for Investments in Energy Efficiency and Renewable Energy.
- Provides for the auction of .75 percent of emission allowances for the years 2012 and 2013 to fund the Energy Efficiency and Renewable Energy Worker Training Fund.
- Provides for emission allowances to owners or operators of coal, petroleum coke or combination cogeneration facilities with a generation capacity of 100 megawatts or greater that was in operation as of January 1, 2009.
- Provides for the Secretary of Agriculture to establish a program to provide incentives in the form of allowances (allocating .28 percent of allowances distributed 2012 through 2016) for agriculture sector projects and activities that reduce, avoid or sequester greenhouse gas, adapt to climate change or prevent conversion of land that would increase greenhouse gas emissions.
- Allocates 1 percent of allowances distributed in 2012 to reward those who have obtained credits from a State voluntary offset program, or who has publicly stated reduction goals and demonstrated reductions through projects, by allowing them to exchange those credits for allowance credits under this bill.
- Requires a report within 18 months by the EPA on effects of CO2 reduction strategies and technologies on acid rain, particulate matter, ground level ozone and mercury contamination.
- Amends the Commodities Exchange Act to include compensatory allowance, offset credit or Federal renewable electricity credit established by this bill as an "exempt commodity." Provides that when Congress passes legislation which includes derivatives regulatory reform the regulatory provisions of this bill would be repealed. Provides for a presidential review of offset regulations and derivative regulations in this bill within 24 months of being enacted.
- Includes language that seeks to set negotiating objectives for other nations' compliance with capping greenhouse gases (GHG). States that the negotiating objectives of the U.S. with respect to multilateral environmental negotiations are to reach an internationally binding agreement in which all major GHG emitting countries contribute equitable to the reduction of GHGs. There is nothing binding in the language requiring other nations to cooperate.
- Requires a report from the President on the effectiveness of the distribution of emission allowance rebates under the bill. The report is required to look at the increased cost of each affected sector and how (if at all) free allowances affected cost. The report is also to include recommendations on how to better achieve the purposes of the bill, including an assessment of the feasibility and usefulness of a national reserve allowance program for eligible industrial sectors. The report must also determine how effective an international reserve allowance program is to the industrial sector (and the exposure to carbon leakage as a result of competition in export markets with goods produced in countries not implementing GHG emission reduction policies). If the President so determines, he may establish an international reserve allowance program for each eligible industrial sector.
- Requires the President receive a joint resolution of Congress in order to waive use of the border adjustment for industrial sectors. Gives authority to the President to use the border adjustment for sectors that are not energy-intensive and trade-exposed at "his discretion."
- Requires U.S. Customs and Border Protection to issue regulations establishing an international reserve allowance program for the sale, exchange, purchase, transfer, and banking of international reserve allowances for covered goods with respect to the eligible industrial sector; ensures that the price for purchasing the international reserve allowances from the U.S. on a particular day is equivalent to the auction clearing price for emission allowances; establishes a general methodology for calculating the quantity of international reserve allowances that a U.S. importer of any covered good must submit; requires the submission of appropriate amounts of such allowances for covered goods with respect to the eligible industrial sector that enter the customs territory of the U.S.; exempts from the requirements products that are from certain countries; specify the procedures that U.S. Customs and Border Protection would apply for the declaration and entry of covered goods with respect to the eligible industrial sector in the U.S; and establishes procedures that prevent circumvention of the international reserve allowance requirement for covered goods with respect to the eligible industrial sector that are manufactures or processed in more than one foreign country.
- Allows the Administrator to include an adjustment to the quantity of international reserve allowances based on the value of emission allowance rebates distributed under the bill.
- Increases the authorization for the Energy Efficiency and Renewable Energy Worker Training Fund from $125 million to $150 million.
- Establishes a clearinghouse of information and resources for vocational education and job training in renewable energy sectors, under the Department of Labor. The Secretary of Labor would also establish a Green Construction Careers demonstration project to promote "middle class careers and...employment practices in the green construction sector."
- Modifies the earned income credit for individuals with no qualifying children. The credit percentage is increased from 7.65 percent to 15.3 percent and would now begin to phase-out at $11,640, instead of $5,280.
- Provides that funds established in the Treasury under Sections 422 (energy worker training program), 467 (Climate Change Health Protection and Promotion Fund), and 480 (Natural Resources Climate Change Adaptation Fund) of the Act would be treated as deficit neutral for budgetary purposes.
Agriculture and Forestry Provisions
- Expands the definition of "renewable biomass" under the bill to include, among other sources, trees from certain public lands, crop residue, algae, and animal waste.
- Excludes the agriculture and forestry sectors from the definition of "capped sectors." This provision seeks to keep agriculture from being regulated as a capped industry. However, there is still no exemption for agriculture under the Title VIII performance standard. This is problematic for any agricultural commodity, such as livestock, that emits high amounts of methane.
- Creates an agricultural and forestry offset credit program within USDA. The Secretary would establish rules to quantify greenhouse gas benefits, audits, and verification procedures. The Secretary would also prepare a list of domestic agricultural and forestry "practice types" that are eligible to generate offset credits. These practice types would include reduced use of nitrogen fertilizer, changes in "animal management practices, including dietary modifications," and urban tree-planting. The Secretary would issue one offset credit to an offset project developer for each ton of carbon equivalent that has been reduced, avoided, or sequestered. The section only recognizes carbon sequestration practices that were commenced after January 1, 2001. These credits could then be sold, traded, or transferred. Members may be concerned that this provision picks winners and losers by leaving certain commodities out of the offset program. Certain farmers and ranchers would be left to manage higher costs without the additional revenue source afforded to other groups. Members may be concerned that by 2001, carbon sequestration practices such as no till were widely used in American agriculture. For example, in 2000, Iowa had 5 million no till acres. In 2007, Iowa had 6.2 million acres. By allowing only those acres entered after 2001, over 80 percent of corn acres in Iowa will be unable to participate in offset credits. This pattern is repeated in State after State.
- Delays the EPA from considering international indirect land use changes as a category to be considered in the greenhouse gas threshold under the Renewable Fuel Standard, pending a National Academy of Sciences report. The Administration would then have 5 years to determine whether to continue this policy. By merely delaying the indirect land use change, the issue is thrown into limbo-investment in new ethanol and other befoul plants would be stifled pending a final decision from the Administration.
Note: Members may be concerned that none of these agricultural and forestry provisions do anything to address the national energy tax that rural electricity consumers (including farmers and ranchers) will pay.
Rep. Forbes (R-VA): The amendment would strike the whole bill and insert the text of H.R. 513, the "New Manhattan Project for Energy Independence." Establishes a commission to set a plan for making the U.S. 50 percent energy independent in ten years and 100 percent energy independent in 20 years. Authorizes a competition that awards large monetary prizes to the first entity that achieves each of seven different energy goals set out in the amendment. The purposes of reaching the goals of the amendment are to eliminate dependence on foreign oil, and transform the energy sector.
The amendment specifically challenges citizens of the U.S. to affordably produce alternative energy vehicles that double CAFE standards to 70 MPG; cut home and business energy usage in half; make solar power work at the same cost as coal; make the production of bio-fuels cost-competitive with gasoline; safely and cheaply store carbon emissions from coal-powered plants; safely store or neutralize nuclear waste; produce usable electricity from a nuclear fusion reaction.
The amendment establishes a commission to make recommendations to Congress and the President on the steps that must be taken to become 50 percent energy independent in 10 years and 100 percent energy independent in 20 years.
The amendment gives the President 60 days to convene a Summit with the heads of every federal program and agency related to achieving the goals, as well as leading researchers and representatives from the private sector who are involved in developing new technologies in order to achieve the goals, and the members of the commission. The goal of the summit is to review the progress of these technologies and foster nationwide collaboration on new technologies.
The amendment sets aside $10 billion for grants to individual researchers, groups, educational institutions or businesses to help share the cost of work toward achieving the goals. These grants are limited to a maximum 15 percent federal cost share and may not exceed 5 percent of the total prize amount for each goal.
The amendment devotes $14 billion for cash prizes to be awarded to the first entity to achieve each stated goal set out by the amendment. The following is the breakdown for the amounts granted for reaching each goal:
- $500 million to affordably produce alternative-energy vehicles
- $250 million to cut home and business energy usage in half
- $250 million to make solar power work at the same cost as coal
- $1 billion to make the production of bio-fuels cost-competitive with gasoline
- $1 billion to safely and cheaply store carbon from coal-powered plants
- $1 billion to safely store nuclear waste
- $10 billion to produce usable electricity from a nuclear fusion reaction
The amendment authorizes $24 billion for the competitive awards. According to the Energy Information Administration, U.S. consumers currently spend over $1 trillion every year on energy, 60 percent of which is imported from foreign sources.