Clean Energy Jobs and American Power Act

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On September 30, 2009, Senators Barbara Boxer (Democrat of California) and John Kerry (Democrat of Massachusetts) formally introduced the Clean Energy Jobs and American Power Act. Similar to the Waxman-Markey Climate Bill, which was passed by the House of Representatives in June 2009, the legislation would create limits on greenhouse gas emissions and implement a national Cap and Trade program. Major elements in the bill include the reduction of global warming gases by 83 percent by 2050; incentives for carbon capture and storage; the establishment of a national renewable electricity standard; provisions for green transportation and green job creation; consumer protection measures; and programs to compensate energy-intensive industries for costs incurred under the bill.[1][2][3]

On May 12, 2010, Senators John Kerry and Joseph Lieberman produced an updated version of the bill, S. 1733, the Clean Energy Jobs and American Power Act.[1] Another Senate climate bill, the Carbon Limits and Energy for America's Renewal Act (CLEAR Act) S. 2877 by Sen. Maria Cantwell (D-WA) and Sen. Susan Collins (R-ME), was introduced on December 11, 2009. In promoting a cap and dividend policy and stronger carbon limits, the CLEAR Act differs from the financial market carbon trading plan promoted by the Waxman-Markey Climate Bill and the Clean Energy Jobs and American Power Act.[4]

EPA Analysis

On October 23, 2009, EPA released its analysis of the potential economic impacts of the Kerry-Boxer Discussion Draft. The analysis found that the Senate bill would cost the average American household roughly the same amount as the House's version. EPA estimated those costs to be between $80 and $111 per year per household, or less than 1 percent of average household consumption.[5][6]

May 12, 2010: Kerry and Lieberman Proposal Released

On May 12, 2010, Senators John Kerry and Joseph Lieberman produced S. 1733 Clean Energy Jobs and American Power Act. The proposal includes incentives of $2 billion per year for carbon capture and storage, which would come on top of the $2.4 billion for carbon capture projects that appeared in President Barack Obama’s stimulus package, the American Recovery and Reinvestment Act of 2009. The bill’s overall goal is to reduce greenhouse-gas emissions by 17 percent (compared with 2005 levels) by 2020, and by 83 percent by 2050, matching those in a House bill passed last year and in the Obama administration’s announced policy goal.[1]

The bill does include provisions to curtail some current Clean Air Act authorities and to preempt some state programs, eliminating New Source Review for greenhouse gas emissions and permanently preempting state authority to impose cap and trade programs once the federal program to curb carbon pollution is in place.[7]

Although there is no economywide cap-and-trade system like in the House measure, the proposal includes a financial market to trade pollution permits. A fixed number of “emissions allowances” is created for each year from 2013 through 2050, reflecting annual emission reduction targets. Covered sources can reduce their compliance costs by investing in “carbon offsets” - up to two billion tons of offsets may be used each year. The draft bill gives the Commodity Futures and Trading Commission (CFTC) responsibilities to protect against manipulation and fraud in the carbon markets.[7] Thomas R. Kuhn of the lobbying interest groups Edison Electric Institute, the American Council for Capital Formation, and the Alliance for Energy and Economic Growth, stood with Mr. Kerry and Mr. Lieberman and endorsed their bill.[1]

The bill includes proposals to promote new nuclear power plants, including large subsidies for constructing new nuclear power plants and weakening changes to nuclear plant licensing requirements and safety and environmental safeguards. The bill also devotes 2 percent of the allowances through 2021 to support low-carbon technology research and development, including energy efficiency, renewable energy, and nuclear technologies.[7]

A more rapid schedule is established for phasing down hydrofluorocarbons (HFCs), a potent greenhouse gas, reaching at least an 85 percent reduction by 2032 (sec. 2201).[7]

The bill allocates a small amount of allowance revenue to address adaptation of our natural resources, wildlife, and fisheries to the impacts climate change and ocean acidification. The bill dedicates no resources to meet adaptation needs in the areas of fire protection and water resource management, nor public health concerns.[7]

The draft bill creates a loophole for the carbon emissions from biomass: covered firms are allowed to ignore carbon emissions from burning “renewable biomass” on the assumption that they are completely counterbalanced by carbon uptake when biomass is grown (an "offset"). According to the Natural Resources Defense Council, such "carbon uptake falls short of combustion emissions for many fuel sources defined as renewable biomass, resulting in net carbon pollution. Not requiring allowances for this carbon pollution gives covered sources an economic incentive to switch to biomass, thus seriously degrading the bill’s stated carbon pollution reductions."[7]

It is not yet known whether the concessions and compromises embodied in the bill will attract the 60 votes needed to thwart a filibuster.[1]

Little Funding for Innovation in Kerry-Lieberman Bill: The Breakthrough Institute's June 2010 "The Power to Compete?" Report

On June 9, 2010, The Breakthrough Institute released a 20-page policy brief titled "The Power to Compete?: Analysis of Key Clean Energy Technology and Competitiveness Provisions in the Kerry-Lieberman American Power Act (APA) of 2010," which stated that the Kerry-Lieberman American Power Act legislation falls dismally short in funding for what is necessary in investments in clean technology. The brief shows that only 7% of the funding allocations for the first ten years of the bill's implementation would go toward the funding of private clean technology, namely things such as electric cars, plug-in hybrid cars, along with energy and industrial research and development. This amounts to roughly $157 billion allocated to clean technology from 2009-2013, with only $2-$4 billion of that as a whole going toward research and development funding for private industry. The brief goes on to demonstrate that this pales in comparison to the United States' Asian counterparts, who invest over $500 billion/year on the same thing, translating an allocation of nearly three times that of the U.S. The brief also states that China alone is en-route to invest $440-$640 billion in clean energy technology in the next ten years, a far more extensive number than that of the U.S.[8]

The report goes on to show that less than 1% of the APA funding would go toward clean vehicle technology like electric and plug-in cars, to the tune of solely $450-$900 million dollars a year. As discussed in their first study titled "Rising Tigers, Sleeping Giant: Asian Nations Set to Dominate Clean Energy Race by Out-Investing the United States," the study for which "The Power to Compete" is a follow-up, this is all problematic because of the five core findings of "Rising Tigers":

  • "Asia's rising "clean technology tigers, [namely], China, Japan, and South Korea, have already passed the United States in the production of virtually all clean energy technologies, and over the next five years, [they] will [far] out-invest the United States...in these sectors...[,]allowing these...nations to attract a significant share of private sector investments in clean energy technology, estimated to total in the trillions of dollars over the next decade. [The benefits of clean tech growth [in Asian countries] will overwhelmingly [go] to Asia's clean tech tigers."
  • "Large, direct and sustained public investments will solidify the competitive advantage of China, Japan, and South Korea. Government investments in research and development, clean energy manufacturing capacity, the deployment of clean energy technologies, and the establishment of enabling infrastructure, will allow these Asian nations to capture economies of scale, learning-by-doing, and innovation advantages before the United States, where public investments are smaller, less direct, and less targeted."
  • "Should the investment gap persist, the United States will import the overwhelming majority of clean energy technologies it deploys...This could jeopardize America's economic recovery and its long-term competitiveness while making it even more difficult to reduce the U.S. trade deficit."
  • "Proposed U.S. climate and energy legislation, as currently formulated, is not yet sufficient to close the clean tech investment gap. In contrast to more direct investments by Asia's clean tech tigers, current U.S. policies rely overwhelmingly on modest market incentives that are viewed by the private sector as more indirect, create more risks for private market investors, and do less to overcome the many barriers to clean energy adoption."
  • "If the United States hopes to compete for new clean energy industries it must close the widening gap between government investments in the United States and Asia's clean tech tigers and provide more robust support for U.S. clean tech research and innovation, manufacturing, and domestic market demand. Small, indirect and uncoordinated incentives are not sufficient to outcompete China, Japan, and South Korea."[9]

In short, the Lieberman-Kerry bill will not be far from sufficient as a measure for pushing the United States in the direction of being more competitive in the global market, according to the Breakthrough Institute's "Rising Tiger, Sleeping Giant" report. A full version of that report can be seen here: http://thebreakthrough.org/blog/Rising_Tigers.pdf, while a summary version can be seen here: http://thebreakthrough.org/blog/Rising_Tigers_Summary.pdf. A video summarizing these findings can be seen at right.<youtube size="small" align="right">6gLf_C9aap4</youtube>

"The Power to Compete?" concludes that " the American Power Act does not contain a comprehensive strategy for U.S. competitiveness in the global clean energy industry...It falls substantially short in each core policy component of clean energy competitiveness. If U.S. energy reform is to secure the nation’s leadership in this growing sector, the scale and scope of these provisions must be significantly improved in future legislative proposals."[10]

American Lung Association Opposition

On May 12, 2010, President Charles D. Connor of the American Lung Association released a statement saying he was "shocked to read language included in the draft American Power Act introduced today by Senators John Kerry and Joseph Lieberman that would unleash a dangerous process to attack life-saving rules on coal-fired power plants and threaten to permit much more air pollution around the nation." According to Connor, the proposal includes changes to the Clean Air Act that are an "open door through which millions of tons of life-threatening pollution could be allowed to flow." Specifically, Connor is concerned about provisions that:

  • "Create a 'study' group that would authorize the 'review' and re-writing of rules currently in place that communities need to protect the lives and health of their citizens."
  • "Give the electric power industry a new venue to seek weakening of cleanup rules indefinitely based on claims of reliability and job loss, while conveniently ignoring the deaths and other health effects caused by their spewing smokestacks."[11]

Environmental Group Opposition

On May 17, 2010 a new alliance of 15 social justice, environmental and community organizations joined together to stop the climate bill from passing. The coalition, called Climate Reality Check, believed Congress needed to head back to the drawing board and start over. The coalition included the Center for Biological Diversity, Public Citizen, among others. Tyson Slocum of Public Citizen stated, "It's not accurate to call this a climate bill. This is nuclear energy- promoting, oil drilling-championing, coal mining-boosting legislation with a weak carbon pricing mechanism thrown in."

Grassroots members of the Sierra Club also opposed the initial bill, stating that the national organization's position was nuanced and too supportive of the legislation.[12]

Articles and resources

References

  1. 1.0 1.1 1.2 1.3 1.4 Darren Sameulsohn, "Boxer, Kerry Set to Introduce Climate Bill in Senate," New York Times, September 28, 2009.
  2. "Senators Kerry and Boxer Unveil Climate Bill," McDermott Will & Emery, October 1, 2009.
  3. Clean Energy Jobs and American Power Act: Summary of Provisions, Senator John Kerry, September 30, 2009.
  4. S. 1733 "Clean Energy Jobs and American Power Act"
  5. "Boxer Releases Chairman’s Mark of Clean Energy Jobs and American Power Act," U.S. Senate Committee on Environment and Public Works, October 23, 2009.
  6. "Economic Impacts of S. 1733: The Clean Energy Jobs and American Power Act of 2009," U.S. Environmental Protection Agency Office of Atmospheric Programs, October 23, 2009.
  7. 7.0 7.1 7.2 7.3 7.4 7.5 David Doniger, "The American Power Act: “First Read” of the Kerry-Lieberman Climate and Energy Legislation" NRDC WEbsite, May 12, 2010.
  8. [1], "http://thebreakthrough.org/blog/2010/06/kerry_lieberman_competitiveness.shtml." The Breakthrough Institute. June 9, 2010.
  9. [2], "Rising Tigers, Sleeping Giant" Report Overview." Breakthrough Institute.
  10. [3], "The Power to Compete?: Analysis of Key Clean Energy Technology and Competitiveness Provisions in the Kerry-Lieberman American Power Act of 2010." The Breakthrough Institute. June 9, 2010.
  11. "Statement of Charles D. Connor, President and Chief Executive Officer, American Lung Association on the Kerry-Lieberman Bill, The American Power Act" American Lung Association, May 12, 2010.
  12. "Not All Environmentalists Pleased with Climate Legislation" Joshua Frank, Truthout, June 20, 2010.

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