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House committee OKs climate bill

The bill's cap on greenhouse gases, along with a renewable electricity mandate and Clean Energy Bank, is designed to promote clean energy technologies.

The House Energy and Commerce Committee passed an energy and climate bill on Thursday that puts a cap on greenhouse gases in a way designed to give heavy polluters years to transition to low-carbon technologies.

The American Clean Energy and Security Act of 2009, sponsored by Congressmen Henry Waxman and Edward Markey, passed through the committee after four days of marathon "markup" sessions where dozens of amendments were considered.

The bill calls for a cap-and-trade system designed to reduce greenhouse gases and a mandate that would require utilities to get a portion of their electricity from renewable energy sources.

Concessions were made during negotiations, causing some environmental groups, including Greenpeace, to withdraw support for the bill and business groups to warn that the impact on new technology development will muted.

Even after the passage through committee by a 33-25 vote, the bill needs to pass other House committees before it can be voted on later this year.

There is concern that the targets won't effectively cut back on global warming emissions. But on the whole, green technology advocates and business people were pleased to see the U.S. move forward with some form of regulation to put a price on carbon emissions.

Carbon regulations will only affect energy-intensive industries such as utilities and industrial manufacturers. Creating a cap that declines over time will stimulate development of energy efficiency and alternative power generation technologies, proponents said.

"As the President's economic advisers said this week, a cap on global warming pollution is essential to our economic recovery and our long-term financial health. The economic benefits of a cap are too big to pass up, and the costs of inaction on climate are too big to ignore," said Fred Krupp, the president of advocacy group Environmental Defense Fund, in a statement.

Other provisions in the bill include a "cash for clunkers" program where consumers get a credit after purchasing a more fuel-efficient car.

A Clean Energy Bank would be created to help finance development of emerging energy technologies, such as algae-based biofuels and enhanced geothermal.

Coal tech and allowances
The cap on greenhouse gas emissions is set at 17 percent below 2005 levels by 2020, and 83 percent by 2050, which is a less aggressive timescale than originally proposed. The cap-and-trade program would allow heavy polluters to buy and sell pollution permits, or allowances.

A renewable electricity mandate would require utilities to get 6 percent of their electricity from renewable sources--sun, wind, geothermal, or biomass--by 2012 and 20 percent by 2020.

In general, businesses prefer a cap-and-trade system over a tax on carbon emissions. A cap-and-trade system works around permits through which heavy polluters, such as utilities and big manufacturers, can buy and sell theses allowances to emit carbon.

The bill is structured so that energy-intensive industries have time to transition to more efficient and less polluting operations by giving them free permits, rather than auctioning them.

In the utility industry, about one-third of the allowances would be free to utilities during the initial years. Giving away these permits is designed to prevent utilities and natural gas companies from spiking up energy cost for consumers.

However, Waxman told committee members on Thursday that he will hold more hearings on allowances to further refine the details, according to reports.

Many politicians from Midwest and southern states that rely heavily on coal for power generation sought to push back the timing of the caps so that technology to pump carbon dioxide from coal-burning power plants can be developed. Many utilities plans to use carbon capture and storage to meet the emissions caps but the technology is still not commercially available.

Meanwhile, politicians from southeastern states that don't have the same sun or wind resources resisted the renewable energy mandate. In addition to using alternatives such as biomass, utilities can partially meet the mandate through efficiency measures.