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House floats draft of energy and climate change bill

Green technologies stand to get further support with the bill, particularly in renewable energy and efficiency, but global warming provisions face a tough political fight.

Updated on April 1 at 6:15 a.m. PDT with comments from utilities.

Updated on April 2, 3:05 p.m. PDT to address dispute over Boehner cost estimate.

The first draft of an energy and climate change bill calls for national mandates for renewable energy and energy efficiency but leaves crucial details on carbon regulations open for negotiation.

The House Energy and Commerce Committee on Tuesday released the first draft of the American Clean Energy and Security Act of 2009, (click for PDF) which its backers hope will be voted on this summer. Key figures for the bill in the House are Rep. Henry Waxman, who chairs the Energy and Commerce Committee, and Rep. Edward Markey, who chairs the Energy and Environment subcommittee.

The document was well received by clean-energy advocates on Tuesday but panned by political foes who complained that the global warming portions of the bill will amount to an energy tax on consumers.

According to a summary document (click for PDF), major provisions of the bill are:

  • A national renewable electricity mandate where utilities need to get 6 percent of power from solar, wind, biomass, or geothermal sources in 2012 and 25 percent in 2025. One-fifth of the requirement can be met with energy-efficiency measures.

  • A demonstration facility for carbon capture and sequestration where carbon dioxide from coal-burning power plants is stored underground.

  • Giving authority to the Federal Electricity Regulatory Commission for planning power grid modernization with smart-grid technology and upgrades to the transmission lines.

  • A single federal fuel-efficiency standard and low-carbon fuel standard for biofuels.

  • An "energy efficiency resource standard" to create incentives for electricity and natural gas companies to invest in customer efficiency programs.

  • A global warming reduction program modeled on recommendations from U.S. Climate Action Partnership, a coalition of large corporations advocating regulation. The target is a 20 percent reduction of greenhouse gas emissions below 2005 levels in 2020, 42 percent reduction in 2030, and 83 percent cut in 2050.

  • Programs to promote "green jobs," such as training, and rebates for heavily polluting industries that could be put at a competitive disadvantage from costs related to carbon regulations.

The proposals build on the significant energy and efficient-related investments already passed as part of the government stimulus package earlier this year. In general, green technology company executives and investors have said the stimulus plan can help the finance-challenged solar and wind industries in the short term and drive investment in smart-grid technologies and weatherization services.

In reaction to Tuesday's draft bill, environmental groups said that the bill moves the country in the right direction by lessening dependence on imported oil while investing in new green technologies.

"Firm limits on global warming pollution will drive investment to recharge our economy today and enhance our economic stability tomorrow. This discussion draft recognizes that we must act quickly to avoid the worst impacts of climate change and jump-start our economy with clean jobs," said National Resources Defense Council president Frances Beinecke in a statement.

House minority leader, Ohio Republican John Boehner, argued in a statement that the global warming-related portion of the bill will impose as much as $3,100 a year in energy-related costs on households during a recession.

How much and whether carbon regulations will raise electricity prices, is a source of debate. However, the author of a Massachusetts Institute of Technology (MIT) report (click for PDF), which is the source of Boehner's estimate, said that Boehner "misrepresented" the study.

MIT professor John Reilly, who published a study of cap and trade proposals in 2007, on Wednesday sent a letter to Boehner saying that actual number is closer to $340 per household per year, or about ten times less. (Click here for text of entire letter). The Republican party published a release on Thursday defending its cost estimate.

The cost of enacting climate change regulations remains a difficult question both practically and politically. The energy bill draft does not propose a specific mechanism for how a price is fixed to carbon dioxide emissions by heavy polluters. Some observers expect that an energy bill will only be passed this year if climate regulations are separated out.

At least two utilities on Wednesday supported the bill. Lew Hay, CEO of Florida-based FPL Group, a significant investor in wind and solar energy, said in a statement that the bill is a "bold blueprint" to confront "a triple threat of challenges: an economy in recession, an overdependence on foreign energy, and a warming planet."

While touting its actions on energy efficiency, National Grid also applauded the bill for addressing climate change but added that the entire country now needs a "clear framework" to reduce carbon emissions.

For more reaction to the draft bill, see the The New York Times, GreenWire, and Dow Jones.