Negotiations between Committee Chairman Henry Waxman, D-Calif., and Democratic moderates on the committee resulted in sufficient support for the massive, 932-page bill (H.R. 2454), which could make it easier for utilities, coal companies and other emitters of greenhouse gases to earn carbon offsets through planting of trees and biomass on U.S. farmland.
During the four-day markup, the bill faced hundreds of amendments, mostly from Republicans. Several other, less-controversial amendments were approved by voice vote, while others were rejected narrowly after significant, lengthy debate. Earlier today, Waxman and the ranking Republican on the committee, Rep. Joe Barton of Texas, agreed to limit debate on each new amendment to 10 minutes after a second marathon session that extended past midnight. Earlier in the week, the committee had spent most of a morning debating a relatively minor change related to nuclear power, while spending much of an evening discussing a proposal to auction off all carbon allowances – an amendment that eventually was defeated by a 52-4 vote.
But passage by the House Energy and Commerce Committee will be just the first step – albeit an important one – in achieving House passage in what is expected to be a lengthy process that ultimately may include review of the bill by up to eight additional committees. Those include the House Committees on Agriculture, Ways and Means, Natural Resources and Foreign Affairs. Earlier today, House Agriculture Committee Chairman Collin Peterson, D-Minn., said that a group of 40 to 45 Democratic congressmen were prepared to vote against the climate-change bill unless their concerns over new Environmental Protection Agency regulations of ethanol and granting carbon credits for agriculture were addressed.
Amendments: Republicans, largely shut out of negotiations in drafting the bill, sought to use the committee amendment process to influence the outcome and to have their views publicized. Among the defeated Republican amendments were ones that would have expanded the definition of biomass harvested on federal lands that would count as renewable energy sources, and that would roll back the bill's carbon-emission-reduction mandates if China and India did not adopt similar measures within a year after the bill's enactment. The international issue, specifically the implications for U.S. competitiveness with China and India, were key Republican themes throughout the debate. During Wednesday's debate, Republicans were able to secure approval of an amendment that would require the EPA administrator to report to Congress annually on climate-change policies in those two countries.
On May 20, the committee rejected an attempt by Republicans to allow states to count energy from new nuclear power plants toward new renewable energy quotas. The amendment, offered by Rep. Cliff Stearns, R-Fla., was rejected 26-30 after nearly two hours of debate. Five committee Democrats voted with Stearns, but were not enough to secure passage.
Waxman finally had to use his authority to close out debate and consideration of further amendments to wrap up consideration before Congress recessed for the Memorial Day holiday.
Carbon Allowances: The House bill would allocate carbon allowances under its cap-and-trade approach in the following manner:
- 35 percent of allowances would be allocated to the electricity sector, representing 90 percent of current utility emissions.
- Local electric distribution companies, whose rates are regulated by states, would receive 30 percent of the allowances and would be required to use those credits to protect consumers from electricity price increases.
- Coal companies and long-term power purchase agreements would receive 5 percent of the total allowances, distributed by a formula recommended by the utility industry.
- The allowances for the electric and coal sectors would phase out over a five-year period from 2026-30.
- Natural gas distribution companies, whose rates are regulated by states, would receive 9 percent of the carbon allowances – which also would phase out over a five-year period from 2026-30 – and would be required to use them to protect consumers from natural gas price increases.
- Starting in 2030, the electric, coal and natural gas industries would be required to purchase carbon allowances from the U.S. government at auction. The bill also proposes to allocate 15 percent of the carbon allowances in 2014 to "energy-intensive, trade-exposed industries" (such as steel and cement) to compensate for increased costs; these allowances would decrease in subsequent years before being phased out after 2025 unless the president determines they still are necessary.
- Oil refiners would receive 2 percent of allowances starting in 2014 and ending in 2026.
- 2 percent of the carbon allowances from 2014-17 – and 5 percent starting in 2018 and thereafter – would be given to electric utilities to encourage installation of carbon- capture and sequestration technologies.
- States also would receive carbon allowances to encourage investments in renewable energy and energy efficiency, as would auto companies to encourage investment in electric vehicles and other "advanced" automobile technology.
- One percent of allowances would be directed to "Clean Energy Innovation Centers" at research universities and institutions for applied research and development of clean-energy technologies.
- Other carbon allowances would be sold at auction in an effort to finance the bill's cost.
In addition, committee Democrats involved in the negotiations agreed to require 15 percent of electricity by 2020 to be derived from renewable sources, such as wind, solar, biomass and geothermal, with another 5 percent improvement coming from energy efficiency. The original bill proposed to require 25 percent of electricity to be derived from renewable sources by 2020. States could petition the U.S. Environmental Protection Agency to go as low as 12 percent from renewable energy to as high as 8 percent in energy-efficiency improvements.
Next Steps: With the measure being referred to eight other House committees, the House Democratic leadership is expected to meet with the other committee chairmen once Congress returns June 1st following its Memorial Day recess. Given House Agriculture Committee Chairman Peterson's previously noted open hostility toward the bill, that committee likely will be called upon to include its perspectives on the bill before it is considered on the House floor.
Meanwhile, House Ways and Means Committee Chairman Charles Rangel, D-N.Y., has indicated his interest in the bill’s provisions concerning auctioning of carbon-emission permits, but has stressed that heath-care reform is his top priority. House Natural Resources Committee Chairman Nick Rahall, D-W.Va., has noted his preference to include a provision that would allow new oil and gas production offshore and on federal lands. These additional priorities and interests could result in the House considering the measure on the floor much later in the year, despite the Democratic leadership’s desire to approve the measure before Congress adjourns in late July for its August recess.