Cap and Trade
On June 26th the U.S. House of Representatives passed the American Clean Energy and Security Act of 2009 by a vote of 219-212. The goal of the 1300+ page bill is to “create millions of clean energy jobs, put America on the path to energy independence, and cut global warming pollution.”
The main mechanism to generate these results is what is called a “cap and trade” system. The legislation would cap or limit the amount of carbon dioxide and other green house gases that are emitted. Businesses that emit green house gases in excess of the cap would have to obtain “credits” which would be traded like commodities, much like corn and soybeans, to cover their emissions.
Our lobbyists at the National Rural Electric Cooperative Association (NRECA) have been working diligently to protect your interests and other Cooperative members across the country to mitigate the impacts of this legislation on your electric bills. They will continue to work on the bill now that it has moved to the Senate for their consideration and action.
There are still two major concerns with this bill that we hope to have addressed in the Senate. One is the limits or “cap” placed on the levels of greenhouse gas emissions. The bill requires a 17% emissions reduction from 2005 levels by 2020; and increasing over time to 80% by 2050. This is a little misleading because it does not account for any growth in energy consumption. Factoring in growth, it would really require about a 24% reduction by 2020. We do not believe that the technology exists to meet the required 24% reductions by 2020. We will be working to establish more realistic reduction levels.
One other major issue we are concerned with is the formula used to allocate credits in the early years of the program. In order to keep electric prices from skyrocketing in 2012, the electric utilities will be awarded free credits to cover a portion of their emissions. Under a deal cut with the investor-owned utilities trade organization, EEI, half of the credits are allocated based on kilowatt-hour sales and half on actual emissions. This formula benefits utilities on the west coast and northeast parts of the country at the expense of the Midwest and Southeast. NRECA was successful in increasing the number of credits awarded to electric cooperatives, but we are still pushing for changes in the Senate that would award the credit based solely on utilities’ level of emissions.
Our folks at NRECA will be working hard to get these changes made, but they still need your help. I hope that you will contact Senator Harkin and Senator Grassley and ask them to support us in establishing realistic reduction levels and that any credit be allocated based on the utilities’ level of greenhouse gas emissions. You can contact them both by logging on to www.ourenergy.coop. We will help you ask the question.