Federal Cap-and-Trade Legislation Update
The American Clean Energy and Security (ACES) Act of 2009, drafted by Representatives Henry Waxman (D-CA) and Edward Markey (D-MA), passed the House of Representatives by a single vote. The Act now moves forward to the Senate, with President Obama lobbying for its passage. The ACES Act, which includes a GHG cap-and-trade scheme and annual GHG reporting, has a 25,000 tpy trigger for most sources.
According to a recent report from the U.S. Congressional Budget Office (CBO), after payroll and tax offsets, the recently proposed cap-and-trade legislation will generate approximately $253 billion from 2010 to 2019 as a result of the auctioning of emission allowances. CBO also estimated that the price of carbon dioxide (CO2) emissions allowances will increase from $15 per ton in 2011 to $26 per ton in 2019. "CBO estimates that, in 2015, a price on emissions of CO2 that raised the average price of end-use energy produced from fossil fuels by 10% would induce about a 5% reduction in such emissions," the report said. "By 2025, a similar increase in price would result in a 9% reduction in emissions, with the response continuing to increase over time at a gradually decreasing rate."
In a related development, House Energy Commerce Chairman Waxman and House Agriculture Chairman Peterson announced a deal on June 23 conceding control of the offset program that pays farmers and other landowners to reduce their GHG emissions from the EPA to the Department of Agriculture. Also, Waxman agreed to a 5-year moratorium on EPA calculating "indirect" GHG emissions from land-use changes intended to protect the viability of ethanol.