CHN: House Passes Landmark Climate Change Legislation

On June 26, after months of negotiating, Representatives Henry Waxman (D-CA), Chairman of the House Energy and Commerce Committee, and Edward Markey (D-MA), Chairman of the Energy and Environment Subcommittee, steered the American Clean Energy and Security Act of 2009, H.R. 2454, to a 219-212 victory in the House.   The legislation would reduce greenhouse gases that threaten the planet with global warming.  In a victory for economic justice, the poorest households will be protected from rising energy costs and many clean energy jobs will be created, some of which will go to low-income workers.
The bill reflects compromises with legislators over regional and parochial concerns and with multiple sectors of the U.S. economy.  Ultimately 8 Republicans voted for the bill and 44 Democrats voted against it.  Opposition ranged from concern that the legislation does not do enough to reduce global warming to doubts that failure to act poses an ominous danger to the planet, despite scientific consensus that the threat is serious.  With billions of dollars at stake, the final shape of the legislation after Senate action and House-Senate compromise is far from clear.  The overall goal of this massive environmental bill is to reduce carbon emissions that cause global warming.  The legislation is based on a ‘cap and trade’ system that requires entities that are the primary sources of the emissions – power plants, oil refineries, factories and others – to purchase permits based on the number of tons of carbon they emit.  If they are able to reduce emissions below the level their permits allow, they can sell the permits to those who need more.  (For more details on the issues around climate change policy and how it affects low-income people, see Human Needs Report, May 11.)

Transitioning to an economy that relies on environmentally-friendly renewable sources of energy, such as wind and solar power, is sure to create higher energy costs.  A major focus of low-income advocates on climate change legislation is to assure that resources are available to offset these costs to vulnerable low-income consumers.  H.R. 2454 calls for auctioning 15 percent of the permits and using the proceeds to totally offset losses in purchasing power for the poorest 20 percent of households due to increased energy costs.  This assistance supplements the relief that households would receive from provisions in the bill that give free emission permits to retail gas and electric companies to keep utility bill costs down for all of their customers.  The lowest-income families already receiving assistance from the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), SSI, or other benefits through states’ human services Electronic Benefits Transfer (EBT) systems would automatically receive the energy aid in their debit cards.  Low-income households not in the state EBT system would apply to be enrolled.  The total relief they would receive would be equal to the average energy-related loss to households with incomes at 150 percent of the poverty line for a household of their size.

Currently low-income individuals with no qualifying children tend not to participate in state human services programs, but some receive a small amount of relief from the Earned Income Tax Credit (EITC) program.  To address the hardships faced by this population, the legislation doubles the EITC benefit they would receive.

The bill has the potential to create millions of new jobs in areas including those related to developing clean energy technologies; making buildings, lighting, and appliances more energy-efficient; and creating clean transportation infrastructure.  The Coalition on Human Needs joined other advocates in pressing for a provision assuring that a portion of the construction jobs created, including retrofitting existing buildings, would be targeted to low-income and other under-represented individuals.  In what is viewed by advocates as a positive first step, H.R. 2454 calls for establishing a Green Construction Careers Demonstration Project.  In an unspecified number of demonstration projects to be designed by the Secretary of Labor, some of the jobs will be targeted to TANF and SNAP recipients and veterans, or workers in census tracts in which at least 20 percent of the households have incomes below the poverty line, or those in families whose incomes did not exceed 200 percent of the federal poverty line in the prior two years.  The program is open to participants in apprentice and job-training programs. If the provision remains in the final version of the bill it will be incumbent on advocates to press for a significant number of demonstration projects and for a significant portion of the jobs to go to the targeted populations.

The comprehensive legislation sets goals of reducing carbon emissions over 2005 levels by 17 percent in 2020, 42 percent in 2030, and 83 percent in 2050.  It would require energy production companies to generate 20 percent of their electricity from a combination of renewable sources and energy savings by 2020.  Over a period of six years, residential buildings would be required to use 30 percent less energy and new buildings 50 percent less energy comparable to building standards set in 2006.  The Congressional Budget Office and the Joint Committee on Taxation estimate that the legislation would result in net deficit reduction of $9 billion over 10 years.

The compromises deemed necessary by Chairman Waxman to gain support for passage have caused anxiety even among some members who ultimately voted for the bill. Concerns include whether there will be strong enough oversight to prevent industries with free permits from manipulating the system for profit, and whether the legislation will result in real reductions in greenhouse gases.  Some think the bill is a windfall for the farm sector. Despite being a major source of pollution, farms are not required to have permits, and are allowed to sell offsets from engaging in existing activities that do not result in additional reductions in carbon emissions.  Others who oppose using nuclear energy oppose the possibility the bill opens for building new nuclear reactors – the first in the United States since Three Mile Island accident in 1979.

President Obama originally called for auctioning 100 percent of the permits (only 15 percent are auctioned in the bill and 85 percent are given away). The Administration has nonetheless expressed strong support for the House bill based on its potential to create jobs while reducing dependence on foreign oil and mitigating the effects of climate change.  The President has, however, expressed concern over a provision in H.R. 2454 that would impose an import tariff on countries that do not have a system for reducing their carbon emissions.

Climate change legislation will be an uphill battle in the Senate where the bulk of the jurisdiction for the bill is in the Environment and Public Work Committee chaired by Senator Barbara Boxer (D-CA).  This Committee’s bill could be combined with legislation already marked up in the Senate Energy and Natural Resources Committee chaired by Senator Jeff Bingaman (D-NM).  The latter has evoked criticism for including oil drilling off the coast of Florida, allowing the U.S. to purchase oil from tar sands in Canada which produces more pollution than regular oil, and failing to make significant investments in renewable electricity.

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