The House Energy and Commerce Committee was the first to pass legislation in response to the President’s goal of enacting climate change legislation this year.  During the transition to alternative, renewable sources of power, the cost of energy will rise.  All consumers will feel the pinch, especially low- and moderate-income people.  At the same time, the potential for creating new “green collar” jobs is significant.
The ultimate goal of climate change legislation is to set a path toward curbing global warming by limiting greenhouse gas emissions produced by the use of fossil fuels like coal and gas. By creating permits to emit greenhouse gases with monetary value, companies will have an incentive to conserve or to switch to alternative energy sources.  Whether the government receives payments for these permits to fund help for consumers, investments in renewable energy, and other public purposes is shaping up to be a contentious element as Congress gets to work on climate change.  While President Obama had recommended government auctions of all the permits, the House Energy and Commerce Committee opted to auction very few.  (For more details on the issues around climate change policy and how it affects low-income people, see Human Needs Report for May 11 at: http://www.chn.org/humanneeds/090511c.html.)

After weeks of negotiations between Chairman Henry Waxman (D-CA) and Committee members and four days of debate including scores of amendments, the American Clean Energy and Security Act of 2009, H.R. 2454, was approved by the Committee, 33-25, on May 21.  The votes were generally along party lines, but four Democrats, Representatives John Barrow (GA), Jim Matheson (UT), Charlie Melancon (LA), and Mike Ross (AK), voted against the bill.  Republican Mary Bono Mack (CA) voted in favor of it.

Low-income advocates are focused on assuring that when climate change legislation is enacted there are sufficient resources available to offset the losses in purchasing power of vulnerable low-income consumers due to higher energy costs.  Beginning in 2012, H.R. 2454 calls for companies to have a permit for each ton of carbon they emit.  The bill provides for reimbursing the poorest 20 percent of the population from revenues obtained by auctioning 15 percent of the permits to the polluting companies.  Low-income households who file federal income tax forms would receive a new refundable energy credit.  Those outside the tax system could receive an energy refund through state agencies using existing mechanisms like the electronic benefit transfer (EBT) cards used in the Supplemental Nutrition Assistance Program (food stamps).  The Environmental Protection Agency is charged with calculating the reimbursement based on the average cost to consumers in the bottom income fifth resulting from climate change policies that are ultimately enacted.  This amount would be reduced by the breaks in rate increases low-income households receive from local gas and electric companies (see below).  For more details see Center on Budget and Policy Priorities May 20 report at: http://www.cbpp.org/files/5-20-09climate.pdf .

Advocacy organizations support auctioning 100 percent of emissions permits and using the resulting revenue to protect low and moderate-income consumers and maximize investments in clean energy solutions that create good jobs in the United States.  However, H.R. 2454 calls for giving the remaining 85 percent of the permits not auctioned free with the highest percentage (44) going to local gas and electric companies.  These companies would be required to use the value of the permits to offset rate increases for their residential consumers and commercial customers.  While this would provide some relief to all households, it would not totally offset their increased energy-related costs.

The remaining 41 percent of the permits would be given to: states to fund renewable energy and energy efficiency projects, coal companies, manufacturers in energy-intensive industries such as steel and chemicals, environmental protection programs, oil companies, and automakers.  One percent of the value of the permits would be used for worker assistance and job training.

H.R. 2454 calls for cutting global warming pollution by 17 percent compared to 2005 levels in 2020, by 42 percent in 2030, and by 83 percent in 2050.  The bill would require that 15 percent of electricity come from renewable sources such as wind and solar power by 2020.  The legislation calls for a five percent reduction in energy use through the development of energy efficient technologies.

Nine committees in the House and four in the Senate have jurisdiction over portions of climate change legislation.  It is unclear when any of the other 8 committees in the House will act.  Ways and Means Committee Chairman Charles Rangel (D-NY), whose committee has jurisdiction over how revenues from the auctioning of permits will be distributed, has said that moving health care reform should be the first priority.

On the Senate side, the Environment and Public Works Committee, with jurisdiction over setting emissions standards and allocating permits, has taken a ‘wait and see’ approach to what happens in the House before acting.  They are planning informal workshops on the issues this summer. The Senate Energy and National Resources Committee under the leadership of Chairman Jeff Bingaman (D-NM) is developing its own bill.  On May 21 the Committee defeated an amendment by Senator Jeff Sessions (R-AL) to kill the renewable electricity standard requiring 15 percent of electricity to come from renewable sources like wind and solar energy by 2021. In order to win Democratic support, the mandate had been lowered from 20 to 15 percent.  Victory on the Sessions’ amendment was a critical step in moving the Committee’s bill forward.  Other action on the bill was suspended until after Memorial Day recess.

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