Originally published on the CGS blog on July 10, 2009.
After passing through the House, The American Clean Energy and Security Act, H.R. 2454, has continued to attract much attention and controversy as it awaits Senate vote. Opponents have tried to brand it as a tax-raising, economy-shattering piece of legislation. But this is not so.
Hearings have begun to discuss the climate legislation under the leadership of Senator Boxer and partnering chairs of other Senate committees. Many different views have been expressed, and some have stood out. One such view promotes establishing a cap-and-trade system and imposing a price on polluting. The 
climate bill puts in place powerful incentive possibilities to spur investment and research in energy technology. Senator Kerry noted that the energy market is a 6 trillion dollar market with about 4.5 billion eligible users. This represents enormous opportunities, and explains why China is currently investing aggressively in alternative energy development. Whoever pushes through this industry and establishes themselves first will be the winner, and this climate bill creates the incentives to make that happen in the U.S.
The provision of allowances, whereby certain companies would be given pollution permits instead of having to buy them, has also come under heavy fire. But these allowances, if distributed carefully, constitute an important method to secure the economic feasibility of the bill. Energy intensive industries vulnerable to international competition need such provisions to help them transition to a new, green economy. Otherwise, they would be tempted to move production to another country with lower standards, instead of reducing their emissions. Visit Robert Stavins’ blog to see how the allowances have been allocated beneficially.
Witnesses also advised against playing industries off each other, and framing some (like coal) as losers and others (like wind energy) as winners. This must be seen as an economy-wide attempt to transition to a fair and healthier form of development. Further, improvements in energy efficiency- boosted by the right kind of legislation- are in the financial interest of every company. Dow Energy has demonstrated this by making energy efficiency investments that saved the company over 8 billion dollars and made energy efficiency gains equaling all the power used by every home in California in a year since 1994.
On the other side of the bill, senators have raised a broad range of excuses for opposing it. Senator Inhofe has employed scare-tactics, which shouldn’t be surprising considering his history of questioning the reality of global warming. Many have continued to harp on “India and China,” insisting that the U.S. must wait for them to do something significant. Senator Kerry, who recently returned from China, pointed out the China is willing to constructively engage on the issue after seeing U.S. leadership. Other countries are also looking forward to U.S. leadership ahead of the international climate talks in Copenhagen this December. Experts have testified that the threat of international competition with respect to India and China applies to limited exports, so there is room to work around it. The developed and developing world can’t keep waiting for each other to act and get stuck in a chicken-and-egg situation. The point is, there is technology available to reduce domestic and overseas emissions, and the right kind of legislation is needed to help proliferate it.
The old method of development, and the fear of “India and China,” has not helped. Our old industries have failed to create the amount of jobs needed in the economy, and have contributed to global warming, causing a range of health hazards. Stimulating an energy efficient economy will create much needed investment and create new jobs, like the production of wind turbines and solar panels. It’s time for the Senate to see the light.
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