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Glass Half Full or Half Empty?

The House Energy and Commerce Committee voted out the long awaited climate change bill, HR 2454, America's Clean Energy and Security Act of 2009, known as the "Waxman-Markey" bill. Everyone in and outside of Washington, DC has a different view -- and not astonishingly, even within the ranks of the clean energy communities.

According to Solar Nation, “it's doubtful whether the legislation can scratch the surface of the problem it purportedly addresses.  For example: “ It's widely felt that GHG emissions must be reduced by 25-40% of 1990 levels by the year 2020;  although the bill's boosters are aiming for '17% of 2005 levels,' in reality this means a reduction of only 4% of 1990 levels — a pitiful under-achievement.

  • Instead of auctioning off emissions permits to raise money to invest in a clean energy economy, the bill proposes to give away up to 85% of them to utilities, carbon-intensive industries, natural gas companies, and others.  Only 10% would go to states for renewable energy and energy efficiency investment, and 0.5% for green job training.

  • The proposed national renewable electricity standard for utilities has also been diluted from 20%-clean-energy-by-2025 down to 15%-by-2020; Worse, if utilities complain to their state governors about meeting this mandate, the figure could be knocked down to 12% for clean energy generation.”

And Public Citizen stated, “We strongly urge lawmakers to make major overhauls to this bill or go back to the drawing board. Now more than ever, Public Citizen needs you to tell your representatives that climate change legislation should not be weakened by the corrupting influence of big money. The problem? Oil, coal and nuclear industries had far too much say in its shaping, and it shows. Public Citizen supports strong, effective climate legislation, but this bill won't achieve it. We can talk about hoping to reduce greenhouse gas emissions significantly, but this bill won't do it. It creates a legal right to pollute for industries and gives away credits for free to allow companies to meet those targets without having to pay for them. That is not going to spur the kind of investments we need.”

Greenpeace echoed those sentiments, “While science clearly tells us that only dramatic action can prevent global warming and its catastrophic impacts, this bill has fallen prey to political infighting and industry pressure. We cannot support this bill in its current state”

The Solar Energy Industries Association takes a rosier view of the American Clean Energy & Security Act of 2009. “The House took a major step forward today in cutting pollution while putting our economy back on track, thanks to the leadership and persistence of Chairman Waxman, Ranking Member Barton, Sub-Committee Chairman Markey and Ranking Member Upton.  This bill will invest in clean energy for the future, while creating jobs and fueling investment in the solar industry.....Specifically, this bill stimulates deployment of solar energy by allocating carbon allowances for renewable energy and energy efficiency, applying triple renewable energy credits (REC’s) for distributed generation (like solar), including solar water heating systems as an energy efficiency measure, creating a Clean Energy Bank, and establishing net metering and interconnection standards for federal facilities that install solar.”

Generally clean energy advocates support the RPS requirement of 20% by 2020 and through 2039,  energy efficiency can be combined into the RPS title with up to 25% of the RPS requirement coming from energy efficiency improvements.  And the proportion of renewable generation in a mixed facility is counted toward RPS requirement. Credits can be banked.

For Distributed Generation: a facility that generates renewable electricity (solar thermal would not count) and primarily serves 1 or more electricity consumers at or near the facility site and is no larger than 2 megawatts in capacity would be elegible for a 3x REC multiplier.

Alternative Compliance Penalties: $25 per megawatt-hour (adjusted for inflation) payment to go to states to be used either for deploying renewable electricity generation or for energy efficiency mechanisms.

Other amendments accepted in the House Committee’s Bill reported by the Business Council for Sustainable Energy: “American Clean Energy and Security Act (HR.2454), the Committee rejected an amendment by Congressman Cliff Stearns (R-FL) to include nuclear power under the renewable electricity standard in the legislation.  The amendment failed on a vote of 26-30.”

So what is the Waxman Markey Bill?  Is it a sell-out to the utilities and political green window dressing, or solid incremental improvement to monetize carbon which will usher in the renewable energy century?

I am here to say “all the above.”

To President Obama’s credit and that of the Congressional Democratic leadership — they are absolutely committed to passing a climate bill in 2009.  That said, there is lots of horse trading around several core issues including the impacts in regions of the country where coal and oil/natural gas have employment impact and in farming and heavy industries where increases of energy prices can effect the speed of the economic recovery.

But there is absolutely no question that the President believes the U.S. must have a climate stance now that is endorsed by the U.S. Congress and he plans to use his first year honeymoon period to usher in its passage.

That said, does the bill really help the clean energy markets? Marginally, yes. By easing interconnection barriers and adding multipliers for distributed generation under 2 MW, the market will increase slightly. Many experts question the effectiveness of multipliers, and even more experts question whether the RES goals would happen anyway with without this Bill. I tend to side those experts, but also believe a greenhouse gas bill with goals for renewables will condition the wider market and send perceptible economic and political messages that green energy is the economic direction: and renewable energy and energy efficiency are the preferred pathways.

So what about the claims by Solar Nation, Greenpeace and Public Citizen? Well, they are surely right.

Greenpeace and Public Citizen, along with many other environmental groups, do not believe the Bill will reduce carbon to levels needed to stabilize the effects of climate change. They see a fundamental flaw in targets and requirements. Solar Nation’s concerns that the renewable targets are too low and state and utility requirements too weak, surely have justification.

From my experience, at least thirty states can exceed the targets and half of the remaining states could reach targets with modest changes in building codes, utility regulation and interconnection, and tax and economic development incentives for new green manufacturers, distributors, installers and service providers.

So the politics and the results are murky. The process is not yet over, but the forces that want to kill the bill are stronger as are the green forces that want to strengthen the bill and add some teeth.

Many doubted that the USA, as one of the largest greenhouse gas emitters, could politically make the changes needed to seriously address the climate, particularly in the aftermath of the economic meltdown. But the green legions that drove President Obama into the White House surely have strong aspirations to do “the right thing.”

I can assure you, participating in this dialogue and political process has not been boring — and action in the Senate is not expected to be dull by any means. You’ll hear my insights after the Senate acts, so stay tuned.

Scott Sklar is President of The Stella Group, Ltd.,  a strategic marketing and policy firm for clean distributed energy users and companies. Scott Sklar is Chair of the Steering Committee of the Sustainable Energy Coalition and serves on the (non-profit) Boards of Directors of, the Business Council for Sustainable Energy, and the Renewable Energy Policy Project, and   CoChairs the Policy Committee of the Sustainable Buildings Industry Council.. klar was also appointed in April 2007 onto National Advisory Council for Environmental Policy & Technology (NACEPT) of USEPA.and be contacted at solarsklar@aol.com.

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