Senate Committee Tackles Kerry-Boxer Climate Bill

While substantially similar in structure to the climate legislation approved by the House this summer, the Kerry-Boxer bill proposes more stringent near-term greenhouse gas (GHG) reduction requirements than the House bill, with reductions required below 2005 levels of 20% by 2020 and 83% by 2050.

In order to emit GHGs under the cap, an entity would have to hold allowances (i.e., a permit, which equals the right to emit one ton of GHGs). A market would be created in which companies could buy and sell the right to emit. Rob Gramlich, AWEA’s senior vice president of public policy, said, “The continuing progress of this bill marks another milestone toward passing comprehensive policy that addresses climate change while changing our energy economy to one that is clean and domestic, creating thousands of new manufacturing, construction, and technical jobs to help drive our economy back to health.”

Putting a price on carbon in this way and raising the price of fossil fuels is expected to help make renewable energy more cost competitive. However, based on the analysis done to date, in the near and medium term, the carbon price will be too low to drive renewable deployment on its own. That is why the wind industry’s top policy priority has been enactment of a national renewable electricity standard (RES) as a key part of the comprehensive policy to address climate change.

On that subject, a highlight in the hearings—from a renewable energy perspective, at least—came when Federal Energy Regulatory Commission Chairman John Wellinghoff told committee members that a national RES of 25% by 2025 can be met. “I do think it is achievable,” he said. “It is time that we have a national standard, and I think the goals that you have set are very achievable." Bills passed in the House, as well as the Senate Energy Committee, over the summer include significantly less aggressive RES provisions.

The Kerry-Boxer bill distributes allowances to a variety of industries and sectors, including electric utilities, manufacturers, refiners, and state governments. Of particular importance to the wind industry, the bill provides a small pool of allowances to be distributed directly to renewable generators. Selling these allowances would provide wind farm developers with another source of revenue to keep their projects cost competitive.

The bill also includes provisions to benefit coal with carbon capture and sequestration, nuclear power, and natural gas.

The legislation could be voted on in the committee as early as the first week of November. It is expected to eventually be combined with the broader energy legislation approved by the Senate Energy and Natural Resources Committee earlier this year, which includes a national renewable electricity standard and transmission provisions. Timing for floor consideration of the combined package is unclear.

This article first appeared in Wind Energy Weekly, and was republished with permission from the American Wind Energy Association.