In one of the most politically volatile legislative seasons that we have seen for many a year, the much vaunted climate bill sponsored by Senators John Kerry and Joseph Lieberman has been received with equal doses of skepticism and praise. Triumphantly tagged the American Power Act, the proposal is most notable for the lack of one prominent Republican senator’s endorsement. Sen. Lindsey Graham turned his back on the bill during the final days of completion.
More than one year previously, the House of Representatives trumpeted the American Clean Energy and Security Act, seen by many as an important piece of climate legislation. It took a long time for the American Power Act to emerge and there are certain similarities. However, the ACES Act called for a more comprehensive cap and trade mechanism, while the Senate version deals with curtailing carbon emissions by focusing mainly on power utility companies and the very largest emitters.
The American Power Act proposes that revenues raised from the fees paid by the utility companies and other industrial organizations in the future would be largely rebated to consumers. This is intended to cushion the expected rise in the cost of utilities caused by the effective premium on a ton of carbon. Indeed, two thirds of all revenues raised will go back to consumers, rising to 75% in the future.
While Pres. Obama originally proposed a cap and trade system to work across all of factors of the economy, the American Power Act legislation proposes targeting only the heaviest emitters, i.e. those who produce more than 25,000 tons of carbon per year. Effectively, this means that the legislation covers some 7,500 organizations, although a secondary market will be created, allowing voluntary participation on a highly regulated, “cash cleared” basis.
There was much speculation that the Kerry/Lieberman legislation would seek to exclude any state or regional initiatives aimed at harnessing carbon emissions. This would have a significant effect on California’s AB 32 as a prime example, which is just starting to roll out. However, programs such as this are protected under the proposals.
A number of incentives have been included in the American Power Act to help fund nuclear power plants through loan guarantees, tax credits, federal risk insurance and expedited licensing. Renewable energy advocates believe that not enough has been done to help them with their individual causes and insist that more is done to block offshore oil drilling in the wake of 2010′s major events.
2010 is an election year and many incumbent senators and representatives are concerned about their futures. Energy reform is a very hot topic as the BP oil rig disaster is expected to remain in the news for many months of the year. The American Power Act includes provisions to allow states to opt out and abandon offshore oil, at least within 75 miles of their shoreline.
A lot remains to be determined, especially when it comes to how emissions allowances are distributed and as some kind of carbon taxation is now almost certain, however, individual organizations should be very aware of their own positions. They now need to address their energy use throughout their business operations, cutting back on their emissions liabilities and making sure that they are as sustainable as possible to meet potential challenges.
Daniel Stouffer has a lot of information about the American Power Act and how a visit to www.verisae.com can aid you.
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