As Congressional hearings on draft green economy legislation begin, the Environmental Protection Agency has found that the bill will “play a critical role in the American economic recovery and job growth.” The initial EPA analysis, based on the draft of the American Clean Energy and Security Act (ACES) released by Rep. Henry Waxman (D-CA) and Rep. Edward Markey (D-MA), looks only at the effects of the cap-and-trade “market-based emissions program,” without modeling the effects of the complementary renewable energy and energy efficiency standards in this comprehensive legislation. Despite the limited review, the EPA has found that Waxman-Markey would “enable American workers to serve in a central role in our clean energy transformation”:
The draft bill would establish a wide range of policies to promote the development and deployment of new clean energy technologies that would fundamentally change the way we produce, deliver, and use energy. The bill would: (1) advance energy efficiency and reduce reliance on oil; (2) stimulate innovation in clean coal technology to ensure that coal remains an important part of the U.S. energy portfolio by capturing harmful greenhouse gas emissions before they enter the atmosphere; (3) accelerate the use of renewable sources of energy, including biomass, wind, solar, and geothermal; (4) create strong demand for a domestic manufacturing market for these next generation technologies that will enable American workers to serve in a central role in our clean energy transformation; and (5) play a critical role in the American economic recovery and job growth – from retooling shuttered manufacturing plants to make wind turbines, to using equipment and expertise in drilling for oil to develop clean energy from underground geothermal sources, to tapping into American ingenuity to engineer coal-fired power plants that do not contribute to climate change.
The ACES Act does not address the question of how allocate the revenues of a carbon market auction. Industry executives and conservative allies like Sen. John McCain (R-AZ) are calling for free giveaways to polluters. However, the EPA analysis finds that polluter giveaways are “highly regressive.” A full auction of permits and equitable returns, however, allows for working families to come out ahead:
Assuming that the bulk of the revenues from the program are returned to households, the cap-and-trade policy has a relatively modest impact on U.S. consumers. . . . Returning the revenues in this fashion could make the median household, and those living at lower ends of the income distribution, better off than they would be without the program.
The EPA modeling finds that a significant proportion of the required emissions reductions in Waxman-Markey are achieved through the use of one billion tons of international offsets a year. Because of the use of offsets, the U.S. electricity sector is expected to produce 10% fewer greenhouse gas emissions from 2010 to 2025, although the overall cap declines by over 25 percent.
Daniel J. Weiss, Senior Fellow and Director of Climate Strategy at the Center for American Progress, tells the Wonk Room:
The EPA analysis confirms that the American Clean Energy and Security Act will create jobs in the clean energy industry, benefit consumers, slash oil use, and cut pollution. This analysis disproves the false claims made by those who want to continue our existing energy policies.
,The Environmental Defense Fund notes:
EPA’s new analysis shows that the market-based cap on carbon contained in the American Clean Energy and Security Act can be met for $98 to $140 per year for the average American household. Those estimates only consider the costs of reducing global warming pollution, and do not take into account the benefits of action.