Waxman-Markey Bill

US law makers always have great sounding names for their bills and acts as they are normally named after the legislators themselves rather than some drab sounding government diktat.


One bill that is going to potentially change the world is the Waxman-Markey bill. The bill attempts to replicate the EU-ETS in the US creating a federal cap and trade scheme. It passed the first hurdle getting through the House of Reps after some last minute compromises to appease the farm and coal lobbies. In the end, Republicans saved the bill from Democrats who represented the rust belt and the coal lobby. It now has to go through the Senate in September where a tough fight is expected.

So what does it entail? The Grist has a great summary of the 1000 page bill. First, the bill is asking for cuts of 17 % from 2005 levels by 2020 and an 80 % reduction by 2050. Sounds impressive, but it's only 3.6% below 1990 levels by 2020 compared to the EU where the reduction is 20%. However, the scope is far wider in the US system. It includes transport fuel, aviation and covers 80% of emissions compared to 46% in the EU.

Included in the bill is a standard requiring utilities to meet 20 percent of their load needs using renewable sources or energy efficiency by 2020, with at least 15% coming from renewable electricity and new funding for new clean energy technologies, including renewable-energy, energy-efficiency and clean-coal technologies

Unlike the Phase 2 EU-ETS, where 90% of carbon allowances were granted free to industry, the US system is auctioning 60% of theirs. Those allowances that are free will be granted to the usual industry sectors such as gas and coal, but also to adaptation which might mean renewable energy companies. There is also a price floor of $10/tonneCO2 which many have argued for the EU-ETS.

Offsets will be allowed but capped and 50% must be in the US with farming and forestry to play a large part. The EU has the CDM and JI Kyoto Protocol initiatives which may change after Copenhagen in December.

The bill is a radical departure from the Bush years and is receiving fierce criticism from everyone: farmers, the oil business, greens and the coal lobby. It won't please everyone, but if it gets passed we have a real chance to make progress on climate change. Americans, the world needs you to make the right choice!