Energy

The vast majority of scientists conclude that the Earth's climate is warming and that the increased rate of warming is due to human activities. These changes are brought on by the emission of heat-trapping gases, like carbon dioxide (CO2) and methane (CH4), which are known as "greenhouse gases" (GHG) because they trap heat in our atmosphere. Scientists conclude that average global temperatures have been rising since the beginning of the 20th century, with most of the warming occurring over the past 30 years. Unless reversed, these changes in climate will cause huge dislocations and have a major impact on the way we live across the globe.

Over the centuries, there have been natural periods of heating and cooling, but scientists say the pace and severity we are seeing now cannot be attributed to natural cycles. These indications include the shrinkage of Arctic ice and glaciers, rising sea levels, shifts in fisheries, and changes in weather patterns. These widely documented effects have contributed to a growing sense of urgency.

Carbon is targeted as the culprit because it is a common component of greenhouse gases and a typical by-product of coal-burning power plants. Since carbon's damage to the environment is not captured in the price of carbon products, their prices tend to understate their true cost. Because nuclear power plants are capital-intense and costly, they may compare poorly with carbon-fueled plants because the dollar cost of nuclear power plants is higher than the dollar cost of coal or gas. But once the external costs of carbon are computed, nuclear power becomes more cost-competitive and attractive. That is one reason firms like Duke Energy, Shell Oil, and General Electric support H.R. 2454.

As passed by the House, the American Clean Energy and Security Act would:

* Set up an exchange so that major carbon sources with emissions over legal limits can buy allowances and comply with the law, and those with unused allowances can sell their extra emissions capacity. Gradually, over time, the bill would ratchet down the volume of emission allowances, so that major sources will have to pay the government if they continue to release excess emissions.

* Impose limits on greenhouse gases emitted by major sources to slow down global warming. The bill seeks to reduce carbon emissions by 17% by 2020 and to limit temperature increases to 3.6 degrees over pre-industrial levels by 2050.

* Make 85% of all emission allowances free at start-up.

* Require electric utilities to generate 20% of their power through renewable energy (such as windmills, solar, and biomass) by 2020, with up to 8% of the requirement met through energy efficiency measures.

* Require, after 2025, all new coal-fired plants to capture and sequester carbon emissions.

* Invest the government's proceeds from cap and trade in efficient energies, electric vehicles, and carbon capture and sequestration.

* Distribute 32% of the allowances to coal-dependent electricity areas as subsidies to lower the energy costs of residential users.

* Sanction tariffs on imports from countries that do not agree to carbon reductions.

One reason for moving this bill now is the decision of the Supreme Court in Massachusetts v. Environmental Protection Agency (EPA). The Supreme Court ruled that methane and carbon dioxide are pollutants that must be regulated under the Clean Air Act. If Congress does not act, the EPA will promulgate regulations for the reduction of carbon dioxide and may do so without taking into account the economic impact to rate payers, manufactures, as well as many other affected parties. The bill before Congress attempts to mitigate much of the cost associated with a cap-and-trade system by providing for tax credits, weatherization assistance, efficiency increases, and investments in renewable energy.

Over the past several years, three models have been proposed to reduce GHG emissions. One is carbon regulation; a second is a carbon tax; and a third is a cap-and-trade system. Cap-and-trade is a mechanism for setting an overall cap on emissions and selling permits called "allowances" for every ton of carbon released into the atmosphere. The carbon tax is less complex, but cap-and-trade has come to be favored because it caps fixed amounts of carbon while plowing the revenues from the sale of allowances back into the economy. The revenues are redistributed to lower the cost of fuel to consumers; to develop technologies like carbon sequestration; and to explore alternative and renewable fuels.

In March 2009, the Chairman of the House Energy and Commerce Committee, Rep. Henry Waxman (D-CA), released a draft of a proposed cap-and-trade and clean energy bill. The bill, while lacking some important details, provided a basis to begin discussions on how best to structure a cap-and trade program as well as how to structure a renewable portfolio standard, which sets goals for energy efficiency and for using higher and higher percentages of renewable energy over time.

The legislation has a number of goals: (1) to reduce the carbon released into the atmosphere by roughly 80% by 2053; (2) to invest in research and development for renewable sources of energy and related technologies, creating new jobs and giving us the lead in these technologies; (3) to mitigate the impact on consumers and manufacturers by providing free allowances to certain sectors, including energy companies, oil refineries, and energy intensive industries (4) to issue grants and tax credits to offset costs in energy efficient appliances; (5) to invest in energy efficiency and weatherization programs; (6) to reduce our dependence on foreign sources of energy; and (7) to show our commitment to work with other nations to reduce carbon emissions.

Since the first draft of the bill was released in March, a wide array of industries and interests have supplied suggestions on how to structure the bill better while achieving reductions in carbon emissions. For example, the rural electric cooperatives in South Carolina were concerned that they would not be able to meet the requirements for increasing use of non-renewable energy. Congressman Clyburn and I worked out solutions to their problems and helped clear a few obstacles to nuclear power, which is important to our state since nuclear generates half of our electricity. We were able to secure a better distribution of credits for the co-ops, a better accounting for coal generation in the state, and consideration of nuclear power as part of a Renewable Portfolio Standard.

This bill is complex and would benefit from many more changes; however, it has been greatly improved. Having contributed to a few of those changes, I had to vote the bill out of the House if I wanted to see our revisions remain in the bill. The Senate is known to support major changes. The best way to improve it further is to send it on to the Senate, and that is what I voted to do.

The revised bill does make major strides, lowering costs to consumers and protecting trade-affected and energy-intensive industries. Some enormous cost estimates have been circulating, most of which originated in the early days of the bill, and are unfounded. According to the neutral, non-partisan Congressional Budget Office (CBO), when the program begins in 2012 the average increase per household would be approximately $175 per year. However, this estimate does not include consumer savings from tax credits and grants for efficiency and weatherization. Insofar as manufacturers, utilities, and energy-intensive industries are concerned, the cost of cap and trade has been sharply reduced by free allowances at the outset. Insofar as international trade is concerned, the revised bill calls for tariffs on imports from countries that do not adopt carbon reduction laws.

Another part of the revised bill establishes a Renewable Portfolio Standard (RPS) that would require certain percentages of electricity to be generated by renewable sources. We need to be pursuing renewable sources of energy, where it can be found and tapped, but flexibility is imperative for states like South Carolina that are not naturally endowed with renewable energy resources. The Great Plains, and states like Texas and Oklahoma with wide open land, lend themselves to large wind farms. Places like Wyoming can harness geothermal power drawing on active geysers. The topography and geology of our state make none of these options easily available to us. We do have a long coast line, and I hope we can tap that source, but windmills have not been welcome in a lot of coastal locations.

South Carolina would probably have to rely on biomass and solar to meet renewable energy requirements, and from what I have learned, not enough energy could be extracted from these sources to meet bold renewable mandates. South Carolina does have six nuclear reactors, and all of the electric utilities that serve our state are planning to build more. Nuclear power carries risks, but I am a strong proponent, and co-chair the Nuclear Power Caucus. Nuclear does not generate carbon emissions, and any mandated standards should credit that advantage.

If a national RPS is established mandating that 15-20% of the electricity generated in a state must be produced by renewable sources, I believe there should be a state-by-state standard to allow flexibility. California and Texas should be asked to generate more than 20% of their energy from renewable sources because they can more easily do so. States like South Carolina should be allowed to generate less than 15-20% of their energy from renewable sources because it would be difficult to meet this standard. Combined, the aggregate production of all fifty states should still meet the 15% or 20% requirement.

This legislation is a work in progress and a long way from being finished. I think our climate is warming, and I think greenhouse gases are a cause. I voted for this bill believing that we need to take action now, but I am not wedded to cap and trade. I also voted to send the bill to the Senate, believing it would weigh the alternatives and improve this bill.