House Approves Climate Bill

On June 26, the House of Representatives passed the American Clean Energy and Security Act of 2009 (H.R. 2454), major legislation addressing energy and climate change policy. Known commonly as the Waxman-Markey bill, the 1,300-page-plus legislation contains far-reaching proposals designed to reduce carbon emissions and transition the country to a clean energy economy.

While justifiable attention has been given to the bill's "cap and trade" provisions designed to reduce greenhouse gas (GHG) emissions, a variety of other provisions in the bill will affect wide swaths of the American economy. For example, in addition to setting absolute limits on GHG emissions, the legislation requires retail electricity suppliers to satisfy set percentages of their electricity demand through renewable sources and efficiency improvements, directs the U.S. Environmental Protection Agency (EPA) to set standards for carbon sequestration in underground geologic formations, establishes incentives to build plug-in vehicles, directs EPA to establish GHG emission standards for certain transportation sectors, provides for updated building efficiency codes, and sets efficiency standards for various appliances and equipment. All of this is on top of creating a major new asset class—the emissions allowance—whose issuance and trading would be regulated by EPA, the Federal Energy Regulatory Commission (FERC), and the Commodity Futures Trading Commission (CFTC).

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