Just back from Atlanta, where I spent four days at the Renewable Energy Markets conference sponsored by CRS, the Center for Resource Solutions.
One of the most striking things about the conference was the acknowledgement by virtually every speaker that a great deal of the clean energy landscape is about to change. Congress is on the verge of passing (we hope) some version of the American Clean Energy and Security Act (ACESA), also known as the Waxman-Markey bill. (The Senate version of the bill is called the Bingaman bill, but don’t let that confuse you).Though far from perfect, ACESA is a significant step forward in the effort to reduce our dependance on fossil fuels and to curb global warming. The bill will mandate that greenhouse gas emissions be reduced by 80% (from 2005 levels) by the year 2050. That’s ambitious goal to be accomplished in 40 years, but it’s far from impossible. Still, many would argue that it is not ambitious enough.
One of the most crucial features of this 1,200 page bill is a cap-and-trade system for reducing greenhouse gas emissions. This is the same model that has been highly successful in reducing acid rain, so we know the mechanism to be effective. Simply put, energy producers would first be required to limit their greenhouse gas emissions to 2005 levels, and then gradually reduce emissions each year as the cap is ratcheted down.
Opponents of cap-and-trade claim that the costs will be prohibitive. But experience has shown that the successful acid rain reduction program in the US has been far less costly than originally predicted. And the European Union currently operates under a cap-and-trade system with virtually no negative economic consequences, according to an analysis by MIT.
More importantly, what opponents fail to consider, and should be reminded of at every opportunity, is that the cost of inaction will dwarf the cost of addressing climate change. I am always amazed when professed fiscal conservatives ignore financial consequences that will occur after the next election cycle, let alone in their children’s lifetime. This is conservatism? I call it irresponsible. But I digress.
But back to ACESA. One of the bill’s flaws, which could be easily fixed, is that neither the House or Senate versions contain a provision for protecting the voluntary market for renewable energy credits (RECs). (Click here for more detail on renewable energy credits).
While utilities in 30 states must buy RECs to comply with state mandates for clean energy, called Renewable Portfolio Standards, many organizations voluntarily buy RECs as part of a corporate commitment to environmental responsibility. Some of the largest voluntary buyers of RECs include Intel, PepsiCo, DuPont, Staples, Alcoa, Cargill Dow, Delphi Corporation, and scores of others who have offset from 4% to 100% of their conventional electricity usage. To date, voluntary REC purchases have been responsible for over 50% of all new renewable energy development in the US. Voluntary purchases in 2007, alone, account for 18.1 Megawatt hours of clean energy capacity. It’s a big success story.
A simple change in the bill’s language could rectify this shortcoming. It would take someone far more wonkish than I to explain this adequately, but passing this bill is a crucial step towards tackling climate change. I urge you to write, call, or email your Senators and Representatives to say you support passage of ACESA, and that it should be amended to provide added protections for the voluntary REC market.
