Representative Henry Waxman, the architect of climate-change legislation, agreed to cut by half penalties utilities would pay for failing to meet requirements for production of renewable electricity, according to a lawmaker who sought the more lenient standard.
The fine for failing to achieve the renewable mandate would be 2.5 cents for each kilowatt-hour that a utility falls short of meeting the standard, down from 5 cents, said Representative G. K. Butterfield, a North Carolina Democrat. The requirement to produce power from renewable sources, such as wind and solar, was dropped in negotiations to as little as 12 percent of electricity by 2025 from Waxman’s original 25 percent proposal.
Waxman, a California Democrat, said this week that he had struck a deal producing the votes needed to push climate legislation through the House Energy and Commerce Committee, which he heads. Some fellow Democrats said yesterday they had not signed off on the deal, which would require cuts in greenhouse gas emissions tied to global warming.
“I’m still not prepared to vote for the bill until I know who will receive the revenues and who is going to pay for it,” Butterfield told reporters.
The bill aims to cut emissions of greenhouse gases by 17 percent by 2020, under the agreement Waxman announced on May 12.
The measure would establish a cap-and-trade system, issuing credits for emissions that could then be traded on a market. Utilities would get 35 percent of the program’s allocations for free, equal to almost 90 percent of their total output.
Steel, Automakers
Manufacturers in energy-intensive industries such as steel would get 15 percent of the allowances free beginning in 2014, Waxman said in a press release yesterday. Those credits would expire in 2025 unless the president determined they are still needed to ease the transition to the plan to limit polluting emissions. Automakers would receive 3 percent, he said.
Jim Owen, a spokesman for the Edison Electric Institute, said the utilities’ trade group was “encouraged” by changes to the draft. Environmentalists said the measure should be toughened.
“We have never had an environmental bill come out of the Energy and Commerce committee that did not need to be improved before it landed on the president’s desk,” said Carl Pope, executive director of the San Francisco-based Sierra Club, in a phone interview. “We’re going to work to improve it.”
Butterfield said he wants assurances that the poorest 20 percent of Americans would get money collected by the federal government from the cap-and-trade proposal. He said the plan is to give away about 70 percent of permits to regulated industries, leaving a smaller pool to be sold to benefit low- income Americans.
Oil Refiners
His concern was one of many still being aired by committee Democrats who have opposed the measure. Remaining holdouts said they believe a deal can be struck. Not yet nailed down is an agreement over what percentage of emissions should be given away to oil refiners. Texas Democrats Gene Green and Charles Gonzalez are seeking a five percent allocation for oil refineries. Waxman is arguing for 1 percent.
“There is some flexibility, but 1 percent is not in the ballpark,” Green said after meeting yesterday with Waxman and Massachusetts Democrat Edward Markey, who is helping write the bill.
Representative Bart Stupak, a Michigan Democrat, said he wouldn’t support the bill unless there is a provision establishing enforcement to prevent manipulation of carbon- credit prices.
‘Financial Disaster’
“There is nothing in the language that would really regulate” carbon markets, Stupak said. “I am not going to create a financial disaster.”
Stupak blamed speculators for driving up oil prices last summer to a record $147.27 a barrel and said it would be even easier to manipulate carbon-permit prices, because there is no physical commodity tied to it.
Butterfield said he was pleased with the concessions on renewable electricity requirements. The mandate would be set at 15 percent, and utilities would also have to improve energy efficiency by 5 percent. Governors could reduce the renewable mandate to 12 percent, with 8 percent in efficiency improvements.
North Carolina, Butterfield’s home state, already requires renewable electricity to account for 12.5 percent of its power output. Revenue from penalties for failure to meet the standard would stay with the states rather than going to the federal government, as was originally proposed, Butterfield said.
“It’s moving in the right direction and that’s going to help control costs,” Owen of the Edison Electric Institute said of the renewable mandate. Owen said that the 17 percent target for emissions reductions “is very ambitious” and warrants further negotiation.
