House OKs Bill With Cap-and-Trade Measure

This story appears in the July 6 print edition of Transport Topics.

In a vote divided largely along party lines, the House last week narrowly passed an energy bill that calls for the United States to reduce its greenhouse-gas emissions by 17% from 2005 levels by 2020 and includes a controversial cap-and-trade provision. The vote sends the measure to the Senate, where it likely faces a tough and long battle.

While the legislation does give the Environmental Protection Agency the authority to regulate mobile sources, including heavy trucks, and does not directly impose emission limits on heavy-duty trucks, trade industry officials said the measure paves the way for limiting emissions from large carriers.

However, regulation of trucks appeared to be a distant prospect.

“We’ve talked with people at the agency and they say [it’s] not their intention to directly regulate mobile sources much like stationary sources,” said Glen Kedzie, environmental affairs counsel for American Trucking Associations. “They’re going to start with the biggest emitters first — primarily stationary sources.”

In the near term, though, the bill could result in higher diesel fuel costs, according to ATA First Vice Chairman G. Tommy Hodges, who told a congressional subcommittee last month the trucking industry is worried that “free emissions allowance” provisions for oil refiners in the House bill are inadequate and would result in higher costs passed on to fuel users.

The climate change legislation, which the House passed by a 219-212 margin, would cap carbon emissions mainly from large sources such as electric utility generators and oil refiners.

Beginning in 2012, large emitters would be allowed to release only a percentage of their total emissions for free and would be required to pay for the remainder of their carbon emissions, using 2005 as a base year for determining the target level of emissions discharged by an industry sector.

The bill also would require electric utilities to meet 20% of their electricity demand through renewable energy sources and energy efficiency by 2020 and invest billions of dollars in new clean energy technologies and energy efficiency, carbon capture and sequestration, electric and other advanced technology vehicles, and other basic scientific research and development. It also mandates new energy-saving standards for buildings, appliances and industry.

In the Senate, the Environment and Public Works Committee, led by Sen. Barbara Boxer (D-Calif.), will take the lead in crafting a Senate version of the House bill, said Bill Wicker, a spokesman for the Senate Energy and Natural Resources Committee.

Wicker called the House energy bill a “dense, complex piece of legislation” and said the process of crafting and passing a Senate bill will be long and difficult. He said the House and Senate bills are “expected to be quite a bit different.”

Wicker said Boxer plans to hold hearings to mark up a bill in July, aiming for a committee vote in August, and that the House bill “will serve as the skeleton or framework for legislation that she is working on.”

Besides Boxer’s committee, four other Senate committees — Energy and Natural Resources, Foreign Relations, Finance, and Commerce, Science and Transportation — also will contribute to the legislation.

Wicker said that after the Senate bill emerges from the committee process, Senate Majority Leader Harry Reid (D-Nev.), wants to combine it with a less sweeping energy bill the Energy Committee approved in May that would require utilities to generate 15% of electricity from renewable sources by 2021. The Senate bill does not include a cap-and-trade provision.

A Senate vote on the climate bill is not expected until fall at the earliest, Wicker said. After that, a conference committee of House and Senate members would work out a final bill.

In a June 26 statement, Reid said the House bill is “not perfect, but is a good product for the Senate and our committees to start considering and begins the nation’s inevitable movement to clean and abundant renewable energy and away from harmful and inefficient use of fossil fuels.”