the american clean energy and security act breakthrough institute analysis of the waxman- markey...

The American Clean Energy and Security Act

Breakthrough Institute Analysis of the Waxman-Markey Climate and Energy Bill

According to the House Energy and Commerce Committee, ACES will…1. “Reduce carbon emissions from major U.S. sources by 17% by 2020 and over 80% by 2050 compared to 2005 levels.”

[Source:] http://energycommerce.house.gov/Press_111/20090602/hr2454_reported_summary.pdf

2. “Require electric utilities to meet 20% of their electricity demand through renewable energy and energy efficiency by 2020.”

3. “Invest in clean energy technologies and energy efficiency…”

1. “Reduce carbon emissions from major U.S. sources by

17% by 2020 and over 80% by 2050 compared to 2005

levels.”

2. “Require electric utilities to meet 20% of their electricity

demand through renewable energy and energy efficiency

by 2020.”

3. “Invest in clean energy technologies and energy

efficiency…”

What Will ACES Do?

Claim: ACES will “Reduce carbon

emissions from major U.S. sources by

17% by 2020 and over 80% by 2050

compared to 2005 levels.”

Emissions Reductions

Analysis: ACES cap and trade would

legally permit continued growth in

U.S. emissions for up to two decades.


[Source:] http://thebreakthrough.org/blog/2009/05/climate_bills_offsets_provisio.shtml

20092011

20132015

20172019

20212023

20252027

20290

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Emissions in ACES Covered Sectors(Million Metric Tons CO2-e)

ACES Target

1990 baseline

2005 baseline

BAU

Full Offset Levels w/BankingEPA Offsets ProjectionCBO Offsets Projection

Emissions Legally Permitted by ACES Cap and Trade3000

4000

5000

6000

7000

5056

5781

6245* 6245^

2020 U.S. Emissions in Covered Sectors under ACES (million metric tons CO2-e)

Target Emissions

BAU 62452005 6089

1990 5189

7% < 1990 4826

25% < 1990 3892

ACES Target17% < 2005

With CBO Offset Levels

With EPA Offset Levels

With FullOffset Levels

* Additional permitsbanked for future: 4,218

^ Additional permitsbanked for future: 12,109

20122013

20142015

20162017

20182019

20202021

20222023

20242025

20262027

20282029

20300

20

40

60

80

100

120

140

Cumulative U.S. Emissions in Covered Sectors Under ACES 2012-2030 - (billion tons CO2-e)

Business as Usual Emissions

ACES Target Emissions Path

CBO Offset Levels

EPA Offset Levels

Full Offset Levels

2027

2037

2018

20

25

30

35

40

45

50

55

60

49.5

54.5 55.4 55.4

Cumulative U.S. Emissions in Covered Sectors Under ACES 2012-2020 - (billion tons CO2-e)

Target Emissions

BAU 55.4

IPCC Target 43.7

ACES TargetEmissions Trajectory

CBO OffsetLevels

EPA Offset Levels

Full Offset Levels

Analysis: Strategic Reserve Pool can

raise cap by 10% in any year.

Triggered when prices rise too high.

Floods market with more allowances,

“refilled” with forestry offsets.


[Source] http://thebreakthrough.org/blog/2009/05/the_climate_bills_catch_22_is.shtml


[Source] http://thebreakthrough.org/blog/2009/06/climate_bill_analysis_part_vii.shtml

Conclusion:

ACES establishes a (modest) carbon

price and an emissions reduction

target. Does not provide “emissions

certainty” of a “hard cap.”

Conclusion:

ACES effectively

establishes a non-

binding “cap” on U.S.

emissions.

Claim: ACES will “Require electric

utilities meet 20% of their

electricity demand through

renewable energy and energy

efficiency by 2020.”

Renewable Electricity Standard


[Source] http://thebreakthrough.org/blog/2009/05/climate_bills_renewable_electr.shtml

Analysis: RES will have little to no

impact on U.S. renewable electricity

generation. (Breakthrough)

Analysis: RES will have “effectively

zero” impact on U.S. renewable

electricity generation. (Southern

Alliance for Clean Energy)

[Source] http://thebreakthrough.org/blog/2009/06/climate_bill_analysis_part_ix.shtml

Percent of U.S. electricity from renewables under ACES RES0%

5%

10%

15%

20%

25%

20%

17%

13%10%

U.S. Electricity Generation from Qualifying Renewable Electricity in 2020 under ACES RES – (% of Total U.S. Elec-

tricity)

BAU = 10%

Nominal Requirement

After Exemptions

With 5%Energy

Efficiency

With 8%Energy

Efficiency

[Source] http://thebreakthrough.org/blog/2009/06/climate_bill_analysis_part_xi.shtml


[Source] http://thebreakthrough.org/blog/2009/05/climate_bills_renewable_electr.shtml

“[A] national RES [at] such a low level …

could severely blunt the signal to the private

sector to invest billions of dollars and

expand production, manufacturing, and job

creation.”

– American Wind Energy Association

[W]e remain skeptical that current versions of either

the RES or a carbon cap and trade policy will lead to

significant solar deployment. … [A] "sweeping"

federal energy bill that fails to deploy a portfolio of

renewable energy options is an underwhelming

outcome, ill-equipped to help us meet the challenges

at hand.” -Vote Solar

Claim: ACES will “Invest in clean

energy technologies and energy

efficiency…”

Investments in Clean Energy

Investments in Clean Energy

[Source] http://thebreakthrough.org/blog/2009/05/how_do_climate_bills_clean_ene.shtml

Analysis: ACES investments in clean

energy R&D are a tiny fraction of

President Obama’s budget;

Clean energy investments overall are

insufficient to the challenge at hand.

$0

$5

$10

$15

$20

$25

$30

$35

ACES Clean Energy R&D Investments Compared to Expert Recommendations - (Billion $ per Year)

ACES R&D$0.5b to $1b

Obama Budget$15b

Breakthrough Institute

$15b

Energy Experts Letter$30b*

Brookings$20b to $30b

$0

$5

$10

$15

$20

$25

$30

$35

ACES Clean Energy R&D Investments Compared to Actual Federal R&D Investments - (Billion $ per Year)

ACES R&D$0.5b to $1b

2009 DOE R&D Budget$5.3b Stimulus Energy

R&D Investment$4.1*

NIH 2009 R&D Budget$30.5b

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

ACES Total Clean Energy Investments Compared to Expert Recommendations - (Billion $ per Year)

Obama Budget, R&D Only$15bACES

$6b-$12b

Apollo Project$50b

Breakthrough Institute$30b-$80b

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

ACES Total Clean Energy Investments Compared to Actual Federal Investments - (Billion $ per Year)

ACES$6b-$12b

Stimulus$33b*

New Energy Economy Old Dirty Energy Industries Overseas Offsets$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

ACES Annual Money Flow To...(Billion $ per Year)

$6-$12b

$30-$60b

$15-$30b

Carbon Price• Strategic Reserve Pool price ceiling:

-> $28/ton from 2012-15; 60% above 3 yr rolling

average after 2015

• Price floor:

-> $10/ton at outset, rises 5% each year

• EPA estimate:

-> $12-15 per ton 2015; $15-20 per ton in 2020

• CBO estimate:

-> $15 per ton 2011; $26 per ton 2019

[Chart] PointCarbon.com http://www.pointcarbon.com/news/historicprices/

EPA:$28 ceiling

$10 floor

EPA: $12-20

Carbon Price

CBO:$15-26

2005

2006

2007

2008

1,400

1,450

1,500

1,550

1,600

1,650

1,700

1,6391,653

1,666

1,619

EU-15 ETS Emissions 2005 – 2008(million metric tons CO2 per year)

2008 ETS Emissions Reductions?

“It confirms that the EU has a well functioning

trading system, with a robust cap, a clear price

signal and a liquid market, which is helping us to

cut emissions cost-effectively. This should

encourage other countries in their efforts to set up

comparable domestic cap-and-trade systems.”

- Stavros Dimas, European Environment

Commissioner

“The 3 percent [emissions] reduction [in 2008]

was partly due to businesses taking measures to

cut their emissions in response to the strong

carbon price that prevailed until the economic

downturn started.”

- Stavros Dimas, European Environment

Commissioner

The Counter-Factual: the US

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

2008 Emissions Reductions (Annual Percent Reduction)

2.9%

2.5%

2.1%

Jesse JenkinsDirector of Energy and Climate PolicyBreakthrough [email protected] x465

Ted NordhausChairmanBreakthrough [email protected] x305

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