SEMA eNews Vol. 12, No. 26, July 2, 2009

House Passes Bill to Limit Greenhouse Gas Emissions

The U.S. House of Representatives passed landmark legislation to establish national limits on greenhouse gases and an emissions credit trading system. The bill’s intent is to gradually switch the nation from fossil fuels to sources of “clean” power, such as wind and solar energy. The legislation would require a 17 percent reduction in carbon dioxide (CO2) emissions by 2020 and 80 percent by 2050, based on 2005 levels.

It would also set up a market for issuing CO2 permits worth potentially more than $100 billion a year, and then allow the permits to be bought and sold as a mechanism for regulating emissions limits. The primary targets are large stationary source emitters such as power plants, factories and refineries. The approach has been adopted in Europe and is similar to the EPA’s “acid rain” program which limits sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions from coal-fired power plants and other sources.

Automobiles would also be a target for emissions reduction. The EPA is already using its own authority under the Clean Air Act to regulate CO2 tailpipe emissions. In May, the Obama Administration announced that it would set new fuel-economy standards for model year 2012-2016 cars/trucks and simultaneously reduce CO2 emissions through a national standard. Fuel economy and CO2 emissions are directly related since CO2 is released in proportion to the amount of carbon-based fuel that is burned.

The EPA will set a CO2 emissions standard of 250 grams per mile for vehicles sold in 2016, roughly equivalent to a 35.5 mpg CAFE rating. SEMA joined with the automakers in supporting an approach that is technologically feasible without jeopardizing jobs and consumer choice.

The carbon dioxide legislation passed by the House would provide incentives to alter how energy is used by individuals and companies. The bill would mandate new energy-saving standards for buildings and appliances, and promote energy efficiency. It would also invest billions of dollars into research and development for new technologies, from renewable energy to electric vehicles.

A Congressional study projects that implementation of climate and energy legislation would cost the average household between $80 and $111 per year in higher energy costs. Opponents have expressed concern that the estimates are too low and that American jobs will migrate to countries that do not have equivalent climate regulations. The United States Senate is expected to consider its version of the legislation this fall.

President Obama has made passage of the bill a top domestic priority. He would like to use it as a mechanism to forge a common international approach when leaders meet this December in Denmark as part of the United Nations talks on climate change.

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