AGENDA ITEM # 6 SUBJECT H.R. 2454 – THE
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AGENDA ITEM # 6 SUBJECT: H.R. 2454 – THE CLEAN ENERGY AND SECURITY ACT OF 2009 RECOMMENDATION: Accept Report Background and Analysis On June 26, the House of Representatives passed H.R. 2454, the Clean Energy and Security Act of 2009. The bill addresses climate change through an overhaul of U.S. energy and global warming policy. The Senate will begin committee hearings on its version of a climate change bill in September. The following major provisions are included in H.R. 2454: • Requires electric utilities to use 20 percent of renewable energy in their loads by 2020; • Incentives to encourage investment in renewable energy; • Sets national building code standards requiring new buildings to be 30% more efficient in 2012 and 50% more efficient in 2016; • Institutes a national cap and trade program to reduce emissions from large sources by 17% below 2005 levels by 2020 and 83% below 2005 levels by 2050; and • Sets up regional planning grids to site new renewable energy transmission infrastructure. Cap and Trade Cap and trade is an environmental policy tool used to reduce emissions while providing emitters flexibility in how they comply with requirements. Cap and trade programs intend to reward innovation, efficiency, and early action and provide strict environmental accountability without inhibiting economic growth. While H.R. 2454 addresses greenhouse gas emissions, cap and trade has been used to reduce nitrogen oxides as well as the pollutants that cause acid rain. Under a cap and trade approach for greenhouse gas emissions, companies would have a limit on the amount of gas that it could emit. An “emissions permit” would be required for every ton of greenhouse gas a company releases into the atmosphere. The permits would set an enforceable limit – the “cap.” Over time, the limits would become stricter, allowing for less and less pollution until an ultimate goal is met. Some companies will be able to reduce their emissions below their required limit more quickly than other companies. These firms would be allowed to sell or “trade” their extra permits to companies that are not able to make reductions as easily. The extra permits are also referred to as credits. Under H.R. 2454, the Federal government will auction most of the credits, providing a revenue stream that can be used to help off-set the costs of program.