The Clean Energy Future Starts Here

The Clean Energy Future

Starts Here Understanding the American Clean Energy and Security Act The Clean Energy Future

Starts Here Understanding the American Clean Energy and Security Act

Fall 2009 This paper was written by Tony Dutzik and Emily Figdor, with assistance from Margie Alt, Rob Sargent and Anna Aurilio. The generous financial support of the Oak Founda- tion made this report possible.

The authors bear responsibility for any factual errors. The recommendations are those of Environment America. The views expressed in this report are those of the authors and do not necessarily reflect the views of our funders or those who provided review.

We all want clean air, clean water and open spaces. But it takes independent research and tough-minded advocacy to win concrete results for our environment, especially when powerful interests stand in the way of environmental progress. That’s the idea behind Environment America. We focus exclusively on protecting America’s air, water and open spaces. We speak out and take action at the local, state and national levels to improve the quality of our environment and our lives.

For more information about Environment America, or for additional copies of this paper, please visit www.environmentamerica.org.

Cover Photo: istockphoto, Kativ Layout: To the Point Publications, tothepointpublications.com Table of Contents

Executive Summary ...... 4. Introduction ...... 8. The Goal: Repowering America with Clean Energy ...... 10. Clean Power ...... 10. Energy Independence ...... 12. Creating Millions of Green Jobs ...... 13. Reducing Global Warming Pollution ...... 14. America Is Making Progress Toward a Clean Energy Future ...... 16. States Are Leading the Way ...... 16. Washington Begins to Meet the Challenge ...... 18. Keeping Up the Momentum ...... 19. The American Clean Energy and Security Act Moves America in the Right Direction ...... 20. The American Clean Energy and Security Act: What It Does . . . . . 20. Projected Benefits of the ACES Act ...... 24. The ACES Act: Moving America Toward a Clean Energy Future . . . . 29. The ACES Act Gets Some Important Things Wrong … But Passing it Is a Critical Step Forward for Clean Energy ...... 30. Key Flaws in the ACES Act ...... 30. Why Fight for the ACES Act? ...... 34. The Road to a New Energy Future: The ACES Act and What Comes Next . . . 38. Winning the Battle Over the ACES Act ...... 38. The Next Steps ...... 39. Notes ...... 41. Executive Summary

merica’s dependence on fossil fuels our dependence on oil, create millions wreaks havoc on our environment of new jobs, and prevent the worst Aand is a drag on our economy. With impacts of global warming. a new president committed to tackling • America can save energy by improv- our energy challenges – and with the ing the efficiency of our homes, momentum generated by a decade of businesses and factories. At the same clean energy innovation at the state time, America has access to enough level – Congress has taken up the task energy from the sun, wind, water and of mapping out a new energy future for other renewable sources to power the the nation. nation several times over. The nation The American Clean Energy and Se- should set a goal of obtaining 100 percent curity (ACES) Act, passed by the House of our electricity from clean sources of this June and currently under consider- energy. ation by the U.S. Senate, is the fruit of that effort. Passing the ACES Act – even • We have the tools to use less oil in with the compromises made to secure our transportation system by vastly passage in the House – would be a signifi- improving the energy efficiency of cant step toward a clean energy future for our vehicles, replacing at least some the United States and would represent a of the oil we use with cleaner sources ground-breaking political achievement. of energy, and bringing new transportation options – including public We have the technology and the transportation, high-speed rail, and know-how to repower America with more opportunities for walking and clean energy. Congress and the presi- biking – to more Americans. The dent should embrace and work to nation should strive to achieve energy achieve ambitious goals to obtain our independence by cutting our consumption electricity from clean sources, curb of oil in half.

4 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act • Hundreds of thousands of Ameri- • These state efforts are making a cans already work in clean energy difference. America now gets a industries. Repowering America greater share of our electricity from would create millions of new jobs wind, solar, geothermal and bio- in manufacturing, installing, financ- mass energy than at any time in our ing, selling and servicing energy modern history. In the two-year span efficient products and renewable between 2006 and 2008, America’s energy technologies. America should production of wind power nearly embrace the goal of creating five mil- doubled and our production of solar lion clean energy jobs to revitalize our power increased by two-thirds. State economy. energy efficiency programs, meanwhile, saved approximately 63 billion • The actions we take to repower kilowatt-hours of electricity in 2007, America with clean energy will enough to power 5.6 million Ameri- also dramatically reduce our emis- can homes. sions of pollutants that contribute to global warming. To prevent the • Recent efforts by the Obama ad- worst impacts of global warming, ministration and Congress – most America should commit to reducing our notably the American Recovery and emissions of global warming pollutants Reinvestment Act enacted in Febru- by at least 35 percent by 2020 and by ary – build on these efforts. By in- at least 80 percent by 2050. vesting in clean energy technologies, the economic recovery plan will: State and local governments have • Double the amount of wind power laid the groundwork for a new energy produced in America in 2012 future for America through innova- compared with business-as-usual tive public policies. The Obama projections. administration, in its first months in office, has followed suit. Together, • Reduce energy consumption for those efforts have made a meaning- home heating by 1.7 percent, ful contribution toward achieving and for cooling by 3.0 percent, in the vision of an America powered by 2030. clean energy. • Reduce household energy bills by • More than two dozen states have $64 per year on average between adopted minimum requirements for 2009 and 2030. the percentage of their electricity • In addition, the Obama administra- that comes from renewable energy. tion’s proposal to improve vehicle Nineteen states have set similar fuel economy will save 19 billion requirements for tapping energy gallons of gasoline per year by 2030, savings from improved efficiency. reducing our dependence on foreign Fourteen states adopted clean cars oil. standards designed to reduce global warming pollution from cars and The American Clean Energy and light trucks. Six states have adopted Security Act moves the nation further enforceable caps on global warming toward a clean energy future. pollution. And many states, cities and towns have taken other impor- • The ACES Act includes strong tant steps to promote clean energy. provisions to improve the energy

Executive Summary 5 efficiency of the American economy, as However, the ACES Act gets sev- well as the nation’s first-ever manda- eral important things wrong and so tory nationwide limits on emissions of represents an incremental, rather global warming pollutants. In addition, than a transformative step toward a the bill establishes a framework for the clean energy future. The following future expansion of renewable energy flaws in the bill should be fixed in in the United States. the Senate:

• Analyses of the bill by the Environ- • The bill removes EPA’s authority to mental Protection Agency, the Depart- regulate carbon dioxide emissions ment of Energy and others show that from existing coal-fired power the ACES Act will move the nation plants – the majority of which are one large step closer to a clean energy already more than a quarter-cen- future. These analyses (which under- tury old – removing an important sell the benefits of the bill because they tool from the toolbox of strategies omit analysis of several key provisions) that can speed the transition from project that the ACES Act will: inefficient, polluting technolo- • Reduce electricity consumption by gies to clean, renewable sources of 7 to 12 percent by 2030 versus busi- power. ness-as-usual projections through • The ACES Act’s heavy reliance on improvements in energy efficiency. offsets – global warming emission • Increase the share of America’s reductions that take place overseas electricity coming from non-hydro- or in areas of the economy not electric renewable sources of energy covered by the emission cap – and from a projected 10 percent to ap- its lack of clarity regarding how the proximately 15 percent by 2030. offset program will be implemented leave too much to chance, possibly • Cut our consumption of oil by at eroding the bill’s effectiveness in least 4 to 7 percent below business- reducing global warming pollution as-usual in 2030, with America us- and promoting clean energy. ing up to 12 percent less oil in 2030 than we did in 2006. • The ACES Act misses out on important opportunities to expand • Create hundreds of thousands to the use of renewable energy and millions of new jobs. create new clean energy jobs. The • Reduce domestic emissions of renewable electricity standard global warming pollutants by 5 to (RES) in the bill will not result in 14 percent by 2020 and by 15 to 21 any additions of renewable energy percent by 2030, and drive overall beyond those already forecast (al- emission reductions (including re- though other provisions in the bill ductions overseas achieved through will promote renewables). And by the use of “offsets”) equivalent to 25 giving away a significant number to 38 percent of 2005 U.S. emis- of valuable emission allowances to sions by 2020 and 40 to 46 percent polluters, the bill fails to invest the of U.S. emissions by 2030 (assum- resources necessary to encourage ing all offsets are real, additional, the clean energy technologies of and permanent). the future.

6 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act Despite these flaws, passage of Even assuming passage of the the ACES Act would be an historic ACES Act, much work will remain achievement, for both substantive and to be done to repower America with political reasons. clean energy. Among the most urgent tasks are: • The ACES Act is a clear step in the right direction and, if passed • Winning a national renewable elec- into law, will result in significant tricity standard that assures that the improvements in the energy ef- nation will get at least 25 percent of ficiency of the American economy its electricity from new, renewable and our use of clean energy – helping sources of power by 2025. to reinvigorate America’s economy and prepare the nation for the seri- • Adopting a national energy efficien- ous energy challenges it faces in the cy resource standard designed to cut decades to come. America’s electricity consumption by 15 percent by 2020. • Passage of the bill would represent a political breakthrough – the first • Implementing a national low-car- time the U.S. Congress has ever bon fuel standard with a goal of cut- set mandatory limits on emissions ting the global warming impact of of global warming pollutants – and transportation fuels by 10 percent establish a precedent for action that by 2020 – encouraging a transition can be built on over time. to cleaner, non-petroleum fuels for cars and trucks. • The ACES Act requires periodic sci- entific review that creates a pathway • Investing in new transportation for the bill’s goals to be strength- choices for Americans, including ened over time. efficient public transportation and high-speed rail, and expanding • Passage of the ACES Act would Americans’ opportunities to walk send a message to the world that and bike to the places they need to America is serious about dealing with go. our energy challenges, including global warming. American leadership • Encouraging the development and is particularly important with world implementation of innovative clean leaders scheduled to meet in Copen- energy policies and programs by hagen this December to construct a state and local governments. successor to the Kyoto Protocol. • Ensuring that the ACES Act and • Finally, the battle over the ACES Act similar efforts to reduce global presents an historic opportunity to warming pollution at the state level educate the public about the need for deliver real results and ensuring that a clean energy future and to build the United States takes leadership strength and momentum for future in securing a worldwide agreement battles to come. to reduce global warming pollution.

Executive Summary 7 Introduction

ight years ago this January, a new 2,400 certified green buildings in the administration came to Washington United States; and energy efficient prod- Ewith a vision for America’s energy ucts such as compact fluorescent light future. bulbs are becoming common fixtures in It was a vision that included oil rigs in American homes. the Arctic National Wildlife Refuge and A new president has taken office – one off our coastlines, hundreds of new power who campaigned on a clean energy plat- plants, many of them operated on coal, form, accepts the challenge of dealing and a massive rollback of environmental with global warming, and has committed protections. Left out of that vision: clean, to rebuilding the American economy on renewable energy and any meaningful a foundation of green jobs. efforts to help Americans use energy It is virtually impossible to get 90 per- more wisely. To the architect of the new cent of Americans to agree on anything, administration’s plan, Vice President but more than 90 percent now believe Dick Cheney, “conservation may be a that the federal government should take sign of personal virtue but it is not a suf- action to build more solar and wind ficient basis for a sound, comprehensive power. About three-quarters of Ameri- energy policy.” cans support more action to encourage How far we have come. energy conservation in homes, business Less than a decade later, wind turbines and industry.1 are sprouting by the hundreds on the How far we have come … but how far plains of West Texas; solar panels are we have yet to go. taking root on rooftops in New Jersey; Despite the progress America has made highly efficient hybrid-electric vehicles toward a new energy future, the scale and – virtually unheard of eight years ago – seriousness of the energy challenges we are now in the driveways of more than 1 face are greater than ever. International million Americans; there are more than events have reminded Americans that

8 The American Clean Energy and Security Act the money we spend to satisfy our dependence on oil at home can feed in- Despite the progress America stability abroad. Hurricane Katrina, An Inconvenient Truth, and the conclusion has made toward a new of the U.N. Intergovernmental Panel on Climate Change that the evidence energy future, the scale and of human-caused global warming is seriousness of the energy now “unequivocal” have started to open Americans’ eyes to the necessity and ur- challenges we face are greater gency of dramatically reducing our use than ever. of fossil fuels that contribute to global warming. And price spikes for oil and natural gas have reminded us that fossil fuels are inherently finite resources. This June, in an effort to address compromises made to ensure the bill’s these challenges and reposition the narrow passage in the House are disap- United States as a world leader in ad- pointing. dressing global warming, the U.S. Powerful interests, ranging from the House of Representatives adopted the coal industry to electric utilities, have American Clean Energy and Security already used their influence to extract (ACES) Act, a bill that includes the concessions under the ACES Act, and will nation’s first-ever mandatory, economy- continue to try to do so as the legislative wide limits on global warming pollution battle moves to the Senate. Winning pas- and sweeping reforms in almost every sage of a strong version of the ACES Act area of America’s energy economy. The through the U.S. Congress will take one Senate is slated to consider its own ver- heck of a fight. sion of the bill this fall. The ACES Act isn’t perfect, but it is The ACES Act makes progress on a beginning, not an end. No single piece many fronts toward the goal of repow- of legislation will ever be sufficient, in ering America with clean energy. It and of itself, to achieve a clean energy fu- builds on the momentum generated by ture. And the effort to address America’s a decade’s worth of clean energy inno- energy challenges and embrace a better vation at the state level and the Obama future will and must continue, regardless administration’s ambitious early efforts of the fate of the ACES Act. to improve the energy efficiency of This paper argues that winning passage our buildings and vehicles. It creates a of the ACES Act will leave America in a framework for continuing that progress far better position to address those chal- into the future. And it will create hun- lenges than it would be otherwise. dreds of thousands of new green jobs In short, the battle to pass the ACES here in the United States. Act is a fight worth winning. Nonetheless, the ACES Act is not all that it could or should be. The bill’s failure to guarantee emission reductions consistent with those that science tells us are necessary to prevent the worst impacts of global warming is troubling. And in many other areas, the political

Introduction 9 The Goal: Repowering America with Clean Energy

ewis Carroll wrote, “If you don’t the goal of a clean energy future – and know where you are going, any road the faster the better. Lwill take you there.” As Congress considers sweeping legislation to revamp our energy economy, it is critical to know Clean Power where we should be headed so that we are America does not need to rely on dirty sure to take the right road. and dangerous sources of energy for our America should head toward a new electricity. We can use electricity more energy future – one in which we produce wisely and improve the energy efficiency the vast bulk of our energy here at home, of our homes, businesses and factories. using energy sources that never run out. We can also take advantage of America’s A new energy future is one in which we virtually limitless potential to generate get the energy we need without produc- electricity from the wind, sun and other ing pollution that harms our health or the renewable sources. health of the planet. And it is a future in America should embrace a future of which America enjoys a vibrant economy clean power by making our economy built on a foundation of green jobs, and more energy efficient and getting 100 without the turmoil and uncertainty percent of our electricity from clean caused by volatile fossil fuel prices. sources. America has the technology, the resources, and the know-how to achieve the goal of a new energy future starting Improving Energy Efficiency right now. The vast majority of Americans The first step is to use energy more are eager to get started. Congress should wisely. Energy efficiency is the cleanest, adopt legislation that moves us toward cheapest, fastest way to address America’s

10 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act energy challenges – our greatest un- tapped energy resource. Leaky windows, inefficient furnaces, energy-sucking appliances and light bulbs are all sources of energy waste – but they are also sources of energy we can reap to meet our nation’s needs. Smart public policies can encourage energy efficiency improvements in all areas of our economy. A recent analysis by the McKinsey & Company found that cost-effective improvements in energy efficiency – those that pay themselves back over time – could reduce energy consumption in homes, business and industry by 23 percent by 2030 compared with business-as-usual projections.2

Renewable Energy The wind blowing over just five U.S. states can generate as much The energy that we can’t save we electricity as is currently used in the entire nation. should obtain from clean, renewable Photo: Oak Ridge National Laboratory sources that will never run out. America has vast renewable energy resources – the heat of the sun, the movement of the wind and waves, the heat beneath the earth’s surface, and the energy contained in trees and crops – capable of powering 70 percent of the capacity of America’s the nation several times over. existing power plants.6 The wind blowing over just five U.S. Other forms of renewable energy can states – North Dakota, South Dakota, also help break dependence on dirty and Kansas, Montana and Texas – could dangerous sources of electricity. There theoretically produce enough electric- is enough traditional and enhanced geo- ity to power the entire United States.3 thermal energy potential in the United Similarly, America’s coastlines could States to support more than 500 giga- host enough wind turbines to nearly watts of electricity generation – equiva- match the capacity of all of America’s lent to about half the total electricity current electricity generators combined.4 production capacity in the United States Concentrating solar power (CSP) plants today.7 Plant-based energy and energy installed on just 9 percent of the land from waves and currents could augment area of Nevada – the area contained by a America’s supplies of renewable energy, square 100 miles to a side – could produce playing significant roles in our energy enough electricity to power the entire future. United States.5 Meanwhile, the space We do not need to wait to tap this available on America’s rooftops could potential. Recent analyses suggest that host enough solar photovoltaic panels the United States could realistically get to provide more than 700 gigawatts of at least 20 percent of our electricity from generation capacity – representing about the wind by 20308 and at least 10 percent

The Goal: Repowering America with Clean Energy 11 of our power from the sun by 2025.9 More Efficient Cars and Trucks Continued advances in technology In 2009, President Obama committed – coupled with improvements in the to improve the fuel economy of cars and electric grid and efforts to tap other light trucks to an average of 35.5 miles readily available sources of renewable per gallon by model year 2016. That energy – could vastly expand the share single step will save a total of approxi- of our electricity needs we can meet mately 1.8 billion barrels of oil over the with renewable energy. America should lifetime of the vehicles affected – twice settle for nothing less than a future in as much as we import from the Persian which all of our electricity comes from Gulf each year.12 clean, renewable sources. The oil savings delivered by these new standards, however, are only the tip of the iceberg of what is possible. Energy Independence By using advanced technologies, such America now imports 57 percent as hybrid-electric vehicles, the Union of our oil from abroad – up from 27 of Concerned Scientists projects that percent in 1985 – threatening our we could lift the average fuel economy economy and our national security.10 of the U.S. light-duty vehicle fleet to We spent twice as much on gasoline 55 miles per gallon by 2030 – meaning in 2008 as we did just five years earlier that Americans could use less than half – an additional $220 billion per year as much oil to travel the same number of sucked out of Americans’ pocketbooks, miles as today.13 Similar improvements with much of it sent to high-profiting are possible for other transportation Big Oil companies and unfriendly na- vehicles that use oil – such as heavy-duty tions overseas.11 trucks, planes and trains. Thankfully, there are many opportunities to reduce our consumption of oil. Clean Fuels America should adopt the ambitious goal of achieving energy independence A second way to wean ourselves off by cutting our consumption of oil in of oil is by replacing the oil we use in half – nearly as much as we currently transportation with alternative fuels. import from all other nations. Not all alternative fuels are good for Reducing our use of oil in homes, the environment or enhance our energy business and industry can help curb security – fuels such as coal-to-liquid America’s dependence on petroleum. fuels and oil from tar sands and oil shale But we use most of our oil to power all produce more global warming pol- cars, trucks, planes, trains and other lution than gasoline and cause serious forms of transportation. To break our environmental damage, making them dependence on oil, we need cars and poor substitutes for conventional oil. trucks that go further on a gallon of Even fuels such as corn-based ethanol gas, clean fuels that can substitute for can have significant environmental im- petroleum without harming the en- pacts and dubious benefits for reducing vironment, and more transportation global warming emissions. choices for more Americans. Yet, there are some alternative fuels that have the potential to be good substitutes for oil. Electricity – whether used in electric cars, plug-in hybrids, or trains – can reduce global warming emissions

12 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act and other forms of air pollution, espe- The United States should invest in cre- cially when the electricity is generated ating a balanced, modern transportation from clean sources. Ethanol produced system, one in which a range of options from energy crops and crop wastes could – including light rail transit, commuter also someday play a role in reducing oil rail, subways, modern buses, high-speed consumption in cars. rail, and even biking and walking – can meet our transportation needs. Ameri- Expanding Transportation cans with access to transportation alternatives are already embracing them; in Choices 2008, for example, public transportation Even if America moves toward more ridership hit a 52-year high.14 By invest- efficient cars powered in part by clean ing in transportation alternatives – and fuels, we will remain dependent on oil by developing communities where more if we drive more miles with each passing people can reach work, stores, schools year. In many areas of the country, unfor- and entertainment via transit, on foot or tunately, driving is the only convenient on bike – we can reduce our dependence transportation choice available. That on oil while curbing congestion on our leaves too many Americans vulnerable roads. to spikes in gasoline prices, stuck in long With progress toward more efficient and frustrating commutes, and subjected cars and trucks running on cleaner, to dangerous pollution from vehicle non-petroleum fuels and the addition tailpipes. of more transportation choices for more Americans, America can achieve the goal of cutting our consumption of oil in half – effectively freeing ourselves from reliance on foreign oil and reducing the pressure to drill in pristine or environmentally sensitive areas of the United States.

Creating Millions of Green Jobs Most Americans understand that our dependence on fossil fuels is harmful to our environment, our national security and our economy. To put America on track for a clean energy future, we need to make sure that that future enables a healthy and vibrant economy built on a Modern public transportation – such as foundation of green jobs. this streetcar line in Portland, Oregon – While they may not necessarily know can provide new transportation choices for it, many Americans already hold “green Americans while reducing oil consumption, jobs.” The Pew Center for the States es- global warming pollution, and emissions of timated that, in 2007, 770,000 Americans air pollutants linked to asthma attacks and working for 68,200 businesses in all 50 other health problems. states were employed in the “clean energy Photo: istockphoto.com, Daniel Deitschel economy.”15

The Goal: Repowering America with Clean Energy 13 duce wind turbine towers, fuel-efficient cars, solar panels, energy efficient products and more. Agricultural workers produce energy crops. And behind those ranks of clean energy workers are many others who owe their jobs at least in part to the increased economic activity generated by clean energy investment, whether they are truckers, producers of raw materials, service workers or employees at corporate headquarters. By investing in a new energy future, we can put millions of Americans back to work, while also keeping more of our hard-earned dollars at home. In 2008, the nation spent more than $1 trillion on fossil fuels – with much of that money leaving the American economy and being shipped overseas to pay for imported oil.17 By contrast, investments in energy efficiency and renewable energy technology keep money in the American economy, spurring the creation of additional jobs Workers assemble blades for wind turbines. Photo: NEG Micron in all segments of the economy.

Reducing Global Warming And that is only the beginning of Pollution what is possible. Wind and solar power America’s dependence on fossil fuels manufacturers are building new plants doesn’t just threaten our security and across the country to take advantage of economic health, but it also pollutes the increased demand for renewable energy. environment. Smog, soot and mercury In 2008, for example, 10 new wind energy pollution from fossil fuel burning threat- manufacturing facilities were opened in en the health of millions of Americans, the United States and 17 existing facilities and fossil fuel consumption is the number were expanded, helping the wind industry one contributor to global warming. to add approximately 35,000 jobs over the The science is clear: to avoid the most previous year.16 dangerous impacts of global warming, “Green” jobs aren’t all that different we must limit additional warming to as from regular jobs. In fact, most of them far as possible below 2 degrees Celsius are regular jobs. over pre-industrial levels.18 According Engineers and accountants work to to the Intergovernmental Panel on Cli- plan and finance renewable energy proj- mate Change (IPCC), we have a reason- ects. Skilled construction workers build able chance of meeting this objective if renewable energy facilities and renovate developed countries as a whole cut their homes and businesses to maximize energy emissions to 25-40 percent below 1990 efficiency. Manufacturing workers pro- levels by 2020 and to 80-95 percent below

14 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act 1990 levels by 2050.19 Major developing countries also must act.20 The United States, which is respon- The nation has ample sible for more of the global warming pol- opportunities to reduce global lution in the atmosphere than any other nation and remains the world’s second- warming pollution – often in largest polluter, must shoulder our share ways that benefit the economy. of the burden. The IPCC’s targets for developed nations translate into U.S. emission reductions equivalent to at least 35 percent of 2005 levels by 2020 (with emissions by 2020.22 The Union of Con- the majority of those emission reductions cerned Scientists, looking at a broader occurring domestically), and at least 83 set of clean energy initiatives, found that percent of 2005 levels by 2050.21 the nation could reduce global warming Meeting those goals will be challeng- emissions by 30 percent below 2005 levels ing, but it can be done. A series of recent by 2020 and by 44 percent below 2005 analyses show that the nation has ample levels by 2030 – all while delivering $465 opportunities to reduce global warming billion in annual savings by 2030.23 pollution – often in ways that benefit the Many of the steps we take to reduce economy. A 2009 study by McKinsey & global warming pollution are the same Company estimated that cost-effective steps that are needed to free ourselves of investments in energy efficiency im- our dependence on fossil fuels – including provements in homes, business and in- improving the energy efficiency of our dustry could reduce U.S. emissions by an economy and developing our renewable amount equivalent to 15 percent of 2005 energy potential.

The Goal: Repowering America with Clean Energy 15 America Is Making Progress Toward a Clean Energy Future

merica has made great strides their own hands. The result has been a toward a clean energy future over flurry of innovative policies designed to Athe last decade. Like most great reduce dependence on fossil fuels, clean changes in American history, the clean up the environment, and create good energy revolution has taken place from clean energy jobs. the bottom-up, with path-breaking in- novations at the state level eventually working their way up to Washington, Renewable Electricity D.C. Standards The American Clean Energy and Twenty-nine states and the District Security Act, in other words, did not of Columbia have committed to increas- emerge suddenly and from out of no- ing the share of their electricity that where. Nor is it the only game in town. comes from clean, renewable sources of Local and state governments, along with electricity through renewable electric- the federal government, have a variety ity standards (RESs). State RESs have of policy tools they can use to advance contributed to the boom in renewable the nation toward a clean energy future. energy development taking place in much Those tools have already made a mean- of the country – a recent analysis by the ingful contribution toward the goal of Lawrence Berkeley National Labora- repowering America with clean energy. tory found that 70 percent of the record amount of wind power installed in the nation in 2008 was in states with an RES.24 Renewable energy targets in RES states States Are Leading the Way are scheduled to increase over time, such Over the last decade, frustrated by that 76.7 gigawatts of qualifying renew- inaction at the federal level, states have able energy facilities will be online by increasingly taken energy policy into 2025 – equal to about 7 percent of the

16 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act nation’s current electricity generating lion kilowatt-hours of electricity in 2007 capacity.25 (enough to power 5.6 million average American homes), along with 218 million therms of natural gas (enough to power Energy Efficiency Resource 29 Standards nearly 300,000 homes). A total of 19 states have adopted Building Codes and Appliance specific targets for energy savings to be achieved through improvements in Standards energy efficiency.26 Leading states with States have also taken leadership by energy efficiency resource standards adopting advanced, energy efficient (EERSs) have achieved savings of 1 per- building codes and energy efficiency cent or more per year in total electricity standards for appliances. Eleven states use through programs designed to im- have adopted energy efficiency standards prove the efficiency of homes, businesses for appliances and equipment, while oth- and industry.27 ers have moved quickly to adopt model energy efficient building codes or develop their own strong codes to ensure that new Clean Cars Program homes and commercial buildings do not Fourteen states adopted the Clean waste energy.30 Cars Program initiated by the state of California, the centerpiece of which Caps on Global Warming is the first-ever emission standards for global warming pollution from cars. Pollution The standards are designed to reduce Six states – California, Connecticut, global warming pollution from new cars Hawaii, Massachusetts, Maryland and by 34 percent and new light trucks by New Jersey – have adopted mandatory 25 percent by model year 2016, with the caps on global warming pollution from additional benefit of achieving similar re- their states’ economies. In many other ductions in gasoline consumption. Earlier states, governors have established emis- this year, President Obama announced sion reduction goals by executive order that he would apply similar standards and developed climate change action nationwide – with states able to adopt plans with lists of recommended actions stronger standards after 2016. to achieve those targets. Recognizing that issues related to energy production and use cross state Energy Efficiency Programs borders, leaders in several areas of the Thirty-five states have ratepayer- country have worked to develop regional supported energy efficiency programs for programs to reduce global warming pol- electricity consumers, while at least 19 lution. One pioneering effort – the Re- states have similar programs for natural gional Greenhouse Gas Initiative (RGGI) gas customers.28 These programs provide – brought together 10 northeastern states important services, such as home and to create a cap-and-trade program for business energy audits, weatherization carbon dioxide emissions from electric assistance, and financial incentives for the power plants. The program, which began purchase of energy efficient appliances operation in 2009, is designed to reduce or equipment. These energy efficiency emissions from the region’s power plants programs saved approximately 63 bil- by 10 percent by 2019 and even now is

America Is Making Progress Toward a Clean Energy Future 17 demonstrating the feasibility of cap-and- • Extension of federal tax incentives trade as a mechanism to address global for renewable energy development, warming pollution in the United States. assuring would-be developers of renewable energy projects reliable, long-term support for their invest- Washington Begins to Meet ments. the Challenge • An increase in funding for the na- The first months of the Obama ad- tion’s proven Weatherization As- ministration have seen quick progress sistance Program, which improves in efforts to move the nation toward a energy efficiency for low-income cleaner energy future. Among the most homeowners. significant efforts are the following: • Creation of a new grant program to provide funding for state and lo- A Green Economic Recovery cal government efforts to improve Plan energy efficiency. The American Recovery and Rein- • Increased investment in public trans- vestment Act, passed by Congress and portation, rail infrastructure, and signed by President Obama in early 2009, high-speed rail. included a $78 billion investment in en- • Investment in advanced transporta- ergy efficiency, clean energy and green tion technologies, such as plug-in transportation. Among the highlights of hybrid vehicles. the bill were: • Investment in job training programs for emerging “green jobs.”31

A U.S. Department of Energy analysis of the law’s impact estimated that it will: • Double the amount of wind power produced in America in 2012 compared with business-as-usual projections. • Reduce energy consumption for home heating by 1.7 percent, and for cooling by 3.0 percent, in 2030. • Reduce household energy bills by $64 per year on average between 2009 and 2030. • Reduce energy expenditures in the President Obama and Vice President Biden inspect solar panels on commercial sector by an average the roof of the Denver Museum of Nature & Science prior to the of 2.7 percent between 2010 and 32 signing of the American Recovery and Reinvestment Act, which 2030. will provide a big boost to renewable energy projects. Photo: White House, Pete Souza

18 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act Clean Cars Standards The impact of these efforts is begin- As noted above, in May 2009, Presi- ning to be felt across the country. Exclud- dent Obama announced new standards ing hydroelectric power, America now for vehicles that are designed to improve generates a greater share of our electricity fuel economy and reduce emissions of from renewable sources than at any time global warming pollutants. These stan- in our modern history. In the two-year dards for cars, SUVs and light trucks span between 2006 and 2008, America’s are intended to boost the average fuel production of wind power nearly doubled economy of new vehicles to 35.5 miles and our production of solar power in- 36 per gallon by model year 2016, saving a creased by two-thirds. total of approximately 1.8 billion barrels of oil – twice as much as we import from the Persian Gulf each year.33 By 2030, Figure 1. Wind Power Generation, United States

Americans will be using 19 billion fewer 60 gallons of gasoline each year as a result of the new standards, and the measure 50 is projected to reduce global warming pollution by 29 billion metric tons over - hours) the course of the next century – savings 40 equal to four years’ worth of America’s current emissions.34 30

Energy Efficiency Standards 20 Wind Power Generation Wind

for Lighting and Appliances Megawatt (Million 10 In June 2009, the Obama administration announced new energy efficiency 0 standards for lighting – one of a series

of new standards due to be issued over 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 the next several years as a result of the 2007 energy bill adopted by Congress. The new standards are estimated to save No single piece of legislation enacted 1.2 trillion kilowatt-hours of electricity by Congress – however ambitious – will over the next 30 years – approximately get us all the way to a new energy future. the same amount of electricity as used It will take effort by individuals, busi- by all of America’s homes in a year.35 nesses and governments at all levels to put the nation on track to a future powered by clean energy and to keep it on track. But Keeping Up the Momentum any federal legislation should move the Justice Louis Brandeis called states nation in the right direction, expanding “the laboratories of democracy.” Over on efforts at the local and state levels to the last decade, the states have been tap clean sources of energy, reduce our the proving grounds for a variety of dependence on oil, create new green jobs, innovative energy policy ideas, while and reduce pollution. the federal government – once largely So, by that measure, how does the on the sidelines – has finally begun to American Clean Energy and Security offer meaningful support. Act stack up?

America Is Making Progress Toward a Clean Energy Future 19 The American Clean Energy and Security Act Moves America in the Right Direction

he American Clean Energy and • Create hundreds of thousands to Security Act builds on the clean millions of new jobs. energy advances made over the past T • Reduce domestic emissions of several years by the states and in the global warming pollutants to 5 to 14 early months of the Obama administra- percent below 2005 levels by 2020 tion – moving the nation yet another and to 15 to 21 percent below 2005 step toward a clean energy future. levels by 2030, while driving further Analyses by the U.S. Department emission reductions abroad. of Energy (DOE), the Environmental Protection Agency (EPA) and others Because both the DOE and EPA project that the ACES Act will: analyses fail to estimate the impact of • Reduce electricity consumption by several key pieces of the ACES Act, it is 7 to 12 percent by 2030 versus busi- likely that the bill will deliver additional ness-as-usual projections through energy savings, renewable energy devel- improvements in energy efficiency. opment and global warming pollution reductions beyond those projected by • Increase the share of America’s elec- the agencies. tricity coming from non-hydroelectric renewable sources of energy to approximately 15 percent by 2030, compared with 10 percent under The American Clean Energy business-as-usual conditions. and Security Act: What It • Cut our consumption of oil by 4 to Does 7 percent below business-as-usual The American Clean Energy and in 2030, with America using up to Security Act seeks to transform how 12 percent less oil in 2030 than we America uses and produces energy – en- did in 2006. couraging a shift toward energy-efficient

20 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act buildings and products and forms of implement programs to reduce emis- energy with less impact on the environ- sions from freight transport; ment. • New guidelines for local and state The ACES Act seeks to move America transportation planning that intend toward a clean energy future by: to align transportation investments • Improving the energy efficiency of with climate and energy targets; and the American economy. • Steps to encourage energy efficiency • Capping emissions of global warm- improvements and to expand the use ing pollution, thereby encourag- of energy recovery technology in ing investment in cleaner forms of manufacturing plants. energy. In addition, the ACES Act allocates • Expanding production of clean, re- a portion of the revenue from the sale newable energy. of global warming pollution allowances under the cap-and-trade program (see The ACES Act Makes Big Strides below) to energy efficiency and renewable in Promoting Energy Efficiency energy. Additional allowances are distrib- The American Clean Energy and uted to natural gas utilities and to states Security Act marks a leap forward in with large numbers of homes using oil or improving the energy efficiency of virtu- propane for heating, with part of those ally every aspect of America’s economy. allowances dedicated to energy efficiency. Among the key energy efficiency provi- Finally, the ACES Act allocates some rev- sions of the bill are the following: enue from the sale of pollution allowances to clean energy innovation hubs that will • New energy efficiency standards for engage in research and development of lighting, appliances and equipment, clean energy solutions, including energy as well as awards to manufactur- efficiency technologies. ers and retailers who develop and sell “best in class” energy-efficient products; The ACES Act Caps Global Warming Pollution, Helping to • Advanced building energy codes Encourage Clean Energy intended to reduce energy consumption in new homes and commercial The ACES Act includes the nation’s buildings by 50 percent by 2015 and first economy-wide limits on global by 75 percent by 2030; warming pollution. Because most global warming pollution comes from the con- • Expanded programs for energy ef- sumption of fossil fuels, a strong cap on ficient retrofits of existing buildings, pollution can be a key driver in the devel- along with the creation of an energy opment of a new clean energy economy. labeling system for new homes and The ACES Act also ensures that America commercial buildings that would is part of a global solution to the problem enable purchasers to evaluate the of tropical deforestation, which is a major efficiency of those buildings at the contributor to global warming. point of sale; The nominal targets for emission • A requirement that the EPA establish reductions in the ACES Act are roughly global warming emission standards consistent with the reductions scientists for heavy-duty trucks by 2011 and tell us are necessary to prevent the worst

The American Clean Energy and Security Act Moves America in the Right Direction 21 impacts of global warming, but the near- another 10 percent of 2005 U.S. emis- term target should be stronger. More sions in 2020.38 importantly, however, there are legiti- The most recent climate science sug- mate questions about whether the global gests that developed countries as a whole warming pollution cap in the ACES Act must cut their emissions to 25-40 percent will achieve its desired results. below 1990 levels by 2020 and to 80-95 The mechanism used in the ACES Act percent below 1990 levels by 2050 if the to regulate global warming pollution is world is to have a chance to avoid the called “cap and trade.” Cap and trade has worst impacts of global warming. For been the most widely discussed portion the United States, that means reducing of the ACES Act … to the point where it emissions by at least 35 percent below seems that sometimes it is the only part of 2005 levels by 2020 and by at least 83 the bill discussed in news reports. percent by 2050.39 The “cap” in cap and trade is the Ideally, the ACES Act would call for a annual limit on global warming pollu- minimum 20 percent reduction in emis- tion established under the bill for those sions from covered sources below 2005 polluters covered under the program levels by 2020. But even if the ACES – electricity generators, oil refiners and Act were to achieve its current stated importers, industrial facilities, and sup- goals, it would be a large step forward pliers of natural gas, which, collectively, for the world in the effort to stop dan- are responsible for about 87 percent of gerous global warming. Together with the nation’s global warming pollution.37 the ACES Act’s commitment of U.S. Under the ACES Act, any of these facili- resources toward combating tropical ties that produce global warming pollu- deforestation – the source of about 20 tion (either directly or through the sale of fossil fuels) must hold a permit – called an percent of the world’s global warming “allowance” – for every unit of pollution pollution – achieving the bill’s emission they create. Because these allowances may reduction commitments would vault the be bought or sold, they have economic United States into a position of world value. The more polluting the activity, leadership in addressing the challenge of the greater the cost of the allowances global warming. one must hold, the greater the financial Unfortunately, there are several pro- incentive will be to switch to cleaner visions in the bill – including provisions practices. that allow for the use of large numbers The cap starts in 2012 and declines of “offsets” and that establish weak en- each year through 2050. It aims to vironmental safeguards for the use of reduce global warming emissions from “renewable” biomass fuel – that could un- covered sources by 3 percent below 2005 dermine its ability to achieve its promised levels by 2012, 17 percent by 2020, 42 emission reductions. These provisions are percent by 2030, and 83 percent by 2050. discussed in detail on page 31. The bill also directs the EPA to establish Putting a price on emissions of carbon performance standards for some smaller dioxide and other global warming pol- sources that are not included in the cap, lutants will drive investments in clean such as landfills and coal mines. In addi- energy technologies – helping to move tion, the bill directs the EPA to achieve the nation toward a new energy future. additional emission reductions through But other provisions of the ACES Act can agreements to prevent tropical deforesta- also contribute to the development of the tion, requiring reductions equivalent to nation’s renewable energy potential.

22 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act The ACES Act Creates a Finally, the cap on global warming Framework for Future pollution will encourage the use of clean Expansion of Renewable technologies such as renewable energy in place of highly polluting forms of Energy electricity generation such as coal-fired With “clean energy” as its middle power plants. name, one would expect the American However, the most heralded renewable Clean Energy and Security Act to include energy policy in the bill – the nationwide ambitious steps to promote renewable renewable electricity standard (RES) energy. The ACES Act does take some for utilities – is disappointing. The bill important steps forward, but the bill falls requires large electric utilities to achieve short of taking full advantage of the na- 20 percent of their sales by 2020 from a tion’s potential for wind, solar and other combination of “renewable” energy gen- forms of clean energy. eration and energy efficiency improve- The ACES Act includes several pro- ments. States could allow their utilities visions that will increase the amount of to meet up to 27 percent of the total renewable energy produced in the United standard each year with energy efficiency States. It establishes the first renewable (i.e., 8 percent of sales in 2020). electricity standard for federal agencies, The bill adds garbage incineration and requiring the federal government to gen- coal mine methane to the sources that erate 6 percent of its energy from clean qualify as “renewable” – despite neither renewable energy sources in 2012, gradu- actually being renewable – and allows ally rising to 20 percent in 2020. The utilities to subtract energy generated bill also extends the limit on contracts from new nuclear power plants and coal for federal agencies to acquire electric- plants with carbon capture and storage ity generated from renewable sources from the baseline upon which the final from 10 to 20 years – enabling renewable percentage is calculated. In addition, the technologies to better compete with fossil bill exempts all but the largest utilities fuel technologies for market share. Since and electricity co-ops from the renewable the federal government is the largest energy requirement. electricity consumer in the nation, these Considering these loopholes and measures will provide a significant boost exemptions, the Union of Concerned to the development of renewable energy Scientists estimates that the combined in the United States.40 standard requires less renewable energy The bill also dedicates a portion of than the 9.9 percent renewable energy the the revenue from the sale of pollution Department of Energy projects the na- allowances to clean energy, including tion will achieve under policies already in renewable energy. The bill dedicates 9.5 place – namely state renewable standards percent of allowances to state programs and the investments made earlier this year to promote renewable energy and energy in the economic recovery package.43 efficiency when the program begins in Given America’s vast renewable energy 2012, with lesser shares of allowances potential – and the potential for invest- devoted to these purposes over time.41 ments in renewable energy to create The Solar Energy Industries Association jobs that can reinvigorate the American estimates that these provisions will gener- economy – the lack of a strong renew- ate approximately $90 billion by 2025, of able electricity standard in the bill is a which one-fifth, or $18 billion, must be tremendous missed opportunity. Enact- spent on renewable energy projects.42 ment of a federal RES – even a very weak

The American Clean Energy and Security Act Moves America in the Right Direction 23 one – will, however, create a framework The general conclusion of that re- for expanding renewable energy in the search is that the ACES Act will make future. And the other renewable energy meaningful progress in moving America provisions in the bill will provide a boost toward a cleaner energy future. to clean energy. Clean Power Projected Benefits of the As noted earlier, the strongest and most visionary portions of the Ameri- ACES Act can Clean Energy and Security Act are How far will the American Clean En- those that improve the energy efficiency ergy and Security Act move us toward the of the nation’s homes, businesses and goal of repowering America with clean factories. energy? A great deal depends on how the According to the U.S. Department of bill is implemented, as well as inevitable Energy’s analysis of the bill, the ACES changes in technology and the economy Act, combined with the economic stimu- over time. Several federal agencies and lus package, will cut electricity consump- independent organizations, however, tion by 2 percent versus business as usual have analyzed the bill and made projec- by 2020 and by 6 percent by 2030. (See tions regarding its impact on the nation’s Figure 2.) energy future. (See “Benefits of the ACES Other analyses of the bill project Act: What the DOE and EPA Analyses even greater reductions in electricity Miss,” below.) consumption, reducing the amount of

Benefits of the ACES Act: What the DOE and EPA Analyses Miss Forecasting the impact of sweeping energy legislation such as the American Clean Energy and Security Act is complex – particularly since the bill establishes several important new initiatives but leaves the details of their implementation up to administrative agencies such as the EPA. In addition, the models used by the DOE and the EPA to evaluate the ACES Act have important weaknesses that may understate the contribution the ACES Act will make in moving America to a clean energy future. As a result, the impact of the ACES Act in several key areas is likely to be greater than estimated by either the DOE or the EPA. Initiatives left out: The DOE and EPA analyses of the ACES Act fail to evaluate several provisions of the bill, including emission standards for heavy-duty transportation vehicles (which will reduce oil consumption) and investments in energy research and development and the deployment of clean energy technologies.44 The EPA analysis further omits energy efficiency standards for appliances, lighting and equipment.45 Weaknesses: The DOE’s National Energy Modeling System (NEMS), on which the agency’s analysis is based, has long incorporated overly optimistic assumptions about nuclear energy technology and overly pessimistic assumptions about renewable energy technology, meaning that penetration of renewable energy may be higher than the agency projects.46

24 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act electricity that U.S. power plants must Figure 2. Electricity Consumption Under ACES Act47 produce. The EPA’s ADAGE model projects that the ACES Act will reduce 6,000 electricity generation by 9.7 percent below business-as-usual levels in 2020 and 5,000 by 11.5 percent by 2030.48 The American Council for an Energy-Efficient Econo- 4,000 my (ACEEE) estimates that the ACES

Act’s energy efficiency provisions – many 3,000 of which are not included in the EPA modeling of the bill – will reduce total 2,000 U.S. energy use by 5 percent below pro- kWh) (billion No ACES Act jected levels by 2020 and by 12 percent With ACES Act Electricity Consumption Consumption Electricity 1,000 below projected levels by 2030.49 The energy efficiency improvements delivered by the ACES Act still fall short 0

of America’s potential for energy savings, 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 with recent analyses suggesting that the nation could reduce energy consumption by 20 percent or more using cost-effective Figure 3. Non-Hydroelectric Renewable Electricity Penetration Under ACES Act51 solutions alone. But the ACES Act would ensure that the nation’s demand for elec- 16% tricity will remain in check for the next several decades, creating an opportunity 14% for the nation to replace existing power 12% plants with cleaner forms of electricity, especially renewable energy. 10% The ACES Act is also expected to increase the share of electricity coming 8% from renewable sources of power, despite

Hydro Renewables 6% a weak renewable electricity standard. -

Before passage of the economic recovery Non 4% With ACES Act package, the U.S. Department of Energy Percentage of Electricity from With ARRA projected that 7.9 percent of the nation’s 2% No ARRA electricity would come from renewable 0% energy sources other than conventional hydroelectric power by 2030. The economic recovery package boosts that per- ARRA=American Recovery and Reinvestment Act centage to 9.9 percent. The ACES bill provides another large boost, increasing the share of electricity from non-hydro The EPA’s analysis of the ACES Act, renewables to 15.2 percent. When hy- based on the agency’s ADAGE model, droelectric power is included, the share projects similar but less optimistic re- of electricity from renewable energy sults, with the percentage of electricity increases from 14 percent without the generation coming from all renewables economic recovery package to 16 percent (including hydroelectric power) in 2030 with it, and to nearly 22 percent after increasing from 12 percent to 17 per- enactment of the ACES Act.50 cent.52 The Natural Resources Defense

The American Clean Energy and Security Act Moves America in the Right Direction 25 Council, in a recent analysis using the Again, these increases in renewable en- MARKAL model, projects that the bill ergy production are driven not by the bill’s will deliver greater amounts of renew- renewable electricity standard, which is able energy, with non-hydroelectric ineffectual, but by other components of renewables accounting for more than the ACES Act. one-quarter of all electricity generation Adoption of the ACES Act would likely by 2030.53 lead to a dramatic drop in the production of electricity from fossil fuels. Before passage of the recovery package, fossil fuels Figure 4. Electricity Net Generation from Fossil Fuels were expected to produce two-thirds of (Department of Energy Estimates)55 America’s electricity in 2030. Under the ACES Act, fossil fuels are projected by 4,000 the Department of Energy to produce

3,500 less than half of the nation’s electricity (44 percent) in 2030 and by the EPA to 3,000 produce slightly more than half (52 percent) in 2030.54 2,500 In sum, the ACES Act, coupled with

2,000 previous efforts, is projected to significantly reduce electricity demand, nearly 1,500 double the share of America’s electricity No ARRA that is projected to come from new re- 1,000 With ARRA newable sources of energy, and help the

Fossil Fuels (billion kWh) (billion Fuels Fossil With ACES Act 500 nation wean itself off fossil fuels for elec-

Net Electricity Generation from Generation Electricity Net tricity generation. While the bill could go 0 farther to take full advantage of America’s vast energy efficiency potential, the bill does make significant progress. ARRA=American Recovery and Reinvestment Act Energy Independence Figure 5. Total Petroleum Consumption (Quad BTU)56 America’s dependence on oil is one 45 of our most vexing energy challenges – leaving us dependent on foreign nations 40 for the vast majority of our supply and 35 leaving our economy vulnerable to the whims of international oil markets. 30 The ACES Act will make a meaningful 25 contribution to weaning America off of

20 oil. The Department of Energy projects (Quad BTU) (Quad that oil consumption will decline over 15 the next couple of decades even without Without ARRA 10 With ARRA further government action as a result of

Total Petroleum Petroleum Consumption Total ACES+CAFE higher oil prices, increased use of ethanol 5 in America’s fuel supply, and improved 0 vehicle fuel economy. But the ACES Act will trigger greater reductions in oil consumption, cutting our use of petroleum by ARRA=American Recovery and Reinvestment Act

26 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act an additional 7.5 percent when coupled projects that the energy efficiency provi- with the stronger near-term fuel economy sions of the ACES Act will create 600,000 requirements for cars proposed by the net new jobs by 2030. Expanding the Obama administration. (See Figure 5.) energy efficiency provisions of the bill, By 2030, under the ACES Act, America according to the study, could result in will use 12 percent less oil (in terms of its the creation of more than a million net energy value) than we did in 2006. new jobs.59 The EPA projects more modest impacts of the ACES Act on oil consump- Reduce Global Warming tion, projecting a reduction of 4 percent versus business-as-usual levels in 2030. Pollution Were America to use these oil savings Because of the various flexibility to offset imports of crude oil, it would mechanisms and loopholes in the ACES cut our dependence on foreign oil by 27 Act, there is little certainty that the bill percent by 2030.57 will deliver the level of emission reduc- It is important to note that neither the tions it promises. How close it will get DOE nor the EPA analyses model several to its stated goal depends on the assump- important portions of the ACES Act that tions one uses in evaluating the law and have the potential to significantly reduce the types of emission reductions one oil consumption, including provisions to includes. improve the energy efficiency of heavy- One key factor in determining the level duty trucks, promote the production and of emission reductions that take place use of plug-in electric vehicles, and en- here in the United States is the degree to courage future investments in transporta- which polluters take advantage of the po- tion infrastructure to be consistent with tential to use “offsets” – emission reduc- the objectives of reducing global warming tions that occur overseas or in segments pollution and reducing America’s depen- of the U.S. economy that are not covered dence on oil. As a result, the ACES Act by the cap-and-trade program – in place is likely to do more to reduce America’s of emission allowances. The EPA and the dependence on foreign oil than the DOE U.S. Department of Energy both project or EPA analyses project. that facilities will take advantage of their potential to use international offsets and Create Millions of Jobs use an increasing number of domestic offsets as well. The American Clean Energy and Se- As a result, the EPA projects that the curity Act will contribute to the creation ACES Act will reduce domestic emissions of hundreds of thousands, and perhaps of global warming pollution by 12 to 14 millions, of new clean energy jobs. percent below 2005 levels by 2020, by Several organizations have compiled 16 to 21 percent by 2030, by 20 to 26 estimates of the job creation impacts of percent by 2040, and by 30 to 36 percent various portions of the ACES Act. by 2050.60 The U.S. Department of En- The American Institute of Architects ergy, which examined the impact of the has estimated that two provisions in the ACES Act only as far as 2030, projected ACES Act directed at improving the en- that the program would reduce domestic ergy efficiency of buildings would create global warming pollutant emissions by 5 or save 270,000 jobs in the construction percent below 2005 levels by 2020 and industry.58 The American Council for by 15 percent by 2030.61 (See Figure an Energy-Efficient Economy (ACEEE) 6.) These domestic emission reductions

America Is Making Progress Toward a Clean Energy Future 27 would be an inadequate contribution to also allows polluters to comply with the the goal of preventing the worst impacts program using offsets generated domes- of global warming. tically and overseas. Additional emission Domestic emission reductions are only reductions will also be generated through part of the story, however. The ACES Act efforts to reduce deforestation in developing countries. Should those projects deliver real emission reductions, the ACES Act will make a more significant Figure 6. Projected Emission Reductions from 2005 Levels 62 contribution to addressing global warm- Under ACES Act, Domestic Emissions Only ing. Overall, the ACES Act – including off- 40% sets and investments in stopping tropical

35% deforestation (and assuming all offsets are DOE EPA ADAGE real, additional, and permanent) – drives 30% EPA IGEM emission reductions ranging from 25 to Levels 38 percent (compared with 2005 emis- 25% sions) by 2020 and from 40 to 46 percent 2005 2005 20% by 2030. By 2050, according to the EPA’s modeling, the ACES Act will deliver 15% emission reductions equivalent to 58 to 66 percent of 2005 emissions (with the 10% same caveat with regard to the integrity Reduction vs. Reduction 64 5% of the offsets).

Domestic Global Warming Emission Warming Global Domestic In the early years of the program, 0% these emission reductions are roughly 2010 2015 2020 2025 2030 2035 2040 2045 2050 consistent with the minimum science ADAGE and IGEM are the names of two EPA models suggests is necessary to prevent the worst used to project the impact of the ACES Act. impacts of global warming. Over the longer term, the United States will need to make deeper emission reductions. Moreover, there are serious questions Figure 7. Projected Global Warming Emission Reductions from ACES Act Including Overseas Reductions and Reduc- regarding the ability of offsets to deliver tions from Domestic Biological Sequestration63 real emission reductions (see page 32). If offset projects fail to deliver real emission 70% 2010 2020 2030 2040 2050 reductions, the benefits of the ACES Act

60% for addressing global warming will be

EPA IGEM much reduced. bioseq & intl 50% EPA IGEM In sum, the ACES Act takes an historic domestic EPA ADAGE first step toward reducing America’s con- bioseq & intl 40% EPA ADAGE tribution to global warming – and will domestic DOE bioseq & likely deliver significant and real reduc- 30% intl DOE domestic tions in global warming pollution, both

Global Global Warming Emissions in the United States and abroad. But the 20% bill’s many loopholes fail to guarantee 2005

10% that the nation will make the emission

Emission Emission Reductions from All Sources reductions necessary to prevent the worst vs. U.S. U.S. vs. 0% impacts of global warming.

28 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act The ACES Act: Moving large numbers of green jobs. We will America Toward a Clean also significantly reduce emissions of the pollutants that contribute to global Energy Future warming. The American Clean Energy and The ACES Act also includes provi- Security Act moves America one large sions, however, that work at cross-pur- step closer to a future powered by clean poses with the rest of the bill. Revising energy. Under the ACES Act, America those provisions in the Senate, and then will consume less energy than we oth- winning passage of comprehensive clean erwise would, get a larger share of our energy legislation in both houses, are electricity from renewable energy, re- vital steps in the drive to achieve a new duce our dependence on oil, and create energy future for the nation.

The American Clean Energy and Security Act Moves America in the Right Direction 29 The ACES Act Gets Some Important Things Wrong … But Passing It Is a Critical Step Forward for Clean Energy

he American Clean Energy and Allows Old Coal-Fired Power Security Act will make a meaning- Plants to Keep Running ful contribution toward moving T Americans understand that moving America to a clean energy future. But the legislation has important flaws that toward a new energy future means should be fixed in the Senate. leaving old, inefficient, dirty technolo- Winning passage of the ACES Act gies behind. Just ask the thousands of Americans who seized the opportunity in its current form or better – com- to finally rid themselves of inefficient promised though the legislation may “clunker” vehicles in exchange for new, be – is a critical step, in ways that go energy-efficient cars during the govern- well beyond the number of barrels of ment’s “cash for clunkers” program. oil that will be saved and number of The same factors that keep people tons of pollution that will be averted. driving clunker automobiles have kept Enactment of the ACES Act would be the nation reliant on clunker power a political breakthrough, would create plants – aging, coal-fired plants, many a framework for further action, and of them 40 to 50 years old, that rely would make it more likely, rather than on outdated technology and are re- less likely, that the nation will continue sponsible for vast amounts of carbon its long-term momentum toward a clean dioxide pollution. Most of these power energy future. plants, like the aging gas-guzzler in the driveway, are paid off, and therefore cheap to run, even though they impose Key Flaws in the ACES Act major costs on the environment and The ACES Act includes several major public health. flaws that should be rectified as the leg- America should be doing everything islation passes through the Senate. we can to retire or clean up these old,

30 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act riding the brake. The ACES Act includes powerful incentives for shifting to clean energy technologies, but it also will allow – and even perversely encourage – companies to keep their oldest and dirtiest power plants operating for years, if not decades, to come. Preventing the EPA from requiring improvements to the most-polluting existing power plants will needlessly delay America’s transition to a clean energy future. That’s particularly important since the nation will need to close down or clean up the most polluting power plants within the next few decades to achieve the ever more stringent emission reductions we will need to achieve in the years Aging coal-fired power plants are a leading to come. Instead of encouraging power source of global warming pollution. The companies to invest even more money EPA should have the power to limit global in their oldest power plants, the ACES Act should unambiguously encourage warming pollution from these plants. Photo: istockphoto.com, Andy Olsen power companies to invest in renewable energy and energy efficiency. Otherwise, the nation will find itself ill prepared to polluting power plants and replace them make the steep reductions in emissions with clean technologies. At the very least, required in 2030 and beyond. coal-fired power plants – both young and The Senate should provide the EPA old – should be required to meet the same equivalent new authority or restore the modern emission standards for carbon EPA’s current authority to regulate exist- dioxide. ing power plants for their emissions of The ACES Act, however, removes the carbon dioxide, including when power tools the EPA has to require the cleanup companies expand the capacity of those of existing coal-fired power plants. plants to produce electricity. By doing so, Under the bill, a power company that the Senate can ensure that the EPA can chooses to build a new coal-fired power crack down on carbon dioxide emissions plant must meet standards limiting the from coal-fired power plants and move plant’s production of carbon dioxide. America to cleaner electricity sources. However, under the bill the EPA will lose the authority to impose such stan- Leaves Too Much to Chance on dards on existing plants, and companies that choose to expand capacity at exist- Global Warming ing plants – and increase carbon dioxide Decades of inaction have left the world emissions – would avoid those limits. with a narrowing window of opportunity When it comes to shifting America to to prevent the worst impacts of global a new energy future, the effect of these warming. As important as taking action changes is like pressing down the ac- against global warming is being able to celerator of a car while simultaneously predict the results of that action. At this

The ACES Act Gets Some Important Things Wrong … But Passing It Is a Critical Step Forward for Clean Energy 31 late stage of the game, we cannot afford to release a unit of pollution, something to think we are on track to make sig- that can be tracked and quantified. An nificant reductions in emissions, only to offset, however, is a credit received for have those reductions fail to materialize not emitting a unit of pollution or for a decade or more down the road. removing a unit of pollution from the Unfortunately, the ACES Act has atmosphere. To have any value, an entity several loopholes that threaten to reduce seeking to receive an offset must be re- the amount of real emission reductions quired to demonstrate that the pollution it generates. The two most problematic either would have been emitted but was not loopholes are those related to the use of or has been permanently removed from the “offsets” and to the accounting of emis- atmosphere – and that it was the offset sions from biomass. payment that was responsible for the emission reduction. Offsets In practice, ensuring that offsets An offset is an action taken to reduce deliver real, additional, verifiable, emissions in areas not covered by the enforceable and permanent emission cap-and-trade program. Offsets can be reductions is difficult. The U.S. Govern- domestic – for example, changing farm ment Accountability Office, the investi- practices to store more carbon in the gative arm of Congress, noted in a recent soil – or can take place overseas. Under report that “offsets can compromise the the ACES Act, a polluter can buy an integrity of programs designed to reduce offset and use it interchangeably with a greenhouse gas emissions” and that “it is pollution allowance.65 If offsets can be nearly impossible to demonstrate project obtained more cheaply than allowances, additionality with certainty.”66 polluters will tend to use offsets – rather The European Union, which has a than pollution reductions at their own cap-and-trade program similar to that facilities – to achieve the emission cap. in the ACES Act, has long allowed pol- The use of offsets, therefore, can luters to comply by purchasing offsets reduce the cost of complying with a generated in developing countries and cap-and-trade program. But offsets also certified through the United Nations’ reduce the obligation to use cleaner Clean Development Mechanism (CDM). technologies in the portions of the Despite procedural safeguards intended economy regulated under the cap. Be- to ensure that CDM projects deliver real cause America’s dependence on fossil emission reductions, a 2008 paper by fuels creates a range of problems – from researchers at Stanford University con- price spikes to air and water pollution cluded that “much of the current CDM that affects human health and the health market does not reflect actual reductions of critical ecosystems – reducing the in emissions.”67 The CDM’s problems need for emission reductions from fos- include: sil fuel use also reduces the benefits our • The suspension of at least two third- communities receive from a transition party offset validators amid allega- to a clean energy economy. In addition, tions that they failed to properly offsets produce less-certain reductions in audit offset projects;68 pollution – reducing the possibility that the ACES Act will deliver the emission • The generation of offset credits by reductions it promises. projects that would have occurred Offsets and allowances are fundamen- anyway. One recent study estimated tally different. An allowance is a permit that as many as 40 percent of CDM

32 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act projects deliver emission reductions forestry offsets, with the intention of re- whose additionality is questionable solving the issue as the bill moves through or unlikely;69 the legislative process. As a result, the bill creates two offset programs, one • A high proportion of offsets gen- administered by the EPA and the other erated from “low-hanging fruit” by the USDA. projects (such as the destruction of The problem is that the USDA, for high global warming potential gases) all its strengths, is not an environmen- that achieve little in promoting tal agency. The USDA should have an sustainable development and provide important role in developing and imple- windfall profits to industry.70 menting the domestic offsets program, but the agency is poorly equipped to The experience of the CDM shows judge whether the offsets generated that it can be devilishly hard to devise a under the program meet environmental system of accrediting and verifying offsets goals. that forecloses the potential for gaming Ensuring a strong program to assure the system. the quality of offset projects is imperative, The ACES Act addresses the issue of particularly because of the number of offset quality in several ways: establishing offsets that can be used to substitute for a process for assessing the additionality of emission reductions under the cap-and- offset projects and taking the extra step trade program. Rather than taking a cau- of requiring facilities using international tious approach to incorporating offsets, offsets to provide 1.25 offsets for every the ACES Act allows the use of 2 billion allowance they retire, starting in 2018 – a tons of offsets per year, split evenly be- provision intended to deliver additional tween domestic and international offsets, environmental benefits from the use of with the potential for further increases offsets. in international offsets if insufficient However, the ACES Act also raises domestic ones are available. Two billion serious questions about who will be tons of offsets is more than the emission responsible for enforcing the domestic reductions required annually under the portion of the offset program. During ACES Act until nearly 2040 – meaning the final negotiations on the bill in the that facilities could technically increase House, Energy Committee Chair Henry their emissions, purchase offsets, and still Waxman and Agriculture Committee comply with the requirements. Chair Collin Peterson failed to resolve Because the ACES Act allows so many the roles that the EPA and the U.S. De- offsets, practically the entire fate of the partment of Agriculture (USDA) would program depends on how the offsets have in writing the rules for and enforcing provisions of cap-and-trade are handled. agricultural and forestry offsets – the vast Every offset given to a project that does majority of potentially available domestic not deliver true emission reductions will offsets. The two chairmen formally asked be one more hurdle to the adoption of President Obama for recommendations clean energy technology here in America on the appropriate roles for the EPA and and the avoidance of the worst impacts of the USDA in developing and implement- global warming. ing the domestic offsets program. For the purposes of House action, the chair- Biomass men gave responsibility exclusively to The ACES Act also includes troubling the USDA for domestic agriculture and policies related to the use of biomass en-

The ACES Act Gets Some Important Things Wrong … But Passing It Is a Critical Step Forward for Clean Energy 33 ergy – energy from trees, crops and other ate should also include strong safeguards plant materials and wastes. to ensure that increased use of biomass The use of domestically produced bio- does not harm public lands, wildlife or mass can be an important part of a clean sensitive ecosystems. Closing the biomass energy economy, but it can also cause loophole would help ensure that biomass harm. Harvesting trees and crops for consumption occurs in a responsible way energy production can, if handled poorly, that contributes to real emission reduc- pollute waterways, threaten wildlife, and tions. reduce biodiversity. Using biomass for energy can even result in an increase in global warming pollution if the emis- Misses Critical Opportunities to sions resulting from consumption of the Promote Renewable Energy biomass, the release of carbon stored in As noted above, the ACES Act takes the soil, and indirect land-use impacts of important steps to promote renewable increased biomass production outweigh energy, but fails to deliver on America’s the amount of carbon dioxide that would full potential for clean energy innova- otherwise be emitted from consuming tion. The federal renewable electricity fossil fuels and the amount of carbon that standard (RES) in the bill is a particular will be removed from the atmosphere by disappointment, as it is unlikely to create new plantings. any new renewable energy. And while As a result, it is critical that public poli- other provisions of the bill will help spur cies related to biomass reflect the complex some increases in renewable energy, the effects its production and use can have bill still fails to take advantage of the na- on the environment – both for good and tion’s clean energy potential. for ill. Unfortunately, the ACES Act as The Senate can take several steps to currently drafted turns a blind eye toward boost the bill’s level of support for renew- many of the potential problems with able energy. The most direct way to do biomass. It gives energy companies a pass so would be to strengthen the RES to from having to hold pollution allowances require at least 25 percent new renew- for the net global warming pollution that able energy by 2025. Another way would results from consumption of “renewable” be to increase the amount of allowances biomass (even if the production and devoted to renewable energy projects by consumption of this biomass leads to an reducing the number of allowances given increase in global warming pollution), to polluters for free. Using the allowances reverses existing public policy designed currently directed toward oil refiners, to ensure that ethanol and other biofuels merchant coal-fired power plants and deliver real reductions in global warming other polluters to instead encourage the pollution, and weakens safeguards de- deployment of renewable energy would signed to protect federal lands, sensitive provide an important boost to clean en- ecosystems and wildlife.71 ergy in the United States. To ensure that the ACES Act delivers on its emission reduction promises, the Senate should close the biomass loophole Why Fight for the ACES Act? by ensuring that emissions from biomass Given these flaws – and the fact that energy consumption – including the use the ACES Act represents an incremental, of ethanol and other biofuels in vehicles rather than transformative step toward a and biomass at power plants – reflect the clean energy future – why is passage of full impact on global warming. The Sen- the bill so important?

34 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act A Clear Step in the Right the U.S. Congress since Reconstruction Direction – ultimately paved the way for the more significant civil rights legislation of the The ACES Act is a clear and signifi- 1960s, enactment of the ACES Act could cant step toward a new energy future for lower the political barriers to more ag- America. The energy efficiency provi- gressive clean energy legislation in the sions in the bill, while they can still be im- years to come. proved and expanded upon, would make The recent experience with clean en- a significant dent in the nation’s energy ergy laws in the states validates the notion use, and some of those provisions – par- that initial adoption of clean energy leg- ticularly the bill’s embrace of aggressive islation can lead to further improvements building energy codes – are potentially in that legislation as the years go on. As transformative. The bill also places a noted earlier, 29 states and the District price on emissions of global warming of Columbia have adopted renewable pollution (which will drive continued electricity standards. Of those 29 states, innovation and encourage deployment 17 – more than half – have increased their of clean energy technologies), encourages renewable electricity target or acceler- research and development of new tech- ated the timeline after adoption of their nologies, and will create large numbers original RES. Seven states have revised of new, clean energy jobs. their goals more than once.72 As the analyses of the bill by the DOE, the EPA, and others show, passage of the ACES Act would lead to measurable Includes Provisions for reductions in energy consumption, oil Strengthening dependence and global warming pollu- The ACES Act includes provisions that tion, along with a significant increase in allow for review and possible strengthen- renewable energy production. The ACES ing over time. Under the bill, the EPA Act does not go as far toward a clean en- and the National Academies of Sciences ergy future as it could or should, but it (NAS) each must issue reports every four still represents major progress. years reviewing the latest climate science, assessing our progress in avoiding catastrophic global warming, and making A Political Breakthrough recommendations about additional ac- Just a dozen years ago, the United tion that may be needed. The bill then States Senate voted 95 to 0 in opposition requires the president to direct relevant to the U.S. signing the Kyoto Protocol. federal agencies to use existing authority Just six years ago, a majority of senators to take additional actions identified in voted against the far weaker McCain-Lie- the EPA and NAS reports. In addition, berman Climate Stewardship Act of 2003, if a report from either the EPA or the which merely pledged to cap, not reduce, NAS concludes that the United States emissions of global warming pollution. will not achieve the necessary domestic Prior to the House approval of the ACES reductions or that global actions will Act in June, neither branch of the U.S. not maintain safe global average surface Congress had ever adopted mandatory temperatures and atmospheric green- limits on global warming pollution from house gas concentration thresholds, the any sector of the U.S. economy. Much bill requires the president to submit to as the relatively weak 1957 Civil Rights Congress a plan identifying domestic Act – the first civil rights bill adopted by and international actions to achieve nec-

The ACES Act Gets Some Important Things Wrong … But Passing It Is a Critical Step Forward for Clean Energy 35 essary additional reductions, including makers at all levels of government, and to any legislative recommendations. There build political strength for the important is no guarantee that those actions will be battles yet to come. implemented, but the ACES Act ensures The plain fact of the matter is that, in that the U.S. government will ask the 2009, an energy bill that puts America on right questions about global warming in a path toward improved energy efficiency, the years to come, and it creates a process expanded use of renewable energy and for the nation to act on the answers. significant reductions in global warming pollution may be winnable in the U.S. A Strong Message to the Rest Congress after a tough fight. The chances of winning a truly transformative energy of the World bill, of the kind that will guarantee that Enactment of the ACES Act would America achieves a clean energy future, send a message to the rest of the world are much slimmer. Even winning the that the United States is serious about a ACES Act in its current or better form transition to a clean energy future. With will take one heck of a fight – one that world leaders meeting in Copenhagen will require supporters of clean energy in December to negotiate a successor to mobilize all of the support we can agreement to the Kyoto Protocol, there muster in the face of a massive, well- is no more important time for America to funded lobbying campaign by fossil fuel break its long legacy of inaction on global producers and their allies. The challenge warming. The ACES Act, while it falls is magnified by the institutional hurdles short of what is necessary to prevent the of the U.S. Senate, which gives small worst impacts of global warming, would states – including some in which fossil represent a strong commitment from the fuel production is currently a cornerstone United States to significant reductions in of the local economy – outsized influence global warming emissions. Absent such a over the final outcome of legislation. commitment, the chances for a meaning- The process of organizing a broad ful international agreement to reduce coalition of support around the ACES global warming pollution are more dire. Act presents an opportunity to solidify And with every year the world waits to and deepen the support of the American take action on global warming, the costs people for actions to achieve a clean en- of inaction grow higher. Passage of the ergy future and reduce our impact on the ACES Act, therefore, would not just put global climate. Americans already broadly America on a course to a cleaner energy support a transition to a clean energy future, but it would help put the world on economy – including actions to reduce course to a better future as well. global warming pollution such as adoption of a cap-and-trade system for global 73 An Opportunity to Build warming pollution. Residents of states that have adopted clean energy policies Strength for Future Efforts are beginning to see the results of those The ACES Act is not and was never actions in expanded economic opportu- envisioned to be the final step in the drive nity and a cleaner environment, and more to repower America. The high-profile Americans will see similar benefits as the debate over the ACES Act provides an clean energy transition forwarded by the opportunity to convey the promise of a ACES Act gains momentum. Outreach clean energy future to a broader audi- and confidence-building is particularly ence, to educate the public and decision- important in states with coal fields, oil

36 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act patches, or heavy industry, where the eco- done so much in recent years to raise the nomic promise of a clean energy economy alarm about global warming and develop is a harder sell. a vision for a clean energy future. Just as years of organizing, outreach, That is why it is so important that the and innovative policy work at the state ACES Act be understood by everyone level have paved the way for the ACES involved in the debate as part of a longer- Act – the emission reductions and clean term strategy to achieve a new energy energy investments in which would future for the nation – a strategy that have been politically unthinkable just builds momentum for stronger national a few years ago – so too can continued legislation in the future, that works to organizing expand the range of political secure strong, binding international possibilities in the years to come. agreements to address global warming, That said, with scientists warning of that continues to promote and harness the urgent necessity of dramatic emission the innovative energy of state and local reductions to prevent the worst impacts initiatives, and that clearly communi- of global warming, legislation – even cates to the American people both the significant legislation – that falls short of urgency of a clean energy transition and meeting that challenge is difficult to swal- the benefits that transition would deliver low. It is not surprising that the ACES for our environment, our economy, and Act is perceived as a let-down by some our quality of life. The ACES Act, by of the grassroots environmentalists, clean itself, is not enough. But it can help lay energy business leaders, visionary elected the foundation for a clean energy future officials, scientists and others who have for America.

The ACES Act Gets Some Important Things Wrong … But Passing It Is a Critical Step Forward for Clean Energy 37 The Road to a New Energy Future: The ACES Act and What Comes Next

cleaner energy future for America Keeping the Bill Strong is within reach. Getting there, The ACES Act, as it passed the however, will require effort A House, is a bill worth fighting for – from all levels of government, busi- making significant gains in improving ness, key constituency groups and the energy efficiency of the American individual Americans. Winning passage economy, cutting global warming pol- of a strong version of the American lution, reducing our dependence on Clean Energy and Security Act will be oil, and encouraging clean energy. Any a good start, but even with the ACES legislation adopted by the Senate should Act, there will remain plenty of work lock in those gains. to be done. A key part of keeping the ACES Act strong is ensuring that it delivers emission reductions in the most cost-effective Winning the Battle Over and environmentally sound way possible. The House-passed version of the the ACES Act ACES Act provides support to a variety The first task in moving toward a of clean technologies that can make a clean energy future is winning a strong contribution to reducing global warm- version of the ACES Act. “Victory” in ing pollution. The Senate should resist the battle over the ACES Act means the temptation to invest vast amounts of more than just winning enough votes money in technologies with extremely in Congress to pass any energy bill – it high start-up costs and negative impacts means keeping the bill strong and fixing on the environment – particularly nucle- its biggest weaknesses. ar power. Because of the long lead time

38 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act for the construction of nuclear reactors, • Reduce the amount of valuable pol- nuclear power is incapable of making a lution allowances given away for free meaningful contribution to achieving the to polluters and instead invest the nation’s short-term emission reduction revenue from those allowances in goals (i.e., those that must be achieved by renewable energy, energy efficiency, 2020). And because nuclear power plants and measures that reduce the cost of are more expensive than many clean en- the program to consumers. ergy technologies, a massive investment in nuclear power could actually set the nation back in achieving long-term emis- The Next Steps 74 sion reductions. Even with passage of a strong ACES The public must continue to reevalu- Act, the journey to repower America will ate the bill as it makes its way through be closer to its beginning than its end. the Senate to ensure that it remains, on There are dozens of important steps the balance, a step in the right direction. And nation can take to achieve the vision of as always, supporters of the House bill a new energy future. A few of the most should reserve the right to oppose the important steps are highlighted below. Senate version if that bill no longer meets the test of making meaningful progress toward a clean energy future. Renewable Electricity Standard States with renewable electricity stan- Fix the Biggest Weaknesses dards are leading the nation in taking advantage of America’s ample clean energy The Senate should also fix the biggest potential. The weak renewable electricity weaknesses in the version of the ACES standard in the ACES Act should be aug- Act that passed the House. Specifically, mented or replaced by one that requires the Senate should: that at least 25 percent of America’s elec- • Provide the EPA with equivalent new tricity come from new renewable energy authority or restore the EPA’s current sources by 2025. Achieving that target authority to regulate existing power would put the nation well on its way to plants for their emissions of carbon the goal of getting all of America’s elec- dioxide, including when power com- tricity from clean, renewable sources. panies expand the capacity of those plants to produce electricity. Energy Efficiency Resource • Ensure that offsets used under the Standard bill’s cap-and-trade program deliver America has vast potential to use en- real emission reductions and clarify ergy more efficiently. To take advantage that the EPA should have ultimate of that potential, the nation should adopt authority for developing and enforc- an energy efficiency resource standard ing the program. (EERS) similar to those adopted by • Ensure that companies using renew- leading states across the country. Such able biomass energy are held re- a standard would set a concrete goal for sponsible for its full global warming improved energy efficiency and unleash impacts – including contributions to the resources needed to achieve that global warming through direct and goal. A federal EERS should seek to indirect changes in land use. reduce electricity demand by 15 percent

The Road to a New Energy Future: The ACES Act and What Comes Next 39 by 2020 and natural gas demand by 10 Continuing the Momentum to percent, with more ambitious goals in later years. Address Global Warming Congressional passage of the ACES Low-Carbon Fuel Standard Act is an important first step to address global warming, but it is only the begin- To encourage a shift toward less pol- ning. The United States must ensure that luting vehicle fuels, the nation should the ACES Act delivers on its promises by adopt a low-carbon fuel standard with making real reductions in global warming a goal of reducing the carbon content emissions. That means making sure that of fuels by 10 percent by 2020. A the program is implemented properly – low-carbon fuel standard would help especially those provisions, including the America break its dependence on oil offset program, that have the potential to by encouraging cleaner alternatives to create loopholes and reduce the volume gasoline, including the use of electricity of emission reductions delivered by the in electric vehicles and plug-in hybrids program. In addition, the United States and the use of biofuels that meet rig- must use the momentum generated by orous standards for reducing global passage of the ACES Act to take leader- warming pollution and protecting the ship in the effort to devise a strong suc- environment. cessor agreement to the Kyoto Protocol when the world’s leaders meet in Copen- Expanding Transportation hagen in December. Choices With Congress scheduled to reau- State and Local Actions thorize the main federal transportation State and local governments led the law soon, the nation has a golden op- way in promoting clean energy policies portunity to expand Americans’ access for America over the last decade, and to clean transportation choices. The their continued innovation and leader- next federal transportation bill should ship will be necessary in the future. That focus resources on restoring our ex- is why it is critical that Congress create isting transportation infrastructure, a prominent role for the states and local expanding access to modern public governments in future policy-making by transportation, creating a high-speed avoiding preemption of state regulations. rail network to link cities across the For example, California should retain the country, and promoting other trans- right to establish stronger standards for portation policies that can help move global warming emissions from vehicles, America toward a new energy future, and states should generally retain the ranging from rail electrification to ability to establish their own standards policies to promote walking and bi- and limits on global warming pollution cycling. from other sources.

40 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act Notes

1. ABC News – Washington Post poll, 13- Notice of Upcoming Joint Rulemaking to Establish 17 August 2009, accessed at www.pollingreport. Vehicle GHG Emissions and CAFE Standards, 19 com/energy.htm, 1 September 2009. May 2009; Persian Gulf: 2008 figures from U.S. 2. Hannah Choi Granade, Jon Creyts, et Department of Energy, Energy Information Ad- al., McKinsey & Company, Unlocking Energy ministration, Petroleum Navigator: U.S. Imports Efficiency in the U.S. Economy, July 2009. by Country of Origin, downloaded from tonto.eia. 3. American Wind Energy Association, Wind doe.gov/dnav/pet/pet_move_impcus_a2_nus_ Web Tutorial, downloaded from www.awea.org/ ep00_im0_mbbl_a.htm, 1 September 2009. faq/wwt_potential.html, 2 November 2008. 13. Rachel Cleetus, Steven Clemmer and Da- 4. Walt Musial, National Renewable Energy vid Friedman, Union of Concerned Scientists, Laboratory, Offshore Wind Energy Potential for Climate 2030: A National Blueprint for a Clean the United States, Powerpoint presentation to Energy Economy, May 2009. Wind Powering America – Annual State Sum- 14. American Public Transportation Asso- mit, 19 May 2005. ciation, 10.7 Billion Trips Taken on U.S. Public 5. U.S. Department of Energy, Office Transportation in 2008 – Highest Level in 52 Years; of Energy Efficiency and Renewable En- Ridership Increased as Gas Prices Decline and Jobs ergy, Solar FAQs – Concentrating Solar Pow- Were Lost (press release), 9 March 2009. er – Applications, downloaded from www. 15. Pew Charitable Trusts, The Clean Energy eere.energy.gov/solar/cfm/faqs/third_level. Economy: Repowering Jobs, Businesses and Invest- cfm/name=Concentrating%20Solar%20Power/ ments Across America, June 2009. cat=Applications, 26 March 2008. 16. American Wind Energy Association, 6. Rooftop capacity from The Energy Foun- AWEA Annual Wind Energy Report Reflects Strong dation, Energy Foundation Study Finds Residential Growth in 2008, Dramatic Increase in Manufactur- and Commercial Rooftops Could Support Vast U.S. ing (press release), 13 April 2009. Market for Solar Power (press release), 1 March 17. Sarah Payne, Tony Dutzik and Em- 2005. ily Figdor, Environment America Research & 7. U.S. Geological Survey, Assessment of Mod- Policy Center, The High Cost of Fossil Fuels: Why erate- and High-Temperature Geothermal Resources America Can’t Afford to Depend on Dirty Energy, of the United States (fact sheet), 2008. June 2009. 8. U.S. Department of Energy, Office of 18. This temperature increase is equivalent Energy Efficiency and Renewable Energy, to 3.6 degrees Fahrenheit over pre-industrial 20% Wind Energy by 2030: Increasing Wind levels or about 2 degrees Fahrenheit over the Energy’s Contribution to U.S. Electricity Supply, amount of warming that has already occurred. July 2008. See W.L. Hare, Worldwatch Institute, “A Safe 9. Ron Pernick and Clint Wilder, Clean Landing for the Climate” in 2009 State of the Edge and Co-op America, Utility Solar Assess- World: Into a Warming World, January 2009. ment (USA) Study: Reaching Ten Percent Solar by 19. For the United States, the low end of 2025, June 2008. these ranges are equivalent to a 35 percent re- 10. U.S. Department of Energy, Energy duction from today’s levels by 2020 and an 83 Information Administration, Annual Energy percent reduction from today’s levels by 2050. Review 2008, 26 June 2009. 20. S. Gupta, et al., “Policies, Instruments, 11. Based on gasoline prices and consump- and Co-operative Arrangements,” in Climate tion statistics from U.S. Department of Energy, Change 2007: Mitigation, Contribution of Work- Energy Information Administration, Annual ing Group III to the Fourth Assessment Report Energy Review 2008, 26 June 2009. of the IPCC, 2007, 776. 12. Oil savings: Environmental Protection 21. See emission reduction targets for Annex Agency and Department of Transportation, I countries for 450 ppm stabilization scenario:

Notes 41 S. Gupta, et al., “Policies, Instruments, and 32. U.S. Department of Energy, Energy In- Co-operative Arrangements,” in Climate Change formation Administration, An Updated Annual 2007: Mitigation, Contribution of Working Energy Outlook 2009 Reference Case Reflecting Group III to the Fourth Assessment Report of Provisions of the American Recovery and Reinvest- the IPCC, 2007, 776. ment Act and Recent Changes in the Economic 22. See note 2. Outlook, April 2009. 23. See note 13. 33. See note 12. 24. Ryan Wiser and Mark Bolinger, U.S. De- 34. National Highway Traffic Safety Admin- partment of Energy, Office of Energy Efficiency istration, Draft Environmental Impact Statement: and Renewable Energy, 2008 Wind Technologies Corporate Average Fuel Economy Standards, Pas- Market Report, July 2009. senger Cars and Light Trucks, Model Years 2012- 25. Union of Concerned Scientists, Re- 2016, September 2009. newable Energy Standards – Mitigating Global 35. Appliance Standards Awareness Project, Warming, downloaded from www.ucsusa.org/ President Obama Announces New Light Bulb Stan- clean_energy/technology_and_impacts/impacts/ dards (press release), 29 June 2009. renewable-energy.html, 2 September 2009. 36. See note 10. 26. Laura Furrey, American Council for 37. John Larsen, World Resources Institute, an Energy-Efficient Economy, State Renew- A Closer Look at the American Clean Energy and able Portfolio Standards and Energy Efficiency Security Act, 2 July 2009. Resource Standards (PowerPoint presentation), 38. In addition, starting in 2018, the bill June 2009. requires polluters who use international offsets 27. American Council for an Energy-Effi- to submit 1.25 tons of offset credits to cover one cient Economy, Success with Energy Efficiency ton of domestic emissions, which could yield Resource Standards, January 2009. additional reductions in emissions depending on 28. Maggie Eldridge, Max Neubauer, et the volume of international offset credits used al., American Council for an Energy-Efficient and the integrity of those credits. Economy, The 2008 State Energy Efficiency Score- 39. See note 21. card, October 2008. 40. “Largest electricity consumer”: Solar En- 29. Consortium for Energy Efficiency,2008 ergy Industries Association, Federal Long-Term Annual Industry Report, downloaded from www. Power Purchase Agreements, 25 June 2009. cee1.org/ee-pe/2008/member_impacts.php, 2 Sep- 41. Georgetown Climate Center, Allowance tember 2009. Average electricity consumption: Allocations to States, American Clean Energy and U.S. Department of Energy, Energy Informa- Security (ACES) Act of 2009, updated 9 July tion Administration, Frequently Asked Questions 2009. – Electricity, downloaded from tonto.eia.doe. 42. U.S. House of Representatives, Commit- gov/ask/electricity_faqs.asp, 1 September 2009. tee on Energy and Commerce, The American Average natural gas consumption: American Gas Clean Energy and Security Act (H.R. 2454), 23 Association, Annual Statistics, downloaded from June 2009. www.aga.org/Research/statistics/annualstats/ , 43. Union of Concerned Scientists, Agree- 23 September 2009. ment Moves Waxman-Markey Climate Measure 30. 11: U.S. Department of Energy, Energy Toward House Committee Approval (press release), Information Administration, Annual Energy 14 May 2009; U.S. Department of Energy, Outlook 2009 with Projections to 2030, March Energy Information Administration, Energy 2009. Market and Economic Impacts of H.R. 2454, the 31. For full list, see Environment America, American Clean Energy and Security Act of 2009, Clean Energy and the Economic Recovery, down- 4 August 2009. loaded from www.environmentamerica.org/ 44. U.S. Department of Energy, Energy uploads/4d/Wx/4dWx_IPfgrx3oinEFyaXVQ/ Information Administration, Energy Market ARRA_chart_2009-2-17.pdf, 2 September and Economic Impacts of H.R. 2454, the American 2009. Clean Energy and Security Act of 2009, 4 August 2009.

42 The Clean Energy Future Starts Here: Understanding the American Clean Energy and Security Act 45. Ibid. 60. See note 48. 46. The Union of Concerned Scientists’ Cli- 61. See note 44. mate 2030 report includes a detailed description 62. See notes 44 and 48. of appropriate adjustments to the Department 63. Ibid. of Energy’s assumptions for these technologies. 64. Ibid. See: Rachel Cleetus, Steven Clemmer and Da- 65. Starting in 2018, the bill requires pol- vid Friedman, Union of Concerned Scientists, luters who use international offsets to submit Climate 2030: A National Blueprint for a Clean 1.25 tons of offset credits to cover one ton of Energy Economy, May 2009, Appendix D. domestic emissions. 47. See note 44. 66. U.S. Government Accountability Office, 48. U.S. Environmental Protection Agency, Testimony before the Subcommittee on Energy EPA Analysis of the American Clean Energy and and Environment, Committee on Energy and Security Act of 2009 (data annex), 23 June 2009. Commerce, House of Representatives, Climate Note: For this and all subsequent citations, the Change: Observations on the Potential Role of Car- scenario presented in this report is the EPA’s bon Offsets in Climate Change Legislation, State- scenario 2, the base H.R. 2454 scenario. ment of John Stephenson, Director, Natural 49. American Council for an Energy-Ef- Resources & Environment, 5 March 2009. ficient Economy, H.R. 2454 Addresses Climate 67. Michael W. Wara and David G. Victor, Change Through a Wide Variety of Energy Ef- A Realistic Policy on International Carbon Offsets, ficiency Measures, 24 June 2009. April 2008. 50. See note 44. 68. James Murray, “Carbon Market Under 51. Ibid Fire as UN Suspends British CDM Project Ac- 52. See note 48. creditor,” Business Green, 14 September 2009. 53. Natural Resources Defense Council, 69. Lambert Schneider, Öko-Institut, Is the A Clean Energy Bargain: Analysis of the Ameri- CDM Fulfilling its Environmental and Sustain- can Clean Energy and Security Act, September able Development Objectives? An Evaluation of the 2009. CDM and Options for Improvement, 5 November 54. See notes 44 and 48. 2007. 55. See note 44. 70. Ibid. 56. Ibid. 71. David Hawkins, Natural Resources 57. Ibid. This figure is arrived at is by com- Defense Council, Testimony Before the Senate paring BTU savings under the ACES Act with Environment and Public Works Committee: Hear- the Obama administration’s proposed improve- ing on Moving America Toward a Clean Energy ment in CAFE standards versus the DOE refer- Economy and Reducing Global Warming Pollution: ence case, then dividing by BTU value of crude Legislative Tools, 7 July 2009. oil imports under the DOE reference case. This 72. Laura Furrey, American Council for figure does not include imports of processed an Energy-Efficient Economy, State Renew- liquid fuels, such as gasoline. able Portfolio Standards and Energy Efficiency 58. American Institute of Architects, AIA Resource Standards (PowerPoint presentation), Report Estimates up to 270,000 Construction In- June 2009. dustry Jobs Could Be Created if American Clean 73. See note 1. Energy Security Act is Passed (press release), 10 74. For a detailed review of the cost of August 2009. nuclear power relative to clean energy technolo- 59. Rachel Gold, Laura Furrey, et al., Ameri- gies, see Travis Madsen, Johanna Neumann and can Council for an Energy-Efficient Economy, Emily Rusch, U.S. PIRG Education Fund, The Energy Efficiency in the American Clean Energy High Cost of Nuclear Power: Why America Should and Security Act of 2009: Impacts of Current Provi- Choose a Clean Energy Future, March 2009. sions and Opportunities to Enhance the Legislation, September 2009.

Notes 43