House Energy and Commerce Committee Begin Hearings on Draft Energy and Greenhouse Gas Emissions Bill

The House Energy and Commerce Committee will conduct four days of hearings beginning Tuesday to receive testimony on a 648-page draft global warming and energy bill introduced last month by Representatives Henry Waxman (D-Calif.) and Ed Markey (D-Mass.).  The draft bill would establish a cap and trade program to curb U.S. greenhouse gas emissions by 20 percent below 2005 levels by 2020 and by 83 percent by 2050. The Waxman-Markey draft would establish a market-based program (i.e., cap and trade) for reducing greenhouse gas emissions from electric utilities, oil companies, large industrial sources and other entities that emit more than 25,000 tons per year of CO2 equivalent. Under this program, covered entities would need tradable federal permits, called "allowances," for each ton of CO2 emitted into the atmosphere. However, the bill does not provide details on how the allowances would be distributed. President Obama has called for 100 percent auctioning of allowances; however, the draft bill would set aside a number of allowances for certain industries, including iron and steel, aluminum, cement, glass, ceramics, chemicals and paper. The draft bill would direct the U.S. Environmental Protection Agency (EPA) to set emissions standards on sources that are not covered by the allowance system, including black carbon, which is emitted by construction equipment. It also requires EPA to set greenhouse gas standards for a variety of vehicle types, including new heavy duty trucks, and allows EPA to set standards for other types of non-road vehicles and engines. There is also a "low carbon fuel standard" for fuels used in on-road and off-highway vehicles. Representatives Waxman and Markey have set a timeframe for the House Energy and Commerce Committee to vote on the measure by Memorial Day, followed by a vote on the House floor in July. The Senate, where support for a comprehensive climate change bill is weaker, has yet to propose similar legislation. During consideration of its budget resolution for FY 2010, the Senate approved an amendment that would prevent the Senate from using special procedures to allow a cap and trade bill to pass with a simple majority vote. Included in the draft legislation is a requirement for state and local transportation planners to link transportation and land-use decisions. This provision would likely make it more difficult for transportation planners to meet mobility needs through projects that add highway capacity. Under the draft bill, states would have three years to craft plans to curb transportation-related greenhouse gas emissions across states and for any metropolitan area with more than 200,000 people. States would work with the U.S. Environmental Protection Agency (EPA) to set emissions targets for 10- and 20-year periods and are encouraged to expand environmentally-friendly modes of transportation, such as bus and light rail systems, and re-evaluate their land-use planning to create cities that require less driving and achieve increased mobility. Grants would be available from the EPA and the Department of Transportation to help finance state and local projects aimed at meeting the emission-reduction goals. Although funding is not set in the draft legislation, lawmakers, including Representative Earl Blumenauer (D-Ore.), have called for 10 percent of any future cap and trade revenues to be devoted to low-carbon transportation projects. AGC is currently evaluating the potential impact of the Waxman-Markey draft on the construction industry. Any cap and trade program is likely to increase the cost of construction as a result of higher energy, manufactured goods and materials prices, such as petroleum and cement. Also, firms with facilities that emit more than 25,000 tons of CO2 per year would be covered under a cap and trade program and would have to purchase allowances. Considering the possibility of new emission and fuel standards for construction equipment, AGC is working with Congress to find opportunities to mitigate the bill's impacts with incentives funded by the revenue derived from allowance auctioning. AGC also is working to ensure that states and localities have the flexibility to meet their unique transportation needs, including through capacity enhancements. AGC believes that enhancing capacity, especially at the worst congested bottlenecks, would reduce greenhouse gas emissions and save fuel through better flowing traffic. For more information, contact Karen Lapsevic at (202) 547-4733 or lapsevick@agc.org.