Waxman-Markey Climate Change Cap and Trade Regulation: H.R. 2454-American Clean Energy and Security Act of 2009

What is Waxman-Markey?

The American Clean Energy and Security Act of 2009 (ACES) is an energy bill in the 111th United States Congress that would establish a variant of a cap-and-trade plan for greenhouse gases to address climate change. The bill was approved by the House of Representatives on June 26, 2009 by a vote of 219-212, but has not yet been approved by the Senate.
The bill is also known as the Waxman-Markey Bill, after its authors, Representatives Henry A. Waxman of California and Edward J. Markey of Massachusetts, both Democrats. Waxman is the chairman of the Energy and Commerce Committee, and Markey is the chairman of that committee's Energy and Environment Subcommittee.

The bill is a variant of a cap-and-trade plan:

ACES sets a slightly higher target for reductions in emissions of carbon dioxide, CH4, and other gases than that proposed by Barack Obama.
- The bill requires a 17-percent emissions reduction from 2005 levels by 2020; Obama has proposed a 14 percent reduction by 2020. Both plans would reduce United States' emissions by about 80 percent by 2050.
It includes a renewable electricity standard (almost identical to a renewable portfolio standard, but narrowly tailored to electrical energy) requiring each electricity provider who supplies over 4 million MWh to produce 20 percent of its electricity from renewable sources (such as wind, solar, and geothermal) by 2020.
- There is a provision whereby 5% of this standard can be met through energy efficiency savings, as well as an additional 3% with certification of the Governor of the state in which the provider operates.

Alternative compliance payments are 2.5 cents per KWh in violation of the standard, adjusted for inflation beginning in 2010.

It provides for modernization of the electrical grid
It provides for expanded production of electric vehicles
It mandates significant increases in energy efficiency in buildings, home appliances, and electricity generation.

The bill's cap-and-trade program allocates 85% of allowances to industry for free, auctioning the remainder. 15% will be auctioned, the revenue from which shall be redistributed to low-income households. 30% of the allowances will be allocated directly to local distribution companies (LDCs) who are mandated to use them exclusively for the benefit of customers. 5% will go to merchant coal generators and others with long-term power purchase agreements.

Hearings on the draft of the legislation took place the week of April 20 and the bill was passed by the House of Representatives on June 26th.