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House bill places limits on carbon emissions

As soon as today, the U.S. House could pass sweeping legislation that creates thousands of jobs and move the nation toward energy independence.

Not without critics, however, the American Clean Energy and Security Act is expected to clear the House but see a tougher route in the Senate.

"The broad interest is in finding a way to actually put responsible limits on carbon," J. Drake Hamilton, science policy director for Fresh Energy, a coalition of Minnesota environmental groups, told the Pioneer Editorial Board recently.

"It's just like any other pollutant we've known about in the past when we've realized it's causing health problems, we put responsible limits on it," she said. "We like to call it the Clean Energy Jobs Plan, because that's what it's really all about."

The bill provides incentives for the development of clean energy in a way that creates jobs, she said.

"It started out a little stronger than it is now -- there's been some compromises in the bill, but overall it's a really comprehensive piece of legislation that not only puts a cap on carbon but also requires a national renewable electricity standard and energy efficiency requirement," said Carin Skoog, Fresh Energy global warming solutions coordinator.

The bill sets that 20 percent of the nation's electricity come from renewable sources by 2020 in combination with energy efficiency requirements. It also has new building code standards calling for 30 percent more efficient construction by 2012 and 50 percent more efficient by 2016.

"It has a lot of other components in it that help to make it really economically feasible package," Skoog said. "Doing the full package, making it a comprehensive climate and energy bill, made it much more cost effective than just doing it piecemeal."

The bill creates a Carbon Storage Research Corp. to collect assessments from distribution utilities of fossil fuel-based electricity delivered directly to consumers and performance standards for new coal-fired power plants.

The so-called cap and trade system has the bill providing for trading, banking and borrowing, auctioneering, selling, exchanging, transferring, holding or retiring emission allowances and to set forth a national strategy to address barriers to the commercial-scale deployment of carbon capture and sequestration.

Under such a system, a power plant emitting carbon at levels higher than the standard would be able to buy allowances from another entity that emits under the standard or actually sequesters carbon, such as a forest.

The most vocal critics to the legislation have been the agricultural community and the utilities, especially rural electric cooperatives.

Farmers and ranchers oppose the bill because of its cost to consumers through higher energy costs -- input costs such as farm electricity, fuel and carbon-creating chemicals. That's why they also want farmers to play an important role in the cap and trade system as carbon reduction centers.

One of the most vocal opponents, House Agriculture Committee Chairman Collin Peterson, DFL-7th District, has been in heated negotiations with bill author and House Energy and Commerce Committee Chairman Henry Waxman, D-Calif. They reached an agreement Tuesday.

"We have reached an agreement that works for agriculture and contributes to the reduction of greenhouse gas emissions in the United States," Peterson said. "The climate change bill will include a strong agriculture offset program run by the U.S. Department of Agriculture that will allow farmers, ranchers, and forestland owners to participate fully in a market-based carbon offset program."

Peterson said the agreement also addresses concerns about international indirect land use provisions that unfairly restricted U.S. biofuels producers and exempts agriculture and forestry from the definition of a capped sector.

The move, however, wasn't enough to satisfy farmers.

The bill "continues to be seriously flawed," Bob Stallman, American Farm Bureau Federation president, said Wednesday. "The bill's provisions and omissions are very problematic for U.S. agriculture, our national economy and domestic energy security."

A chief challenge is the energy deficit the bill will create, Stallman said. New technologies hold promise but are nowhere near close to coming on line. "The bill forces agriculture and other productive sectors of our nation's economy into a position into a position of severe competitive disadvantage with trading partners like China and other nations who will not burden their economies to control carbon emissions."

Stallman said that "despite inclusion of Chairman Peterson's hard-fought provisions to reward farmers for carbon offsets and to remove the phony indirect-land-use calculation, this bill should be amended further or defeated."

Power utilities remain at odds also.

"There are definitely some winners and losers," Steve Van Dyke, communications director for Partners for Affordable Energy, said Wednesday in an interview. Under cap and trade allowances, South Dakota is a winner with $5.5 million in additional money in allowances over energy costs.

Most of the nation, however, will see states paying more for electricity by 2012 under the bill's allowance allocation formula in order to make up for the shortfall in allowances.

Under that formula, Minnesota is estimated to pay $103.5 million more for electricity, North Dakota $257.3 million more, Iowa $249.1 million more and Wisconsin $206.8 million more.

Winning states include those on the West Coast and a few in the Northeast, Van Dyke said. South Dakota has a lot of hydropower which doesn't produce carbon emissions.

"Generation costs are only one aspect of what you pay for one kilowatt hour of electricity," he said. "You also have transmission and distribution. But looking at the three, it appears there will be a 30 to 40 percent increase ... for electric customers" because of the bill.

There is a better alternative to a cap and trade system, Van Dyke said. "Money that's generated from any type of legislation to restrict CO2 (carbon dioxide) emissions -- a tax or whatever you call it -- should go to fixing the problem."

And the problem can be fixed with research and development, he said. Legislation should dedicate revenue generated from climate change regulation to continue research and development of clean coal, capture and storage technology.

For example, Van Dyke said a $300 million federal loan is being used for carbon sequestration at Great Plains Synfuels Plant in North Dakota, where 8,500 tons of carbon dioxide a day is captured and transported via pipeline to the oil fields new Weyburn, Saskatchewan.

Adjacent is the Antelope Valley Power Plant, which uses pulverized coal for its operation in a test project for low carbon emissions, since there is no ash byproduct, he said.

Another problem with the bill is compliance dates are not in sync with where technology is today, he said. "There is no commercial technology yet for capturing carbon from a pulverized power plant."

Better than cap and trade, Van Dyke said, would be a research and development investment fee of no more than 0.1 of a cent to a kilowatt hour of electricity, which would raise millions of dollars.

But Fresh Energy's Hamilton said the bill will create hundreds of thousands of green energy jobs, mostly in the private sector.

"Ninety-five percent of jobs in energy are in the private sector, so what you really want to do is compel that private investment dollar," she said. "One thing that's missing is a long-term signal that we're moving to support these clean energy technologies."

The signal is that everything -- from energy efficiency to nuclear -- will do better in the marketplace, Hamilton said., adding that the bill also provides incentives for carbon sequestration technologies.

Also, industries that face international competition such as mining or timber industries are protected under the bill and would not need to purchase cap and trade allowances.

Hamilton cited an analysis of the bill by the American Council for an Energy Efficient Economy that claims provisions in the bill will save $750 per household by 2020 and $3,900 by 20230. The council also estimates it will create 250,000 jobs by 2020 and 650,000 jobs by 2030 from the energy efficiency provisions in the bill.

"The important thing is to say, instead of carbon just rising and rising all the time, we're going to put a limit and it's going to go down over time," Hamilton said. "And companies will know way in advance what the limit is going to be, and then they can make decisions that are right for their company."

She disputes the costs critics say the bill will saddle consumers.

"An analysis from the Environmental Protection Agency says the reductions in carbon required by the legislation will cost American families less than a postage stamp per day," Hamilton said. "We're more heavily dependent on coal here, so it might be two postage stamps a day."

The EPA study puts the legislation cost at $80 to $111 per year to the average household.

Since passage is virtually assured in the House, opponents will focus on the Senate, Van Dyke said.

"When it gets to the Senate, we'll be able to look at this bill and make a better determination of just what this will do," he said. "This bill has been a work in progress, week after week."