This report responds to a request to the Energy Information Administration (EIA) from Chairman Henry Waxman and Chairman Edward Markey for an analysis of H.R. 2454, the American Clean Energy and Security Act of 2009 (ACESA).1 ACESA, as passed by the House of Representatives on June 26, 2009, is a complex bill that regulates emissions of greenhouse gases through market-based mechanisms, efficiency programs, and economic incentives.
The Title III cap-and-trade program for greenhouse gas (GHG) emissions, which covers roughly 84 percent of total U.S. GHG emissions by 2016, is in many respects the centerpiece of the bill and the primary driver of the results presented in this report. The program subjects covered emissions to a cap that declines steadily between 2012 and 2050. The cap requires a 17- percent reduction in covered emissions by 2020 and an 83-percent reduction by 2050, both relative to a 2005 baseline, with targets that decline steadily for intermediate years. Compliance is enforced through a requirement for entities subject to the cap to submit allowances, which are bankable, sufficient to cover their emissions. Allowance obligations may also be offset by reductions in domestic emissions of exempted sources, by international offsets, or by emission allowances from other countries with comparable laws limiting emissions. Maximum offsets from domestic and international sources are each capped separately at 1 billion metric tons (BMT) in each year of the program, with the proviso that up to 500 million metric tons (MMT) of the domestic offset cap may be shifted to the international offset cap if the Administrator of the Environmental Protection Agency (EPA) determines that a sufficient supply of domestic offsets is not available. In addition to its centerpiece cap-and-trade program, Title III also includes additional GHG standards, dedicated programs to limit hydrofluorocarbon (HFC) emissions and black carbon, and provisions governing markets in carbon-related derivatives.
Title I contains provisions related to a Federal combined efficiency and renewable electricity standard for electricity sellers, carbon capture and storage technology, performance standards for new coal-fueled power plants, research and development support for electric vehicles, support for deployment of a smart grid, and establishment of a Clean Energy Deployment Administration. Title II includes provisions related to building, lighting, appliance, and vehicle energy efficiency programs. Title IV includes provisions to preserve domestic competitiveness and support workers, provide assistance to consumers, and support domestic and international adaptation initiatives. Title V addresses the role of domestic agricultural and forestry-related offsets in the Title III cap-and-trade program.
This report considers the energy-related provisions in ACESA that can be analyzed using EIA’s National Energy Modeling System (NEMS). The Reference Case used as the starting point for the analysis in this report is an updated version of the Annual Energy Outlook 2009 (AEO2009) Reference Case issued in April 2009 that reflects the projected impacts of the American Recovery and Reinvestment Act as well as other significant energy legislation, including the Energy Improvement and Extension Act of 2008, the Energy Independence and Security Act of 2007, and the Energy Policy Act of 20052. Cumulative GHG emissions covered by the Title III cap-and-trade program over the 2012 to 2030 period are estimated to be 113.4 BMT in CO2-equivalent terms.
Read the full Executive Summary at http://www.eia.doe.gov/oiaf/servicerpt/hr2454/execsummary.html
