American Clean Energy and Security Act - The US
Climate Change Bill
Introduction:
The American Clean
Energy and Security Act (the energy/climate change bill) passed by the US
House of Representative on June 26, 2009 aims to achieve the following:
create a clean energy economy which replaces old
fossil fuels based technologies with clean renewable technologies,
consequently lowering greenhouse gases emissions, reducing climate change
and preventing global warming and its effects.
lessen American's dependence on foreign oil
importation and reduce the threats to the nation's security;
create millions of new American jobs.
The bill, if finally passed by the US Senate, will
seek to replace the traditional fossil fuels (believed to be responsible
for the emission of heat-trapping greenhouse gases causing Earth warming)
with clean and renewable energy sources such as Solar, Wind, Geothermal,
Nuclear, Clean Coal, etc. (links to some of these energy sources provided
at the left side of this page).
The widely used fossil fuels in the American economy
include: coal, oil and natural gas.
A cap-and-trade approach will be used, whereby the
national limit (cap) set by the bill will be aimed to be collectively
achieved by the various energy industries, releasing greenhouse gases
to the atmosphere.
The
companies that will be mostly affected are the coal power plants, refineries
and factories. Each of these companies will
be granted "permits to pollute" to levels set by the "cap". Annual allowed
emissions units will be given for each company. A company should operate
in a way that it does not exceed his pollution level (i.e. pollute to the
level allowed by your pollution allowance units). If a company uses up all
its units, to be able to "pollute" further, it needs to buy more allowance
units from another company that has reduced his pollution enough and has
some unused allowance units (Trade). This way the companies are encouraged
to reduce pollution which is a cheaper option to buying additional permits
"to pollute". Highly polluting companies can also invest in other sectors
that reduce emissions (e.g. farms that capture methane or plant trees as
carbon sinks). These are known as offsets and the investing company get
some credit towards its pollution from that. This last option is similar
to the clean development mechanism
between annex I and developing nation.
To ease
the the transition, the bill initially would give the bulk of the permits
away for free, but they still would have value because there would be a
limited supply.
Impacts on the US economy and the World Economy:
The power plant industries, refineries, and
factories that depend heavily on fossil fuels for energy generation and
supply may be heavily affected at the onset. The bill, however,
has several provisions to lessen the hardship to these companies.
Households and individuals are likely to pay more or
the services they enjoy from the utility companies who will likely pass
on extra production costs to their consumers.
The existing renewable companies will benefit
emensely from the bill, while many more solar farms, windmills and other
clean energy sources may spring up.
On the international market: America is the largest
economy in the World and she imports the vast majority of fuels used
from a couple of oil producing countries in the Middle East and Africa. with the
new bill, the demand for oil from those countries is expected to drop
sharply.
Subject: Re: American Clean Energy and Security (ACES) Act
This is a very important legislation that has the potential to significantly impact the economy of the United States and that of the entire World. It has serious implications for the energy companies whose power plants are built on fossil fuels. Clean technology companies should flourish under the new legislation. However, the transition period will bring some hardship to industries and individuals and households.
