The American Clean Energy and Security Act

Breakthrough Institute Analysis of the Waxman-Markey Climate and Energy Bill

According to the House Energy and Commerce Committee, ACES will…1. “Reduce carbon emissions from major U.S. sources by 17% by 2020 and over 80% by 2050 compared to 2005 levels.”

[Source:] http://energycommerce.house.gov/Press_111/20090602/hr2454_reported_summary.pdf

2. “Require electric utilities to meet 20% of their electricity demand through renewable energy and energy efficiency by 2020.”

3. “Invest in clean energy technologies and energy efficiency…”

1. “Reduce carbon emissions from major U.S. sources by

17% by 2020 and over 80% by 2050 compared to 2005

levels.”

2. “Require electric utilities to meet 20% of their electricity

demand through renewable energy and energy

efficiency by 2020.”

3. “Invest in clean energy technologies and energy

efficiency…”

What Will ACES Do?

Claim: ACES will “Reduce carbon

emissions from major U.S. sources by

17% by 2020 and over 80% by 2050

compared to 2005 levels.”

Emissions Reductions

Analysis: ACES cap and trade would

legally permit continued growth in

U.S. emissions for up to two decades.

Emissions Reductions

[Source:] http://thebreakthrough.org/blog/2009/05/climate_bills_offsets_provisio.shtml

ACES Target

1990 baseline

2005 baseline

BAU

Full Offset Levels w/BankingEPA Offsets ProjectionCBO Offsets Projection

ACES Target17% < 2005

With CBO Offset Levels

With EPA Offset Levels

With FullOffset Levels

* Additional permitsbanked for future: 4,218

^ Additional permitsbanked for future: 12,109

2027

2037

2018

ACES TargetEmissions Trajectory

CBO OffsetLevels

EPA Offset Levels

Full Offset Levels

Analysis: Strategic Reserve Pool can

raise cap by 10% in any year.

Triggered when prices rise too high.

Floods market with more allowances,

“refilled” with forestry offsets.

Emissions Reductions

[Source] http://thebreakthrough.org/blog/2009/05/the_climate_bills_catch_22_is.shtml

Emissions Reductions

[Source] http://thebreakthrough.org/blog/2009/06/climate_bill_analysis_part_vii.shtml

Conclusion:

ACES establishes a (modest) carbon

price and an emissions reduction

target. Does not provide “emissions

certainty” of a “hard cap.”

Conclusion:

ACES effectively

establishes a non-

binding “cap” on U.S.

emissions.

Claim: ACES will “Require electric

utilities meet 20% of their

electricity demand through

renewable energy and energy

efficiency by 2020.”

Renewable Electricity Standard

Renewable Electricity Standard

[Source] http://thebreakthrough.org/blog/2009/05/climate_bills_renewable_electr.shtml

Analysis: RES will have little to no

impact on U.S. renewable electricity

generation. (Breakthrough)

Analysis: RES will have “effectively

zero” impact on U.S. renewable

electricity generation. (Southern

Alliance for Clean Energy)

[Source] http://thebreakthrough.org/blog/2009/06/climate_bill_analysis_part_ix.shtml

BAU = 10%

Nominal Requirement

After Exemptions

With 5%Energy

Efficiency

With 8%Energy

Efficiency

[Source] http://thebreakthrough.org/blog/2009/06/climate_bill_analysis_part_xi.shtml

Renewable Electricity Standard

[Source] http://thebreakthrough.org/blog/2009/05/climate_bills_renewable_electr.shtml

“[A] national RES [at] such a low level …

could severely blunt the signal to the private

sector to invest billions of dollars and

expand production, manufacturing, and job

creation.”

– American Wind Energy Association

[W]e remain skeptical that current versions of either

the RES or a carbon cap and trade policy will lead to

significant solar deployment. … [A] "sweeping"

federal energy bill that fails to deploy a portfolio of

renewable energy options is an underwhelming

outcome, ill-equipped to help us meet the challenges

at hand.” -Vote Solar

Claim: ACES will “Invest in clean

energy technologies and energy

efficiency…”

Investments in Clean Energy

Investments in Clean Energy

[Source] http://thebreakthrough.org/blog/2009/05/how_do_climate_bills_clean_ene.shtml

Analysis: ACES investments in clean

energy R&D are a tiny fraction of

President Obama’s budget;

Clean energy investments overall are

insufficient to the challenge at hand.

ACES RD$0.5b to $1b

Obama Budget$15b

Breakthrough Institute

$15b

Energy Experts Letter$30b*

Brookings$20b to $30b

ACES R&D$0.5b to $1b

2009 DOE R&D Budget$5.3b Stimulus Energy

R&D Investment$4.1*

NIH 2009 R&D Budget$30.5b

Obama Budget, R&D Only$15bACES

$6b-$12b

Apollo Project$50b

Breakthrough Institute$30b-$80b

ACES$6b-$12b

Stimulus$33b*

$6-$12b

$30-$60b

$15-$30b

Carbon Price• Strategic Reserve Pool price ceiling:

-> $28/ton from 2012-15; 60% above 3 yr rolling

average after 2015

• Price floor:

-> $10/ton at outset, rises 5% each year

• EPA estimate:

-> $12-15 per ton 2015; $15-20 per ton in 2020

• CBO estimate:

-> $15 per ton 2011; $26 per ton 2019

[Chart] PointCarbon.com http://www.pointcarbon.com/news/historicprices/

EPA:$28 ceiling

$10 floor

EPA: $12-20

Carbon Price

CBO:$15-26

2008 ETS Emissions Reductions?

“It confirms that the EU has a well functioning

trading system, with a robust cap, a clear price

signal and a liquid market, which is helping us to

cut emissions cost-effectively. This should

encourage other countries in their efforts to set up

comparable domestic cap-and-trade systems.”

- Stavros Dimas, European Environment Commissioner

“The 3 percent [emissions] reduction [in 2008]

was partly due to businesses taking measures to

cut their emissions in response to the strong

carbon price that prevailed until the economic

downturn started.”

- Stavros Dimas, European Environment Commissioner

The Counter-Factual: the US

2.9%

2.5%

2.1%

Jesse JenkinsDirector of Energy and Climate PolicyBreakthrough InstituteJesse@theBreakthrough.org510-550-8930 x465

Ted NordhausChairmanBreakthrough InstituteTed@theBreakthrough.org510-550-8930 x305