By JOSEPH B. WHITE
WASHINGTON -- The "American Clean Energy and Security Act" is one of the most ambitious efforts to re-engineer American social and economic behavior in decades, presenting risks and opportunities for a wide array of businesses from Silicon Valley to the coal fields of the Appalachians.
The legislation, better known as the Waxman-Markey bill, isn't yet law and has big hurdles to clear. A critical vote looms this week in the House Energy and Commerce Committee. But even with its chances of passage uncertain, the measure has become the basis for debate in Washington over how the U.S. should respond to pressure to slash its carbon emissions.
At a White House meeting Wednesday, members of President Barack Obama's Economic Recovery Advisory Board endorsed the central idea of the 900-plus page measure -- to cap carbon emissions and require businesses to buy tradeable permits to pollute. The measure could create "green" jobs in the U.S. while reducing harmful pollution that might be causing global climate change, executives in the group said. They included General Electric Co. Chief Executive Jeffrey Immelt, who sat next to the president.
Mr. Obama said he's "excited about the opportunity" to develop such a system and that "we've seen some great progress this week" in the U.S. House of Representatives.
Getty Images
Transportation is responsible for 27.9% of total greenhouse gas emissions in the U.S.
The Climate Bill: Industry Impact
The bill has been put forward by U.S. Reps. Henry A. Waxman, (D., Calif.) and Edward J. Markey (D., Mass.). It's prospects look good in the House, but it could face a tougher time in the Senate. Still, the bill is the most viable yet to tackle climate change.
If adopted, it would confront big sectors of the economy with potentially costly challenges. The bill requires that emissions of carbon dioxide, methane and other gases linked to climate change be cut by 83% from their 2005 levels by 2050, long after most current members of Congress will have left office. The planned reduction is all the more ambitious considering that U.S. greenhouse gas emissions grew by 17% between 1990 and 2007.
To drive businesses and power generators to use less oil and coal and slash emissions of other gases, the Waxman-Markey bill would make businesses acquire pollution permits, which they could use to cover their emissions and sell any spares.
The current draft of the bill would give away up to 85% of those permits over the next 20 years. Still, instituting a cap and trade system would start the process of putting a price on emitting carbon dioxide. The bill's supporters say that is enough to start driving the technological innovation and investment needed to move away from fossil fuels.
"Putting a price on carbon is the most important thing we can do," Silicon Valley venture capitalist John Doerr told reporters after the meeting of the president's advisory board. Mr. Doerr, a partner at, Kleiner, Perkins, Caufield & Byers, is one of a number of tech figures who have invested some of the wealth they earned during the Internet boom in clean-energy ventures that could get a boost from the Waxman-Markey proposal.
Critics of Waxman-Markey, most of them Republicans but also some Democrats, say it is a tax by another name applied in a complex and costly way.
A Congressional Budget Office analysis of climate change policy estimated that price increases associated with a 15% cut in carbon dioxide emissions would cost the average U.S. household $1,600 a year. The CBO analysis said low income households would shoulder a larger burden, as would families in coal dependent regions such as the Ohio Valley.
Harvard University economics professor Martin Feldstein questioned during the meeting with Mr. Obama whether the price might be too high for U.S. consumers, but said giving away too many pollution credits to utilities could undermine the goal of reducing emissions.
"You have to raise the price to consumers to get them to cut back," Mr. Feldstein said. "I have a hard time understanding the give-away strategy."
Lawmakers say they would compensate consumers for the added burden through tax credits and direct government subsidies. The Waxman-Markey bill would use the states to funnel monthly payments to low-income households, defined as those eligible for food stamps or with gross income up to 150% of the poverty line.
But the Waxman-Markey bill is more than just cap and trade. The proposal would establish requirements that utilities buy at least 12% of their electricity from renewable sources such as windmills, solar panels and geothermal technology.
Another section promotes "large scale" programs to spur demand for electric vehicles with incentives for buying plug-in cars and building charging stations.
The proposed bill offers auto makers several forms of assistance to make the shift to lower-carbon cars. They include as much as $50 billion in loans under an Energy Department program to spur advanced vehicle development and up to $4 billion for subsidies to consumers who trade in older vehicles for more efficient models.
In addition, auto makers would get 3% of the free pollution allowances through 2017 and 1% from 2018 through 2025 -- tied to investments in electric vehicles and other advanced technology.
The proposal would offer rebates to spur demand for appliances that are not only energy efficient, but also come equipped with "smart grid" technology that would allow a dishwasher to know the most economical time of day to run based on variable electric rates. Retailers would get incentives to push highly efficient appliances to consumers.
The act would order the Department of Energy to see to it that building codes are amended to make new buildings 30% more efficient by 2010 and 50% more efficient by 2016. The act would even establish new efficiency standards for "portable light fixtures," also known as lamps.
—Judith Burns and Josh Mitchell contributed to this article.
Write to Joseph B. White at joseph.white@wsj.com
WASHINGTON -- The "American Clean Energy and Security Act" is one of the most ambitious efforts to re-engineer American social and economic behavior in decades, presenting risks and opportunities for a wide array of businesses from Silicon Valley to the coal fields of the Appalachians.
The legislation, better known as the Waxman-Markey bill, isn't yet law and has big hurdles to clear. A critical vote looms this week in the House Energy and Commerce Committee. But even with its chances of passage uncertain, the measure has become the basis for debate in Washington over how the U.S. should respond to pressure to slash its carbon emissions.
At a White House meeting Wednesday, members of President Barack Obama's Economic Recovery Advisory Board endorsed the central idea of the 900-plus page measure -- to cap carbon emissions and require businesses to buy tradeable permits to pollute. The measure could create "green" jobs in the U.S. while reducing harmful pollution that might be causing global climate change, executives in the group said. They included General Electric Co. Chief Executive Jeffrey Immelt, who sat next to the president.
Mr. Obama said he's "excited about the opportunity" to develop such a system and that "we've seen some great progress this week" in the U.S. House of Representatives.
Getty Images
Transportation is responsible for 27.9% of total greenhouse gas emissions in the U.S.
The Climate Bill: Industry Impact
The bill has been put forward by U.S. Reps. Henry A. Waxman, (D., Calif.) and Edward J. Markey (D., Mass.). It's prospects look good in the House, but it could face a tougher time in the Senate. Still, the bill is the most viable yet to tackle climate change.
If adopted, it would confront big sectors of the economy with potentially costly challenges. The bill requires that emissions of carbon dioxide, methane and other gases linked to climate change be cut by 83% from their 2005 levels by 2050, long after most current members of Congress will have left office. The planned reduction is all the more ambitious considering that U.S. greenhouse gas emissions grew by 17% between 1990 and 2007.
To drive businesses and power generators to use less oil and coal and slash emissions of other gases, the Waxman-Markey bill would make businesses acquire pollution permits, which they could use to cover their emissions and sell any spares.
The current draft of the bill would give away up to 85% of those permits over the next 20 years. Still, instituting a cap and trade system would start the process of putting a price on emitting carbon dioxide. The bill's supporters say that is enough to start driving the technological innovation and investment needed to move away from fossil fuels.
"Putting a price on carbon is the most important thing we can do," Silicon Valley venture capitalist John Doerr told reporters after the meeting of the president's advisory board. Mr. Doerr, a partner at, Kleiner, Perkins, Caufield & Byers, is one of a number of tech figures who have invested some of the wealth they earned during the Internet boom in clean-energy ventures that could get a boost from the Waxman-Markey proposal.
Critics of Waxman-Markey, most of them Republicans but also some Democrats, say it is a tax by another name applied in a complex and costly way.
A Congressional Budget Office analysis of climate change policy estimated that price increases associated with a 15% cut in carbon dioxide emissions would cost the average U.S. household $1,600 a year. The CBO analysis said low income households would shoulder a larger burden, as would families in coal dependent regions such as the Ohio Valley.
Harvard University economics professor Martin Feldstein questioned during the meeting with Mr. Obama whether the price might be too high for U.S. consumers, but said giving away too many pollution credits to utilities could undermine the goal of reducing emissions.
"You have to raise the price to consumers to get them to cut back," Mr. Feldstein said. "I have a hard time understanding the give-away strategy."
Lawmakers say they would compensate consumers for the added burden through tax credits and direct government subsidies. The Waxman-Markey bill would use the states to funnel monthly payments to low-income households, defined as those eligible for food stamps or with gross income up to 150% of the poverty line.
But the Waxman-Markey bill is more than just cap and trade. The proposal would establish requirements that utilities buy at least 12% of their electricity from renewable sources such as windmills, solar panels and geothermal technology.
Another section promotes "large scale" programs to spur demand for electric vehicles with incentives for buying plug-in cars and building charging stations.
The proposed bill offers auto makers several forms of assistance to make the shift to lower-carbon cars. They include as much as $50 billion in loans under an Energy Department program to spur advanced vehicle development and up to $4 billion for subsidies to consumers who trade in older vehicles for more efficient models.
In addition, auto makers would get 3% of the free pollution allowances through 2017 and 1% from 2018 through 2025 -- tied to investments in electric vehicles and other advanced technology.
The proposal would offer rebates to spur demand for appliances that are not only energy efficient, but also come equipped with "smart grid" technology that would allow a dishwasher to know the most economical time of day to run based on variable electric rates. Retailers would get incentives to push highly efficient appliances to consumers.
The act would order the Department of Energy to see to it that building codes are amended to make new buildings 30% more efficient by 2010 and 50% more efficient by 2016. The act would even establish new efficiency standards for "portable light fixtures," also known as lamps.
—Judith Burns and Josh Mitchell contributed to this article.
Write to Joseph B. White at joseph.white@wsj.com
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