Volume 11, Issue 7 - September 2010

WDMA Update

What Happened to Cap-and-Trade?
by Michael O’Brien

The House of Representatives passed sweeping climate change legislation in the summer of 2009 but, despite being a high priority of the Democratic leadership and the current administration, the issue has seen little movement in the Senate. The “American Clean Energy and Security Act” (ACES, H.R. 2454), sponsored by Congressmen Henry Waxman (D-Calif.) and Edward Markey (D-Mass.), was strongly opposed by manufacturers and others across the business community for the costs it would impose on American employers. The cornerstone of the legislation was a carbon-pricing system, known as “cap-and-trade,” which sets limits on the amount of greenhouse gas emissions industry could produce. The “trade” portion refers to a market mechanism by which heavier polluters could purchase allowances above those caps.

The cap-and-trade system has been criticized heavily, even by some Democratic members of Congress, and that criticism has been a primary roadblock to bringing the issue up for a vote in the Senate.

In June 2009, the Senate Energy and Natural Resources Committee proposed a competing bill, the “American Clean Energy Leadership Act” (ACELA), which focused more on the promotion of clean energy technology. Both ACES and ACELA also contain provisions on energy efficiency that would impact the building sector, including the establishment of national energy efficiency targets for residential and commercial buildings, and the adoption of a national building energy code that achieves those targets.The bills differ in the exact role the Department of Energy would play in relation to leveraging established national model building codes and the amendment processes they follow, but either way states would be required to adopt Federally mandated energy codes.

"Driving up costs on domestic manufacturers only jeopardizes American jobs."

The baseline for those codes and the targets set for them would be the 2006 International Energy Conservation Code (IECC) for residential buildings and ASHRAE 90.1-2004 for commercial buildings. Initially, states and localities would be required to adopt energy codes that are 30 percent more efficient than the baseline codes within the next couple of years, and codes that are 50 percent more efficient by 2016 or 2017. The House bill, ACES, is more comprehensive requiring an additional 5 percent increase every three years up to 2030, and it would also establish a building energy labeling program. There are other variances between the two, but the bottom line is aggressive federal targets for building energy efficiency that will prove challenging for the construction industry.

This spring, a new attempt to create a bipartisan approach by Sen. John Kerry (D-Mass.), Joseph Lieberman (I-Conn.) and Lindsey Graham (R-S.C.) broke down, and the resulting third bill, the “American Power Act,” was introduced without Republican support.

While Senate Democrats have argued over how best to proceed on climate and energy policy, Sen. Richard Lugar (R-Ind.) recently introduced an alternative plan that is designed to reduce foreign oil dependence and greenhouse gas emissions with minimal fiscal impact on households or manufacturers. The Lugar plan focuses on vehicle fuel efficiency, energy efficiency and more diverse domestic energy investments. While he also calls for aggressive new building energy codes, developed by existing model code setting organizations in coordination with the Department of Energy that would prove as challenging to develop and meet as those under ACES and ACELA. His legislation patently avoids cap-and-trade.

It is clear that the Waxman-Markey cap-and-trade approach to energy regulation is opposed by the American public. WDMA supports efforts to advance clean energy and energy efficiency, but only in such a way that does not put our domestic manufacturers at a competitive disadvantage with foreign manufacturers. It seems that there is greater support in Congress for an energy-only policy that focuses on clean energy and energy efficiency, with less punitive treatment of industry. It remains to be seen whether such a commonsense approach will move through the Senate, in the limited legislative time remaining before the November elections.

Michael O’Brien serves as president of the Window and Door Manufacturers Association. His opinions are solely his own and do not necessarily reflect those of this magazine.


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