The Kerry-Boxer Climate Bill and How it Affects Solar Industry

“To create clean energy jobs, promote energy independence, reduce global warming pollution and transition to a clean energy economy.”

kerry boxer solar billThat is the objective of the Clean Energy Jobs and American Power Act (S.1733), introduced into the Senate by Senators John Kerry (D-MA) and Barbara Boxer (D-CA). It is the latest climate change legislation to come out of Congress. The political heart of the Kerry-Boxer bill resides in the controversial issue of greenhouse gas (GHG) emission reductions, or in a buzzword, cap-and-trade.

The bill, which on November 5 was referred by committee to the Senate at large, would set up a cap-and-trade market in which polluters could buy, sell and trade emission allowances. In other words, permits to pollute. The rules proposed in the bill to regulate this market are somewhat vast and confusing, at least to those of us not adept in Congressional legalese, and we can only expect the bill to get more convoluted as it traverses the Senate floor.

So now is a good time to examine the contents of the bill as they initially appear. For brevity’s sake, we’ll focus on those that should directly affect the solar industry:

Cap-and-Trade

First of all, a cap is put on GHG emissions in a manner similar to a renewable portfolio standard, which the bill does not yet include. The cap proposed by the Kerry-Boxer bill aims to reduce emissions by 20% of 2005 levels by 2020 and 83% by 2050.

Then a trading market is set up, as mentioned earlier, for “covered entities” (i.e. polluters) to trade government-issued emission allowances or offsets. For this purpose, the cap is separated into yearly GHG emission totals that incrementally decrease on an annual basis until 2050. This sets a bar for each year that companies and governments must fall at or below, or buy permits to exceed that amount.

The money paid for these allowances would produce a revenue pool for the government (every year, the government would auction off more allowances). Penalties for non-compliance equal fines twice the amount of the going market rate for permits in the year of violation. A permit offsets one metric ton of carbon dioxide or its established equivalent in other GHGs.

The idea is that a forced reduction in GHG emissions would in turn force electricity providers to turn to alternate sources of energy, such as solar power. Although, according to the American Wind Energy Association, the carbon price in the program’s early years would be too low to further renewable energy deployment by itself. Still, cap-and-trade is a step in the right direction, and importantly, would finally set some national targets for GHG emissions as well as some semblance of a way to enforce those targets.

Other Solar-Related Provisions

Several portions of the Kerry-Boxer bill would have some effect on the solar industry. Some directly address renewable energy and others, especially green job and energy efficiency provisions, would have at least secondary effects, such as training a workforce in passive solar design and building.

Here are some highlights:

  • Clean Technology Business Competition Grant Program - This program would provide organizations with grants to conduct business competitions providing incentives, training and mentorship to entrepreneurs and start-up companies in renewable energy, energy efficiency, transportation, air and water quality, etc. The idea is to support small business growth and innovation in the clean energy sector.
  • Grants for projects that “increase the quantity of energy a State uses from renewable sources under State renewable portfolio standards.” Special priority would be given to states with binding RPSs and to projects that are deemed the most cost-effective. Grant totals may not exceed 50% of the project’s total cost.
  • Establishment of National Energy Efficiency Codes and a National Energy and Environmental Retrofit Policy that would set national efficiency standards for new buildings and retrofit projects. It would also establish the Retrofit for Energy and Environmental Performance (REEP) program through which grants and incentives could be administered for energy efficient (including renewable energy) retrofits. The program would also certify contractors and organizations through third parties.
  • Funding for grid-tied clean energy projects is also included. Eligible technologies include renewable power, renewable energy storage and carbon capture and sequestration. Grants would also be made available for “advanced energy research,” which would, of course, include anything from solar power to clean coal.
  • Clean Energy Curriculum Grants would be available for the development of education programs focusing on emerging jobs and fields in renewable energy and climate change mitigation. The primary notion being the training of a cleantech-savvy workforce. Related to the CEC grants is the development of an information and resources clearinghouse for vocational education and job training in renewable energy sectors. In other words, it would be a one-stop-shop for employees, students and employers to find green job education opportunities.
  • Finally, the bill would set up an International Clean Energy Deployment Program to aid in the development and deployment of renewable energy technologies in the developing world. The aim here is to help developing countries to transition and upgrade their infrastructure in an environmentally conscious and self-sustaining manner.

Again, I must reiterate that the Kerry-Boxer bill is still extremely young in terms of Congressional legislation. The odds are good it will inherit another 1,000 or so pages, be swallowed up by a larger bill or be substantially edited. Still, it’s good to know what we’ve got going for us from the beginning. The bill is a decent first step in climate change mitigation and renewable energy deployment (still waiting for that national RPS!?). Let’s just hope Congress doesn’t do what it so often does: take small steps and make them infinitely smaller until we find ourselves on a slippery slope sliding backwards and grasping for compromise.

Read the full text of the bill (if you dare!) at the Library of Congress.

Posted on November 11 in Solar Politics by .

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