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:] 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:]

ACES Target 1990 baseline 2005 baseline BAU Full Offset Levelsw/BankingEPA Offsets ProjectionCBO Offsets Projection

ACES Target 17% < 2005 With CBO Offset Levels With EPA Offset Levels With Full Offset Levels * Additional permits banked for future: 4,218 ^ Additional permits banked for future: 12,109

ACES Target Emissions Trajectory CBO Offset Levels 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]

Emissions Reductions [Source] 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

[Source] 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]

BAU = 10% Nominal Requirement After Exemptions With 5% Energy Efficiency With 8% Energy Efficiency

[Source]

Renewable Electricity Standard [Source] “[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

[Source] 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 R&D $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 $15b ACES $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 ; 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 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 Jenkins Director of Energy and Climate Policy Breakthrough Institute x465 Ted Nordhaus Chairman Breakthrough Institute x305