Rhein on Energy and Climate

Spurred by the ruling of the Environmental Protection Agency declaring C02 emissions a risk for human health and welfare, the House Energy and Commerce Committee has begun work on what might become one of the most ambitious pieces of legislation passed by Congress.

Its basic contours would resemble EU legislation, in particular a cap and trade system for green house gas emissions and targets for the share of renewable energies:

· Ambitious long-term targets for the reduction of green house gases, essentially C02, minus 20 percent until 2020, minus 42 percent until 2030 and minus 83 percent until 2050, compared to 2005.

· Requirements for utilities to generate 25 percent of their electricity from renewable sources after 2025.

These would be ambitious targets, even if the reference year is 2005 instead of 1990 as for the EU. Unlike the EU, US legislation might extend until 2050. It is in that time frame that the transition to new energy systems has to occur, the 2020 perspective being too short-term.

The US approach would be tougher than EU legislation on the share of renewables, making a 25 percent share mandatory for utilities, while the EU 20 percent target for renewables does not bind individual companies.

It is, of course, far too early to anticipate the outcome of the US legislative process. Under optimistic assumptions the House might be able to adopt its version by the middle of the year. The obstacles will come from the Senate, where the Democratic majority is inferior to the critical two thirds thresholds and where even Democratic Senators from the coal regions might not like the idea of tough emission curbs.

In due time, the traditional coal, oil and gas lobbies might join the opposition in the Congress arguing the anticipated rise of electricity rates, the economic crisis and whatever other arguments.

Under very optimistic assumptions the Congress might be able to adopt legislation by the end of the year. But it is more likely that the legislative process will still be under way when the Copenhagen Climate Conference will convene in early December.

In any event, the chances for the USA addressing climate change and energy security through a serious long-term approach have never been more propitious. For the first time, the Administration and Congress are convinced of the need for effective action. This bodes well for Europe and humanity.

Brussels, 27. 04.09 Eberhard Rhein

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