Fought out over the course of a week of often acrimonious debate, the 946-page American Clean Energy and Security Act (ACES) is designed to fundamentally change the way the United States uses energy. If signed into law – as President Barack Obama Promises he will – it could overhaul the way the nation drives its cars, manufactures products, heats offices and builds homes.

Democrats on a 35-25 vote Thursday evening pushed the legislation through the committee. The bill calls for cutting emissions of gases linked to global warming by 80 percent over the next 40 years, targeting power plants, factories, oil refineries and other sectors of American industry. Democrats also got the legislation out of committee prior to the US Memorial Day weekend holiday, as promised.

The legislation passed with some major compromises, including giving away the majority of emission permits in the programme’s early years, and reducing from 4 percent to 1 percent the amount of emissions cut backs over 1990 levels that are to be expected by 2020. Nonetheless,  it represents a very significant victory for Democrats and their environmental supporters. Approval in the committee bodes well for House passage, given the panel’s more moderate political makeup.

While the revenue-raising portions of the bill puts a hiccup in the president’s budget plans for the next decade, the legislation’s passage advances a top priority for President Barack Obama and gives the Administration major bargaining leverage in its international greenhouse-gas negotiations.

“By establishing a framework for a cap and trade programme, the American Clean Energy and Security Act is potentially the most significant climate policy ever introduced in the United States,” said Bellona USA Director Jonathan Temple Thursday night.

The combined energy and climate bill, introduced May 15th by House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) and Energy and Environment Subcommittee Chairman Edward Markey (D-Mass.), would establish an economy-wide cap on greenhouse emissions and put the United States on a trajectory to reduce covered emissions by 83 percent below current levels by the year 2050.

“The legislation will face some hurdles before it reaches the President’s desk. Bellona urges Congress to complete its work on the legislation soon so that the United States can play the fullest role during the international climate negotiations later this year” in Copenhagen, Temple said.

The bill still faces a tough road in the House of Representatives, where democratic leaders of other committees could hinder its progress.

For now, though, the Republicans, who constituted the main opposition, failed repeatedly in their attempts to kill or weaken the measure. They argued that the emissions cuts would lead to higher energy prices and job loss. The bill’s supporters said the costs to consumers would be contained and that new clean-energy jobs would be created.

"Today the Committee took decisive and historic action to promote America’s energy security and to create millions of clean energy jobs that will drive our economic recovery and long-term growth," said Chairman Waxman. 

"This bill, when enacted into law this year, will break our dependence on foreign oil, make our nation the world leader in clean energy jobs and technology, and cut global warming pollution.”

Subcommittee Chairman Markey said the plan will “shape a new energy destiny for our country, where we innovate more and pollute less."

Legislation’s highlights
The bill gives local electric distribution companies, whose rates are regulated by states, 30 percent of the allowances, amounting to a handout of $409 billion to mitigate any increases in power rates from higher carbon costs, according to Point Carbon, a market analysis firm. These free allowances will phase out over a five-year period from 2026 through 2030.

In addition, the program provides $227 billion to low-income households, $90.6 billion to local gas companies, and nearly $20 billion to protect against increases in rising heating oil costs.

The House bill seeks to avoid the pitfall faced by Europe, where regulators essentially gave the carbon allowances free to power producers who pocketed the windfall, but did not ease costs on consumers, said Point Carbon.

The legislative proposal is somewhat weaker than originally proposed by President Obama and Waxman, but the main goals seem to have squeaked through committee largely unscathed.

The main highlights of the proposed legislation include reducing greenhouse gases by 17 percent from 2005 levels by 2020 and 83 percent by 2050 through a cap-and-trade programme that allows pollution permits to be bought and sold.

It will also cap emissions from major industrial sources, including power plants, factories, refineries and electricity and natural gas distributors.

There will also be strong emphasis on controlling carbon dioxide from burning fossil fuels and six other greenhouse gases.

The legislation will allow companies to meet emission targets by investing in projects elsewhere such as tree planting, forest conservation.

It will also requiring electric utilities to produce at least 12 percent of their power from renewable sources such wind and solar energy by 2020, and requiring another 8 percent in energy efficiency savings.

Tighter performance standards will also be imposed on new coal-fired power plants and the legislation will provide $1 billion a year for development for capturing carbon dioxide from such power plants.

Development of a national smart grid will also be encouraged on the federal and state government levels as well as for utilities. The bill also will direct that building codes target energy efficiency, and requiring more stringent appliance efficiency standards. On May 19th, President Obama announced new efficiency goals for cars and light trucks.

Democrats also added language to the legislation providing for a clean energy bank to disburse grants for new forms of energy and inserted a "cash for clunkers" programme that would provide rebates for consumers who turn in gas guzzling vehicles for more fuel-efficient cars.

US Environmentalists ecstatic
The passage of the bill by the committee was greeted by widespread and warm applause from the US environmental community.

"I commend Chairmen Waxman and Markey for their leadership in this historic action by the House Energy and Commerce Committee,” said Nobel Laureate Al Gore, former Vice President and Alliance for Climate Protection Chairman.

"The bill represents a crucial step forward in addressing the global climate crisis, the need for millions of new green jobs to end the recession, and the national security threats that have long been linked to our growing dependence on foreign oil and other fossil fuels,” Gore said in a statement after the committee’s passage of the legislation.

Frances Beinecke, President of the Natural Resources Defense Council, called the passage of the legislation through committee historic.

"Chairmen Waxman and Markey have done the heavy lifting and cleared the path for this bill to move through the House and to the Senate, said Beinecke.

“We urge Congress to move quickly on one of President Obama’s top priorities, by passing legislation that will jumpstart our economy, curb global warming, create jobs, and protect our national security.”

On the Republican side, Representative Mary Bono Mack of California bucked her party leadership and supported the legislation. Mack was the only committee Republican to publicly remain neutral on the climate bill, Greenwire reported.

"While I still have significant concerns about this bill, particularly with regard to its cost and its failure to recognize innovative technologies like advanced nuclear energy, I believe this is the right direction for our
district, for our nation and for our future," Bono Mack said in a statement.

Not time for Champaign yet
Despite the jubilation, some of the hardest work lies ahead. Numerous committees will now have the chance to put their stamp on the legislation, and Greenwire reports that Democratic leaders of the Agriculture and Ways and Means committees are threatening to mire the bill for their own purposes.

The legislation also faces a tough go in the Senate where a similar proposal failed to pass last year.

Republicans opposed the bill, calling it a "stealth energy tax" that would create untenable price rises for businesses and households.

"You are about to embark on an episode of putting the entire American economy, which is the world’s largest, through an absolute economic wringer," said ranking member on the panel, Rep. Joe Barton, R-Tx, according to Dow Jones Newswire.

Even some of America’s largest environmental lobbies have pulled their support over concessions.

Greenpeace, Friends of the Earth and Public Citizen, expressed concern that the bill as drafted gave away too much to polluting industries and depended excessively on hypothetical reductions in emissions of heat-trapping gases from developing countries.

“Despite the best efforts of Chairman Waxman, the decision-making process was co-opted by oil and coal lobbyists determined to sustain our addiction to dirty fossil fuels,” said a joint statement from the groups. “The resulting bill reflects the triumph of politics over science, and the triumph of industry influence over public interest.”

Throughout the four-day debate, Republicans argued the climate bill would force manufacturing overseas, escalate federal intervention in energy markets, and usurp state, local and individual rights. Pressing their point, Republicans offered a series of amendments that would have canceled the cap-and-trade programme if power prices doubled, gas prices hit $5 a gallon or thousands of mining or steel jobs were lost as a result of the climate programme. All of the proposals failed.