‘Smart’ steps taken on cap-and-trade bill, auto mileage standards, and the grid

Cap and Trade

As a House committee approved legislation that would regulate US emissions of carbon dioxide for the first time ever, the Obama administration moved on several fronts to implement other elements of its clean energy agenda. Following a week of marathon sessions, the House Energy and Commerce Committee approved a 932-page bill that would impose a cap-and-trade system on emissions of greenhouse gases, with the goal of reducing them 17% by 2020 and 83% by 2050. Known as Waxman-Markey after its principal authors, Henry Waxman (D-CA) and Edward Markey (D-MA), the measure passed by a margin of 33-25. The measure still faces hurdles, including from Democrats such as Agriculture Committee Chairman Collin Peterson (D-MN) who wants his committee to have a crack at provisions dealing with ethanol before a bill comes before the full House.

CAFE standards

At the other end of Pennsylvania Avenue, President Obama announced new mileage requirements for automakers, raising the corporate average fuel economy (CAFE) standard for cars and light trucks to 35.5 miles per gallon in 2016--eight more mpg than the current one, and four years sooner than the far less stringent standard that was enacted just two years ago.

“Ending our dependence on oil, indeed, ending our dependence on fossil fuels, represents perhaps the most difficult challenge that we have ever faced, not as a party, not as a set of separate interests, but as a people,” Obama told a Rose Garden audience . After years of fighting increased fuel economy requirements, and with billions of dollars in loans from the Treasury propping up two of the Big Three, executives from foreign and domestic automakers stood behind Obama and applauded as the president announced that the new standard will save 1.8 billion barrels of oil over the lifetime of the vehicles sold in the next five years.

“Just to give you a sense of magnitude, that’s more oil than we imported last year from Saudi Arabia, Venezuela, Libya, and Nigeria combined,” Obama said. With the government now having a direct financial interest in the industry, Detroit had no choice but to accept the mileage mandate. The silver lining for automakers was the assurance that they will have a single, nationwide standard to meet, rather than a patchwork that would have resulted from regulations issued by individual states. Acknowledging that the higher standard will increase vehicle prices, Obama said consumers will recover that cost in three years from using less gasoline.

‘Smart’ grid

Meanwhile, Secretary of Energy Steven Chu announced a sweetening of the administration’s program to spur creation of a modern “smart grid ” that will be a prerequisite to a major expansion of wind, solar, and other renewable electricity generation. In response to industry input, the Department of Energy is increasing the maximum size for smart grid investment grants 10-fold, to a new level of $200 million, while the maximum grant available for smart grid demonstration projects will also be increased from $40 million to $100 million, Chu said.

Secretary of Commerce Gary Locke, who appeared with Chu, announced the completion of the first set of 16 standards that are needed for the interoperability and security of smart grid components. Locke said that the standards, developed with assistance of NIST , will help to ensure that software and hardware components from different vendors will work together seamlessly and prevent grid disruptions.

David Kramer