It weighs in at over 190,000 words, spans over 1200 pages and will impact every household, business, industry and farm in the nation. Because it will fundamentally change the economics of energy in America, it has the power to create jobs, restructure industries and to launch a revolution in personal transportation.

It’s the American Clean Energy and Security Act of 2009 and its goal is "to create clean energy jobs, achieve energy independence, and reduce global warming and transition to a clean energy economy."

It was passed last week in the U.S. House of Representatives by the narrowest of margins - 219 to 212 - and even then only after furious last minute lobbying from special interest groups, long established energy giants, environmentalists and even the White House.

Groundbreaking in many respects, it will open the door to what many believe will be the most profound series of changes to the economy of the United States since the Second World War.

The key provisions of the bill are:

• Reducing greenhouse gases by 17 percent from 2005 levels by 2020 and 83 percent by 2050 through a cap-and-trade program that allows pollution permits to be bought and sold.

• Limiting emissions from major industrial sources, including power plants, factories, refineries and electricity and natural gas distributors. Emissions from agriculture would be excluded from the cap.

• Controlling carbon dioxide from the burning of fossil fuels and limiting six other greenhouse gases.

• Allowing companies to meet emission-limiting targets by investing in offset projects such as tree planting and forest protection.

• Requiring electric utilities to produce at least 12 percent of their power from renewable sources such wind and solar energy by 2020, and requiring as much as 8 percent in energy efficiency savings.

• Imposing tighter performance standards on new coal-fired power plants and providing $1 billion a year in development money for capturing carbon dioxide from such plants.

• Establishing standards that will require new buildings to be 30 percent more energy-efficient by 2012 and 50 percent more efficient by 2016.

• Protecting consumers from rising energy costs by giving rebates and credits to low-income households

Compromise was the key to getting House of Representative support for a nation-wide cap and trade system to regulate and reduce greenhouse gas emissions, and quite likely more compromise will be required to get the bill through the U.S. Senate.

The Act shifted the cap and trade regime from one that anticipated 100 per cent auctioning to free allocation for coal-burning utilities, oil refineries, automakers and manufacturers in order to compete with China and India, countries with cheap power and labour.

Another key element for agricultural states was the authority given to the US Agriculture Department to run an offsets program that would pay farmers who used tilling techniques to keep carbon dioxide trapped in the soil.

Deals were being made constantly - sometimes in open debate on the floor of the House, an unprecedented but refreshingly transparent process, to fund initiatives in states with representatives that were hesitant to support the draft legislation.

U.S. President Barack Obama was not apologetic about the trade offs that were necessary to get the bill through the House. In a post-vote briefing for reporters he noted that once the policy framework was in place, transition measures could be accommodated to ensure that certain communities were not hit harder than others.

The overall thrust of the bill, he noted was to reduce carbon emissions and to stimulate clean energy production. Part of the reason why business was so supportive was because legislators who once opposed the measures were now in favour because of the flexibility built into the bill, he added.

"I think that when we look back 10 years from now, 15 years from now, we’re going to say to ourselves this was a moment when we decided to take action, to strengthen our economy, create jobs, and improve our environment. And I think what seems controversial now is going to seem like common sense in hindsight."

U.S. President Barack Obama, commenting on the American Clean Energy and Security Act of 2009

While the U.S. emission reduction targets were less than some had hoped, most environmental groups endorsed the legislation as a solid first step in shifting away from past reluctance by the U.S. to commit to fixed reduction targets.

The draft legislation provides a wide range of new powers, including authority to levy import duties on energy products from nations with emission reduction policies less stringent than those of the United States. Such measures were of concern to Canadian legislators.

President Obama has downplayed this issue, noting in his press briefing that "At a time when the economy worldwide is still deep in recession and we’ve seen a significant drop in global trade, I think we have to be very careful about sending any protectionist signals."

Canada’s environment minister, Jim Prentice, is in Washington this week meeting with his US counterparts and members of industry to try to advance the Clean Energy Dialogue on smart grid technology, carbon capture and storage, and energy research and development. The objective is to have something that the three North American leaders can announce when they meet in early August.

Certainly the Bill is as a bold step for America. It may well have far reaching consequences for Canada and the world in general once passed into law - which is still not a certainty. But as President Obama stated, it is "an extraordinary first step" in the transition to a clean energy economy for the world’s largest consumer of fossil fuels and the second largest emitter of greenhouse gas emissions after China.

There are several summaries of the draft legislation available for those who wish to pursue the matter further. For those with time and patience, the full 1200+ page draft bill is available here.

Source: Globe.net