What Congress Must Do by the End of 2009 to Create Jobs, Reduce Oil Use and Cut Pollution

New industries. New jobs. Lower energy bills. Oh, and less global warming. This is why the Center for American Progress' Daniel Weiss says Congress must pass legislation dealing with climate change. And here's what he says they should do.

by Daniel J. Weiss, Senior Fellow and Director of Climate Strategy Center for American Progress Action Fund

President Obama knows that a transition to clean energy sources is one of the pillars of a strong 21st century economy. This would boost employment, cut oil use, strengthen national security, and reduce global warming pollution. In an April 14th speech at Georgetown University, the President declared that a “new foundation for growth and prosperity,” requires “the renewable energy that can create millions of new jobs and new industries.”

In response to this need, House Energy and Commerce Committee Chair Henry Waxman and House Energy and Environment Subcommittee Chair Edward Markey recently released the American Clean Energy and Security Act of 2009. This draft bill establishes a three-part program to increase energy efficiency, invest in renewable energy resources such as the wind and sun, and reduce global warming pollution. The Committee plans to pass the bill by Memorial Day, with full House action likely this summer. Congress must pass the American Clean Energy and Security Act to create jobs, reduce oil use and cut pollution.

Energy efficiency is the “low hanging fruit” of clean energy policies. The US uses significantly more electricity per person than other nations. US per capita consumption is 14,240 kilowatt-hours per year, compared to 8,459 kilowatt-hours per year in Japan. Investments in simple and advanced efficiency technologies would pay for themselves through lower energy use and bills.

ACESA includes a national Energy Efficiency Resource Standard (EERS). It would require utilities to reduce electricity demand, slashing energy costs while creating jobs manufacturing energy efficient technologies, weatherizing homes, and installing energy efficient appliances. An EERS would create 220,000 net permanent jobs and reduce energy costs by $168.6 billion for consumers and businesses.

An EERS could help cut pollution too. McKinsey & Company found “Almost 40 percent of [emissions] abatement could be achieved at ‘negative marginal cost,’ meaning that investing in these [efficiency] options would generate positive economic returns over their lifecycle.”

Eighteen states already have EERS programs that have reduced electricity demand. While Oregon does not currently have one, the Energy Trust of Oregon has created incentives for upgrades in efficiency and for the use of renewable energy.

Another program to create jobs, develop new technologies, and cut pollution is a national renewable electricity standard (RES). ACESA would require that 25 percent of U.S. electricity come from wind, solar, geothermal and other renewable energy sources by 2025. This would create nearly 300,000 jobs, save consumers $64.3 billion, and help the U.S. regain its lost leadership in the development of new clean energy technologies. Currently, Oregon, 27 other states and in the District of Columbia have an RES.

Reduction of fossil fuel energy use through these two programs, however, will not reduce greenhouse gas pollution by enough to slow the growing threat of global warming. ACESA also includes a cap-and-trade program to require companies to pay for their greenhouse gas pollution rather than emit it into the atmosphere for free. This program would achieve a 20 percent reduction (from 2005 levels) in pollution by 2020, and an 83 percent cut by 2050. These reduction targets were endorsed by a number of Fortune 500 companies, including Duke Energy, Shell Oil, and General Electric.

ACESA includes measures to prevent sudden price hikes in the cost of pollution allowances. Banking and borrowing allowances should prevent price volatility. When allowance prices are low, companies could “bank” them, and “borrow” them when they are high. In addition, companies could “offset” their emissions by investing in projects that capture carbon pollution, such as forest protection.

A policy to reduce pollution has strong potential to bolster the economy. The EPA noted: “[S]ubstantial cost savings could be achieved by combining direct emissions policies (e.g. cap-and-trade or carbon tax) with technology push policies (e.g. technology and R&D incentives) that correct for the market failure associated with the fact that the inventor of a new technology can not appropriate all of the associated social benefits.”

Congress must follow President Obama’s lead by enacting a real plan to create jobs, reduce oil use, enhance natural security, and cut pollution. This would help revitalize the economy and launch us on a path towards long term sustainable growth.

Daniel J. Weiss is a Senior Fellow and the Director of Climate Strategy at the Center for American Progress, where he leads the Center's clean energy and climate advocacy campaign. Before coming to American Progress, he spent 25 years working with environmental advocacy organizations and political campaigns. Weiss is an expert in energy and environmental policy; legislative strategy and tactics; and advocacy communications.