US clean-air bill to alter energy use

Analysis The landmark climate bill aimed at transforming the way energy is used in the world's biggest economy.

The US House of Representatives has narrowly passed a landmark climate bill aimed at transforming the way energy is used in the world's biggest economy. It marks the first time that the US Congress has voted for mandatory reductions of greenhouse gas emissions such as carbon dioxide, overcoming concerns about costs to consumers and taxpayers and the potential for large job losses. At the same time, it will allow President Barack Obama to take a leading role in talks over an international climate change agreement that will take centre stage this December at a summit in Copenhagen. Mr Obama hailed the 219 to 212 vote as "a victory of the future over the past" and "a bold and necessary step". "The American people are demanding that we abandon the failed policies and politics of the past, we no longer accept inaction, that we face up to the challenges of our time," he said. The 1,200-page American Clean Energy and Security Act aims to reduce US greenhouse gas emissions by 17 per cent from 2005 levels by 2020, and 83 per cent by 2050, create "green" jobs in renewable energy and reduce US dependence on imported oil. It would create a "cap and trade" system for carbon emissions permits, similar to Europe's, and would require utilities to generate 15 per cent of their electricity from renewable resources by 2020. But before the bill can become law, it must also be passed by the US Senate, where it could face stiffer opposition and a possible filibuster by Republican members intent on delaying and, ultimately, derailing the legislation. The Democrat majority leader, Harry Reid, has said he wanted the Senate to debate the climate change bill this autumn, ahead of the Copenhagen summit. But "today's razor-thin vote in the House spells doom in the Senate", predicted James Inhofe, the top Republican on the Senate's environment panel. "This is a tax on anyone who drives a car, buys an American-made product or flips a light switch," said the Republican minority leader, John Boehner. The bill was also heavily criticised by US business leaders. "It's a prescription for disaster for the economy," Jim Hackett, the chief executive of Anadarko Petroleum, told Bloomberg. The American Petroleum Institute said the bill would harm an industry that had been a backbone of the US economy for nearly a century. The US Chamber of Commerce, the world's largest business federation, said the proposed law could destroy up to three million US jobs and cause businesses to migrate to countries such as China and India, where there are fewer restrictions on energy use. But most US environmental groups were elated. "It is the most important energy and climate legislation in the history of the nation," said Fred Krupp, the president of the Environmental Defense Fund. While the legislation is explicitly aimed at cutting the nation's consumption of fossil fuels, especially oil imported from the Middle East, a positive side effect for oil exporters could be enhanced international incentives to reduce energy sector emissions while improving efficiency. In Abu Dhabi, Masdar, the government-owned renewable energy company, has formed domestic and international joint ventures for such projects, with a view to registering them under the UN Clean Development Mechanism, which issues tradable emissions permits for certified reductions in carbon emissions in developing economies. Currently, those permits can only be traded in Europe, but a US cap and trade scheme would create an important additional market. Mr Obama has pledged to work with emerging economies that are major energy consumers and polluters. Demonstrating momentum on US climate change policy could help him win co-operation during international talks from nations such as China, India and even some Gulf states that are emerging as big energy users. "The legislation is a positive change from the attitude of the Bush administration on climate change, and is a big step forward," said Xie Zhenhua, the vice-president of the Chinese government body in charge of climate policy. [e-mail]