On January 8, 2020, U.S. House Democratic leaders of the Energy and Commerce Committee previewed the first major attempt at climate change legislation in over a decade. In a 15-page summary, the committee described a sweeping draft bill it intends to release this month, the Climate Leadership and Environmental Action for our Nation’s Future Act (the CLEAN Future Act). While the summary stresses that the bill is still in a work in progress, it indicates several key areas of focus for addressing climate change. With upcoming elections, these are areas to watch.

Release of the summary marks the start of a lengthy process before legislation is signed into law. Next steps will include release of the actual legislative language, followed by extensive hearings prior to formal committee action to move the bill to the House floor. With the Senate currently in Republican hands, corresponding action in that body seems unlikely in the short term.

The House Energy and Commerce Committee lacks tax law jurisdiction, which is vested in the House Ways and Means Committee. Therefore, the summary released last week is based on a regulatory approach to greenhouse gas (GHG) control, which is within the committee’s purview. In the decade since the House passed a cap-and-trade regulatory approach to carbon emission control — the Waxman-Markey bill — private sector support for legislation has shifted to use of a carbon tax as the preferred control mechanism. For example, the Climate Leadership Council, which counts 75 Fortune 500 companies among its members, is actively promoting a tax-based regulatory approach. Accordingly, it is far from certain that action by the full House will be along the lines of the Energy and Commerce Committee’s draft CLEAN Future Act. Goals

The draft CLEAN Future Act will set a goal of achieving a “100 percent clean economy,” or net-zero emissions, by 2050. The bill will target reducing GHG emissions, including carbon dioxide (CO2) and non-CO2 GHGs such as methane and black carbon. Sectors Attracting Congressional Interest

The draft legislation will focus on reducing emissions through new legal requirements affecting many major industry sectors, including

  • transportation — including on- and off-road, light to heavy duty, electric vehicles, aircraft, ships and rail
  • transportation fuels — including alternative fuels
  • oil and gas — including production and refining
  • building construction and materials
  • manufacturing — including cement, concrete and steel manufacturing
  • electricity generation, transmission and distribution — including utilities, independent power producers and rural electric cooperatives
  • renewable and alternative energy suppliers — including electric or battery storage and distributed generation and related industries

New Requirements Under Consideration

Unlike the ill-fated Waxman-Markey bill, the proposed CLEAN Future Act will not establish a cap-and-trade program. Instead, it will use a variety of command-and-control and market-based tools, including amending existing environmental, energy and procurements laws, aimed at reducing emissions.

  • The bill will include an array of potential amendments to existing pollution control laws. Under the Clean Air Act’s Renewable Fuel Standard, for example, the bill will direct the Environmental Protection Agency (EPA) to accelerate approvals of pathways for low-carbon alternative transportation fuels. It will require financial responsibility and risk management for accidental releases that occur due to extreme weather, presumably also under the Clean Air Act. And building off the Clean Air Act’s State Implementation Plan model, states will be required to complete “climate plans” for federal approval that demonstrate how a state would meet the 2050 net-zero standard.
  • The bill will amend other pollution control laws as well. Liability under the Comprehensive Environmental Response, Compensation, and Liability Act will include releases of hazardous substances caused by extreme weather events connected to climate change. And the bill will add new coal ash disposable requirements, presumably under the Resource Conservation and Recovery Act.
  • Non-CO2 GHG emissions will also face additional regulation. The bill will address methane emissions from the oil and gas sector by setting emission reduction targets and imposing limits on flaring. EPA will also be required to consider setting new regulations for black carbon emissions.
  • The net-zero goal will manifest through changes to energy laws as well. For the power sector, the summary describes a “clean energy market” in which retail electricity suppliers will be required to meet a “clean energy standard” goal of providing 100 percent clean energy through trading clean energy credits via auction or paying a compliance fee. Clean energy, in turn, will be defined as electricity generated from any source — including fossil fuels — with an annual carbon intensity lower than 0.82 metric tons of CO2 equivalent per megawatt hour. The bill will also further ongoing work at the Federal Energy Regulatory Commission to remove barriers to entry for emerging technologies and will try to modernize the Public Utility Regulatory Policy Act to address energy storage and qualifying facilities’ right to contract.
  • In construction and procurement, the bill summary explains that the federal government purchases significant amounts of cement, concrete and steel. The bill will establish a Buy Clean Program under which federally funded projects must “only use the cleanest construction materials.” The Buy Clean Program will also set out a national “buy clean” standard with the goal of stimulating private investment in decarbonizing industrial sources.

Likely Next Steps

Observers can expect this year extensive House Energy and Commerce Committee hearings concerning the regulatory legislation and possible consideration by House Ways and Means of a carbon tax.