On May 22, a key U.S. congressional committee approved legislation that, for the first time, would put a cap and a price on carbon dioxide emissions. After weeks of debate and an intensive, multi-million dollar lobbying campaign by industry and environmental groups, the House Energy and Commerce Committee passed the "American Clean Energy and Security Act."

The 1000 page bill calls for a 17 percent reduction in greenhouse gas emissions below 2005 levels by 2020 and an 83 percent reduction by 2050. The declining cap on carbon emissions will eventually require all major producers of fossil fuel emissions to purchase permits to emit CO2. The bill also calls for 15 percent of the country’s energy to come from renewable sources by 2020. The bill passed by a 33 to 25 vote, largely along party lines. Opposition to the bill from conservative Democrats and nearly all Republicans was so strong that, in order to win committee approval, Energy and Commerce Chairman Henry Waxman (D-Calif.) agreed to initially give away 85 percent of permits to emit carbon dioxide. President Obama had called for auctioning all permits.

This bill has a long way to go even before it gets to the House floor. Eight other committees have jurisdiction over pieces of the bill, but only a few have indicated any real interest in holding their own markup. Speaking to reporters after the final vote, Chairman Henry Waxman said he would do what it takes to get the measure across the finish line although House Democratic leaders have acknowledged that it won’t be easy to craft successful legislation without upsetting the balance that saw the bill through the Energy and Commerce Committee.

For more information about how this legislation may affect your business, please contact Scott Appel at 949.428.0288 or sappel@heincpa.com

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