House Committee Takes Up Cap-and-Trade Legislation

April 28, 2009

The House Energy and Commerce Committee began hearings last week on global warming legislation, designed to cut U.S. greenhouse gas emissions about 80 percent from today's levels by 2050 and increase energy independence.  Backed by the Obama Administration, the bill would establish a cap-and-trade system that would use market forces to encourage utilities, industrials users and others to reduce emissions.

The American Clean Energy and Security Act of 2009, as the House bill is known, could have a significant impact on the industry if passed, as a key goal of the bill, and an important element in making a cap-and-trade system cost effective, is increased energy efficiency. While the initial draft of the bill does not include any specific references to windows and doors, it includes provisions that call for strengthened energy efficiency standards in building codes and appropriations for funding energy efficient retrofits of residential and commercial buildings.

Specifically, the bill would require the Department of Energy to support consensus code-setting organizations to establish building codes achieving 30 percent and 50 percent higher energy efficiency targets in 2010 and 2016, respectively, than 2006.  It also outlines a number of efforts to encourage state and local adoption of such advanced codes by supporting training and funding for energy efficiency code enforcement.

The House bill also includes the Retrofit for Energy and Environmental Performance (REEP) program for existing buildings.  DOE and the Environmental Protection Agency would support development of standards and processes for retrofitting existing commercial and residential buildings and provide funding to states for cost-effective building retrofits, with funding increasing in proportion to efficiency achievement. 

Other elements in the bill include federal rebates for the purchase of Energy Star rated manufactured homes for low-income families residing in pre-1976 manufactured homes, and the development of a building energy performance labeling program. 

In a letter to leaders of the House committee working on the current bill, the Alliance to Save Energy and a consortium of other groups make the case for investing cap and trade proceeds in energy efficiency, noting that it lowers energy consumption, which reduces GHG emissions and the demand for carbon allowances. "The result is a lower price for carbon allowances and lower overall cost of the cap and trade program."

As this bill moves forward, the National Association of Home Builders is urging Congress to be cautious that legislation intended to make homes more energy efficient does not put affordability at risk.  Dwight "Sonny" Richardson, a home builder in Tuscaloosa, Ala. and chair of the NAHB Construction, Codes and Standards Committee testified at the House subcommittee hearings, offering a number of recommendations.

First, legislation must be flexible, he noted. "Don't modify codes and standards so that they can't accommodate every state's climate demands simultaneously or equally," Richardson explained.

He also urged Congress to "extend, or make permanent" the tax credits passed earlier this year that incentivize the purchase of energy-efficient windows, additional insulation and other improvements in existing homes–where the greatest gains in energy efficiency are most likely to be realized, he said. The type of funding available to encourage homeowners to make these improvements should also be available to home buyers to help them pay for the additional costs associated with very efficient new homes, Richardson added.

Significant opposition
While the Democratic leadership in Congress supports the implementation of a cap-and-trade system as part of a climate change bill, there is significant opposition across party lines.  Many Republicans and some Democrats complain that such a program amounts to a new energy tax that will hurt American competitiveness and create job losses. 

“The fact is, the Waxman-Markey bill will raise taxes on every American who drives a car, buys a product manufactured in the United States, or has the audacity to flip on a light switch," said House Republican Leader John Boehner in a statement.  "For proof of cap-and-trade’s folly, look no further than Europe, where the scheme hurt the economy, drove up energy costs, and failed to cut carbon emissions at all."