By Teryn Norris & Jesse Jenkins
The landmark Waxman-Markey 2009 American Clean Energy and Security Act was introduced in the House yesterday (May 15, download PDF here), and the Breakthrough Institute has performed a preliminary analysis of how it would invest over $1 trillion in cap and trade revenue between 2012-2025. Our key findings for this period include (all numbers are approximate -- download spreadsheet here):
- Polluting industries: 57.3% of allowances would be freely distributed to polluting industries, including 36.7% for the electricity sector, 12.3% for energy-intensive industries, 6.5% for local natural gas distribution companies, and 1.8% for oil refiners
- Direct consumer protection: 16.5% of allowances would be used for direct consumer protection , including 15% for low and moderate-income families and 1.5% to benefit users of home heating oil and propane
- Energy efficiency and clean energy technology: 12.2% of allowances would be used to fund energy efficiency and clean energy technology development and deployment
- Adaptation and technology transfer: 4.7% of allowances would be used for domestic and global climate adaptation and technology transfer
- Workforce development: 0.6% of allowances would be used to fund worker assistance and job training
- Deficit reduction and other: 8.6% of allowances would be used to fund deficit reduction and other public purposes
(click image to magnify)
How much money would these allocations translate into? That depends on the average price for each pollution allowance -- the EPA's initial price estimate was $13-17 per allowance, so we will assume an average price of $15 per allowance. The allocation would look like this:
Investment in clean energy technology development and deployment is broken out here (Note: the amount for clean energy technology within the "Renewable Energy and Efficiency" program is not specified):
Our analysis finds that Waxman-Markey would spend about $9 billion annually on a range of things that could generously be classified as technology innovation. By contrast, the legislation would give $32 billion to utilities, $9 billion to heavy industries, and $11 billion to low-income consumers annually.
Of course, these funding levels assume a price of $15 per allowance. Some analysts, including Joseph Romm of Climate Progress, expect the bill to maintain a low price of $5-10 per allowance for the first several years. If the price was $10 from 2012-2025, the average annual investment in all areas generously classified as energy innovation would be $6 billion. This table compares clean energy investments for $10 per ton vs. $15 per ton:
This $6 to $9 billion is far less than what Obama promised ($15 billion) and far less than the $30 billion that three dozen energy scientists and experts, including several Nobel laureates, called for in a sign-on letter during the fall of 2007. The large allowance giveaway to polluters also stands in contrast to Obama's previous calls for a 100% auction, which was included in his final budget proposal.