American Clean Energy and Security Act of 2009: Title I: Clean Energy

On June 26, 2009 the House of Representatives passed the American Clean Energy and Security Act (ACES) of 2009, a combined energy and climate bill representing our first real chance for a national carbon reduction plan in the United States. The bill combines standards and incentives to promote clean energy and energy efficiency technologies with a firm cap on greenhouse gas emissions. The Alliance will continue to work to obtain Senate passage of strong climate legislation.

• Title I: Clean Energy
• Title II: Energy Efficiency
• Title III: Global Warming Pollution Reduction Program
• Title IV: Transitioning to a Clean Energy Economy
• Title V: Agricultural and Forestry Related Offsets

Title I: Clean Energy

Subtitle A: Combined Efficiency and Renewable Standard

Sec. 101: Combined Efficiency and Renewable Electricity Standard

This efficiency and renewable electricity standard would require that a percentage of electricity production from retail electric suppliers that annually sell more than 4,000,000 MWh be met by renewable sources or offset by efficiency programs. The percentage starts at 6% in 2012, increasing by 3.5% every other year to reach 20% in 2020, and continuing at 20% until 2039. At least three quarters of that percentage must be from renewable sources, unless the governor of a state (or the DC mayor) requests that up to two-fifths (40%) of the requirement for production in that state be achieved by efficiency programs. Savings achieved due to building codes or mandatory appliance and equipment efficiency standards could not be counted for this requirement.

For each year that targets are specified, each electric supplier must submit the appropriate number of 'Federal renewable electricity credits' and 'demonstrated total annual electricity savings' to FERC by March 31st of the following year. Credits may be used in the year of their issue or any of the three subsequent years.

Electricity production is defined as the total amount of electricity supplied to end-users during a given year. Electricity generated by nuclear power plants placed in service after the enactment of this act is not included in calculating the base amount of electricity sold by an electric utility, nor is a portion of a fossil fuel power plant's production that is equal to the percentage of its greenhouse gas emissions that is captured and sequestered. Certain hydroelectric production would also be exempt.

Renewable electricity generators earn one credit per megawatt-hour of production generated after December 31, 2011. Where a retail electric supplier pays for the production of renewable power as part of a state program, they would be granted the appropriate credits. For power contracted to a supplier before the enactment, the purchasing retail electric supplier would be awarded the renewable electricity credits unless otherwise assigned in the contract. Electricity produced by distributed renewable generation would be assigned credits worth three times the electrical output. Holders of federal renewable electricity credits, including non-utility entities, may trade them to electric suppliers that cannot reach a specified target through their own implemented measures.

FERC will establish regulations for the measurement of savings to satisfy the efficiency target, taking into account adjustments to base year levels, deemed savings, and establishing that the retail electric supplier claiming the savings played a 'significant role in achieving the savings,' among other factors. Third-party verification of savings would be required. Retail electric suppliers may contract with other electric suppliers, states, or 'third-party efficiency providers' for savings counted towards this requirement – so long as those savings are achieved within the same state as is served by the purchasing electric supplier. Review of energy savings may be delegated to the states and states may petition to be allowed to use their own measurement and verification procedures, of equal or greater accuracy to federal procedures, subject to FERC approval and review.

A retail electric provider may make a payment of $25 in lieu of each credit (or megawatt hour) of renewable energy or energy savings, adjusted for inflation. This payment goes to the state, or states, where the supplier is located to support renewable energy or energy efficiency programs. If FERC determines that a state is not using the funds for efficiency or renewable energy, it may redirect the funds to the US Treasury.

Failure to comply with the standard incurs a penalty equal to double the in-lieu payment for the missing credits.

Section 103: Federal Renewable Energy Purchases

This section would establish a renewable electricity standard (RES) for the federal government. The RES would begin in 2012, when it would require that 6 percent of the federal government’s electricity consumption be generated by renewable resources. It would rise gradually to a 20 percent standard in 2020 and remain at that level through 2049. The RES would not include an energy efficiency component.

Subtitle C: Clean Transportation

Sec. 121: Electric Vehicle Infrastructure

Requires each electric utility to develop a plan to support the use of plug-in electric drive vehicles, and suggests several topics that such a plan might cover, including the deployment of charging stations, battery exchange, and the level of plug-in electric drive vehicle market penetration that would trigger deployment of infrastructure for their charging. The section directs utilities (and, in the case of regulated utilities, their regulatory authorities) to consider whether and to what extent to allow cost recovery for the creation and implementation of these plans. Utilities and regulators are also directed to establish protocols and standards integrating plug-in electric drive vehicles into smart grid systems, and to consider whether time-of-use pricing should be employed to enable the use of plug-in electric drive vehicles to contribute to meeting peak-load and ancillary service power needs.

Sec. 122: Large-Scale Vehicle Electrification Program

This section establishes a program in DOE to provide assistance to states, tribes and local governments for use in furthering large-scale vehicle electrification. Funds given to states and other entities under this program may be used to provide rebates to consumers for the purchase of plug-in electric drive vehicles, and for infrastructure projects that support the large-scale deployment of such vehicles. States and other entities may apply for these funds jointly with electric utilities, automobile manufacturers, technology providers, car-sharing companies, and other entities. DOE is directed to serve as a clearinghouse of information regarding the cost, performance, and other technical data regarding the deployment and integration of plug-in electric drive vehicles. Such sums as may be necessary are authorized to be appropriated for this program.

Sec. 123: Plug-In Electric Drive Vehicle Manufacturing

This section directs the DOE to establish a program to provide financial assistance to automobile manufacturers to facilitate the manufacturing of plug-in electric drive vehicles that are built in the United States. The financial assistance may fund the retooling or reconstruction of manufacturing facilities and, if appropriate, the purchase of vehicle batteries. In order for a manufacturer to qualify for assistance, it must not be able to reasonably finance the reconstruction or retooling of facilities, or battery purchase, required. In granting assistance, DOE is directed to consider which projects are most likely to be successful and the level of need for the facility in the local market for which the proposal is made. Such sums as may be necessary are authorized to be appropriated for this program.

Sec. 124: Investment in Clean Vehicles

This section establishes funding levels for the programs described in Sections 122 and 123. For a given year between 2012 and 2017, this section directs the EPA to make 0.375% of emissions allowances of a given year available to programs established under Section 122 and 0.375% to Section 123. It directs EPA to give preference for funding under Section 122 to applications that are jointly sponsored by one or more automobile manufacturers. Should applications for Sections 122 and 123 fall short in any given year, EPA is to direct excess allowances to automobile manufacturers and component suppliers to pay up to 30 percent of the cost of facility retooling and the integration of qualifying advanced vehicles and components, giving funding preference to the projects that would save the maximum number of gallons per vehicle.

Sec. 125: Advanced Technology Vehicle Manufacturing Incentive Loans

This section increases to $50 billion from $25 billion the funding for the Advanced Technology Vehicle Manufacturing Incentive Loans Program, which provides loans to automobile manufacturers and parts suppliers to retool their plants for production of advanced technology vehicles.

Subtitle D: State Energy and Environment Development Accounts

Sec. 131: State Energy and Environment Development Accounts

The legislation directs the DOE to establish State Energy and Environment Development (SEED) Accounts to manage emissions allowances dedicated to energy efficiency and renewable energy. SEED Accounts are to be managed by State Energy Offices or related state agencies. Deposits into the SEED Accounts are limited to emissions allowances received for renewable energy and energy efficiency purposes and proceeds generated from allowance trading. Allowances dedicated to specific purposes, noted in Section 132 below, must be expended accordingly, while allowances from trading may be used for low-interest loans, grants, or other forms of support; administrative costs must constitute less than 5 percent of total expenditures. All participating states must prepare an annual plan detailing the intended use of SEED Account funds.

Sec . 132: Support of State Renewable Energy and Energy Efficiency Programs

Emissions allowances for energy efficiency and renewable energy are to be distributed to states according to the following formula: 1/3 allocated equally among states, 1/3 allocated ratably per capita of each state, and 1/3 allocated ratably by the energy consumption of each state, as determined by the most recent EIA data. Pursuant to section 732(g), 9.5 percent of national allowances will be distributed to state SEED Accounts, with a declining allocation over time. The uses of SEED funds are as follows:

• At least 20 percent must be used for the following energy efficiency programs:
  • Implementation and enforcement of buildings codes;
  • Implementation of energy efficient manufactured homes program;
  • Implementation of building energy performance labeling program
  • Low-income community energy efficiency programs (not less than 1% of total allowances)
  • Implementation of the Retrofit for Energy and Environmental Performance program (not less than 5 percent of allowances)
• At least 20 percent must be used for grants, loans and other financial instruments for the manufacture and deployment of renewable energy systems and electricity storage systems.
• At least 12.5 percent must to be used exclusively by states to local governments for the energy efficiency and renewable energy measures described above.
• The remaining 47.5 percent must be used exclusively for
  • Energy efficiency and renewable energy deployment  measures described above
  • Energy efficiency programs for end-use consumer of electricity, natural gas, home heating oil, or propane, including programs administered entities other than the state.
  • Smart Grid for public buildings, including integration of renewable energy resources and distributed generation, demand response and demand-side management.
  • Transportation programs that reduce greenhouse gas emissions (not more than 10% of allowances)

Additionally, the amendment calls for 0.5% of total SEED allowances (prior to the above allotment) to be distributed to Indian tribes for renewable energy and energy efficiency measures.

Subtitle E: Smart Grid Advancement

Sec. 142: Assessment of Smart Grid Cost Effectiveness in Products

The DOE and EPA shall assess the potential for cost-effective integration of smart grid capabilities in all products that are reviewed for Energy Star labeling. The potential energy, greenhouse gas, and cost savings would be studied to identify the cost-effectiveness of the addition of smart grid capability in the product within the context of increasing grid stability and reducing peak demand.

Sec. 143: Inclusions of Smart Grid Capability on Appliance Energy Guide Labels

This section would expand the energy guide labeling to indicate smart grid-capability, including potential dollar savings when used in a smart grid-capable utility system.

Sec. 144: Smart Grid Peak Demand Reduction Goals

A program to set out peak reduction goals for load-serving entities of greater than 250MW capacity is proposed, to be developed by those entities and the states. It does not set out specific reductions or mitigation that would be expected, merely that such entities would develop their own targets in conjunction with FERC. FERC, DOE, EPA, and NERC would collaborate to develop measurement and verification rules. Peak load reduction plans could be managed in a number of ways, including efficiency programs, demand response, distributed generation, and stored energy. These plans would have to be tested to ensure effectiveness. Expenses incurred by the states would be supported by emissions allowances allocated to state SEED funds.

Sec. 145: Reauthorization of Energy Efficiency Public Information Program to Include Smart Grid Information

The DOE's Energy Efficiency Public Information program, originally created by EPAct 2005, but for which funds were never appropriated, would be expanded to include a public awareness campaign for smart grid and the program would be extended to 2020. Advertising and other uses of media communications would be used to inform the public about smart grid and efficiency. Such campaigns would be conducted in collaboration with the private sector, state governments, and local governments.

Sec. 146: Inclusion of Smart-Grid Features in Appliance Rebate Program

Smart grid-capable appliances would be eligible to receive rebates under this federal appliance rebate program, which was created in EPAct 2005 and is operated through state offices. It would also clarify that states are only required to match the administrative costs of the program rather than the entire costs. The program would fund states to issue rebates to consumers purchasing energy efficient or smart grid-capable appliances.

Subtitle F: Transmission Planning

Sec. 151: Transmission Planning

This section would further the integration of renewable and other zero-carbon energy sources in regional grid planning and ensures that all demand- and supply-side options will be taken into account. The demand- and supply-side technologies that would be supported would include energy efficiency, distributed generation, smart grid, demand response, storage, voltage regulation, advanced conductor technologies, underground transmission, and conventional transmission capacity and corridors. FERC would develop principles for planning accordingly. FERC shall coordinate with regional planning entities to harmonize regional electric grid planning and to resolve any conflict or competition among them.

Sec. 153: Support for Qualified Advanced Electric Transmission Manufacturing Plants, Qualified High Efficiency Transmission Property, and Qualified Advanced Electric Transmission Property

This section makes the construction or upgrading of certain advanced, highly-efficient transmission equipment eligible for certain federal loan guarantee and grant programs. Eligible technologies must be expected to become commercially viable within ten years and meet specified technology and capacity levels.

Subtitle H: Energy and Efficiency Centers and Research

Sec. 171: Energy Innovation Hubs

This section directs the DOE to establish eight Energy Innovation Hubs, as outlined in the FY10 DOE budget request. The Hubs will be directed by scientists and housed in public universities, institutions and non-governmental organizations. Each Hub is to support the commercial application of clean energy technology through research and development in a specific focus area, which may include: solar electricity, fuels from solar energy, batteries and energy storage, electricity grid systems and device, energy efficient building systems and design, advanced materials, modeling and simulation and other clean energy technology areas as designated by the DOE. The DOE FY10 budget request prescribed one center to focus on energy efficiency by “integrating smart materials, designs, and systems to tune building usage to better conserve energy.” Under section 782(h) of ACES, Energy Innovation Hubs would  receive 0.45% of emission allowances, to be distributed on a competitive basis among the eight hubs.

Sec. 172: Advanced Energy Research

This section would direct the Advanced Research Projects Agency – Energy (ARPA-E) to distribute funding on a competitive basis to appropriate research and development entities. The entities could use the funding for early stage energy research development of manufacturing processes for technologies; and demonstration of commercial application of technologies, among other activities. 1.5 percent of emissions allowances would be allocated to ARPA-E for carrying out this section.

Sec. 173: Building Assessment Centers

This section directs the DOE to fund higher education institutions to create Building Assessment Centers which would conduct research and development in various areas of building energy efficiency and to provide training in efficiency-related building sciences. Renewable energy would also be included. These centers could also count as Centers for Energy and Environmental Knowledge and Outreach in section 174.

Sec. 174: Centers for Energy and Environmental Knowledge and Outreach

The DOE is directed to establish ten 'Centers for Energy and Environmental Knowledge and Outreach' within higher education institutions. Each center must include at least one of the following: An industrial research assessment center, a clean energy application center, or a building assessment center. The centers would be regionally distributed around the country and would include in their research approaches to specifically regional issues and the development of regionally-specific technical resources. The centers would coordinate with government entities and regional government and private bodies to improve efficiency, implement clean energy solutions, reduce greenhouse gas emissions, and provide workforce training in these areas. The Federal government would cover 50% of the cost of workforce training internships.

The Small Business Administration would be directed to expedite loans to small businesses to implement recommendations from these centers. A Clean Energy Application Center, as established in the Energy Policy and Conservation Act, or an Industrial Research and Assessment Center as established under the Energy Independence and Security Act, could serve as a center under this section. Funding is increased for Clean Energy Application Centers from $10 million to $30 million from fiscal years 2010 onwards.

Subtitle I: Nuclear and Advanced Technologies

Sec.181: Revisions to Loan Guarantee Program Authority

This section revises Section 1201 of the Energy Policy Act of 2005 by defining a conditional commitment – which would require a project's sponsor(s) to submit a final term sheet, complete with the acquisition of necessary permits and licenses, to be submitted to and agreed upon by DOE. The term sheet will be binding final loan guarantee agreement. Contractors and subcontractors of projects that receive loans must be paid the prevailing wage for their region.

Sec. 182: Purpose

The purpose of sections 183-189 is defined here as to promote the domestic development and deployment of clean energy technologies – including residential, commercial, and industrial energy efficiency technologies through the establishment of the financing mechanisms directed by the Clean Energy Deployment Administration.

Sec. 183: Definitions

Clean energy technology relates to technology that will contribute to the stabilization of atmospheric greenhouse as concentrations through reduction, avoidance, or sequestration of energy-related emissions. Only technologies for which the EPA determines there is insufficient commercial lending available to allow for widespread deployment are eligible for the loan program established in this amendment.

Sec. 184: Clean Energy Investment Fund

A revolving "Clean Energy Investment Fund" is to be established by the Treasury, with monthly transfers coming from the general fund. Such sums as are necessary will be appropriated to the Fund, with no limitations as to how the available amount is spent, (except that administrative expenses must not exceed 1.5%). The Treasury is directed to issue $7.5 billion in Green Bonds.

Sec. 185: Energy Technology Deployment Goals

EPA shall develop recommended near-, medium-, and long-term goals with numerical performance targets for the deployment of clean energy technologies. These goals are to promote technologies that relate to such sectors as electricity generation, grid transmission, vehicles, fuels, manufacturing, and zero net energy buildings. The goals shall be elastic based on technological advancement.

Sec. 186: Clean Energy Deployment Administration

A new Clean Energy Deployment Administration (CEDA) will be established as an independent corporation that is wholly owned by the United States. The administration will oversee the portfolio of the Clean Energy Investment Fund to ensure that they are consistent with its stated purpose. CEDA shall also have an Energy Technology Advisory Council, comprised of representatives of the academic, research, and commercial financing communities, to develop a methodology to evaluate the cost-effectiveness of clean energy technology projects and to advise CEDA as to the best approaches for meeting deployment goals.

Sec. 187: Direct Support

CEDA may issue direct loans, letters of credit, loan guarantees, and other debt instruments that it considers would result in the benefit or acceleration of clean energy technologies deployment. Loans, letters of credit, and loan guarantees can constitute only up to 80 percent of the estimated project cost. CEDA shall consider establishing an initial rate of 10 percent loan loss for portfolio investments. Borrowers must submit applications to CEDA and project contractors and subcontractors must meet prevailing wage requirements.

Sec. 188: Indirect Support

This section would authorize CEDA to provide indirect support for clean energy financing using a number of indirect credit methods.

Sec. 189: Federal Credit Authority

Federal loan interest rates shall generally equal those of commercial rates. Breakthrough technologies will be charged a minimum fee to contribute to CEDA's long-term viability.

Sec. 190: General Provisions

CEDA is exempt from any state law in conducting business, and shall be considered a corporation in judicial procedure. All entitites receiving financing through CEDA are required to report quarterly on their use of CEDA’s financing support and its progress toward fulfilling the purpose for which support was granted. CEDA must make this information, and background information on its support for each entity, available to the public in a searchable database on the Internet.

Sec. 191: Conforming Amendments

This section would grant CEDA tax exempt status.

Subtitle J: Miscellaneous

Sec. 196: Clean Technology Business Competition Grant Program

Authorizes the Secretary of Energy to provide grants to organizations to conduct business competitions that provide incentives, traning, and mentorship to entrepreneurs and early state start-up companies throughout the United States to meet economic, environmental, and energy security goals in areas to include energy efficiency, renewable energy, air quality, water quality, and conservation, transportation, smart grid, green building, and waste management. Any 501(c)(3) or sponsored entity of a 501(c)(3) organization that is operated as a non-profit would be eligible for these grants. This grant program is authorized at $20 million.

Sec. 198: Office of Consumer Advocacy

Establishes an Office of Consumer Advocacy and Consumer Advocacy Advisory committee within the Federal Energy Regulatory Commission to represent on behalf of energy customers on matters concerning rates or service of public utilities and natural gas companies under FERC's jurisdiction. This office must represent consumers at hearings and judicial proceedings, monitor and review customer complaints, investigate services, develop means to ensure that interests of energy customers are represented, collect data concerning rates, and prepare and issue reports and recommendations.