About Waxman-Markey American Clean Energy and Security Act.

The bill is a variant of a cap-and-trade plan:

• It requires that a slightly higher target for reductions in emissions of carbon dioxide, methane, and other greenhouse gases than that proposed by President Barack Obama. The bill requires a 17-percent emissions reduction from 2005 levels by 2020; Obama has proposed a 14 percent reduction by 2020. Both plans would reduce United States' emissions by about 80 percent by 2050.
• It includes a renewable electricity standard (almost identical to a renewable portfolio standard, but narrowly tailored to electrical energy) requiring each electricity provider who supplies over 4 million MWh to produce 20 percent of its electricity from renewable sources (such as wind, solar, and geothermal) by 2020. There is a provision whereby 5% of this standard can be met through energy efficiency savings, as well as an additional 3% with certification of the Governor of the state in which the provider operates.

Alternative compliance payments are 2.5 cents per KWh in violation of the standard, adjusted for inflation beginning in 2010.

• It provides for modernization of the electrical grid
• It provides for expanded production of electric vehicles
• It mandates significant increases in energy efficiency in buildings, home appliances, and electricity generation.

Hearings on the draft of the legislation took place the week of April 20.

The bill's cap-and-trade program allocates 85% of allowances to industry for free, auctioning the remainder. 15% will be auctioned, the revenue from which shall be redistributed to low-income households. 30% of the allowances will be allocated directly to local distribution companies (LDCs) who are mandated to use them exclusively for the benefit of customers. 5% will go to merchant coal generators and others with long-term power purchase agreements.