John Podesta is president and CEO of the Center for American Progress and former chief of staff to President Clinton.
On June 26, the House of Representatives passed comprehensive energy legislation that included, for the first time in U.S. history, a cap on global warming pollution. The bill, called the American Clean Energy and Security Act, would also boost investments in energy efficiency and renewable energy, like wind and solar, to jump-start the transition to a clean energy economy. New investments in the clean energy technologies of the future would slash global warming pollution and reduce the use of foreign oil while also creating jobs and increasing our economic competitiveness vis-à-vis China and other nations.
The so-called ACES Act would implement a cap-and-trade system to reduce global warming pollution and spur investment in clean energy technologies. Today, corporations can freely dump global warming pollution into the atmosphere while society foots the bill for the ill effects. The act would limit the amount of global warming pollution that corporations could freely release into the air. Congress would set steadily declining emissions limits, and polluters would have to obtain permits for every ton of pollution they produced—in essence, a "dumping permit" for the sky. Corporations that reduce global warming pollution below their allotment could then sell an equivalent value of permits back to the open market. This system thus empowers individuals, entrepreneurs, and businesses to determine where necessary emissions reductions are most efficiently found.
The cap-and-trade concept itself is a product of American ingenuity. The United States pioneered it in the 1990 Clean Air Act to force power plants to reduce sulfur dioxide pollution, which causes acid rain. The program, developed during the first Bush administration, was a complete success—meaning it achieved total compliance in reducing sulfur dioxide pollution—and cost as little as one fifth of the Environmental Protection Agency's original $6 billion forecast. Both the gross domestic product and total electricity generation continued to rise at a steady clip after the program began. And despite claims that the limits on sulfur dioxide pollution would cause electricity bills to rise, rates are lower now (in constant dollars) than in 1990. Finally, the success of our first cap-and-trade program means that, today, we don't have to worry about—or pay for—the negative health effects, damaged infrastructure, and poor crop yields that acid rain would have caused if we'd chosen to do nothing.
We stand at a similar crossroads today, but we've cleaned our environment while driving economic growth many times before. The Congressional Budget Office estimates that the House legislation will cost the average household only $175 annually—the equivalent of a postage stamp a day. It will cost even less when efficiency measures are factored in, which would save families about 7 percent—or $84—annually on their electric bills. The act also includes provisions to protect low-income families and farmers from any potential cost increases.
But the bill is designed to do much more than reduce global warming pollution at an affordable cost. It will also catalyze clean energy innovation on a remarkable scale. Allowing the market to set a price on pollution will shift investments toward clean technologies and improved efficiency, while unleashing Americans' unique talent for problem-solving and technological ingenuity. The United States will join Europe and China—already bounding ahead—to capitalize on the most significant economic opportunity since the United States dominated the information technology revolution in the 1990s.
To make sure the United States can lead the world during the coming era of clean energy, the act creates a Clean Energy Deployment Administration—simply put, a "Green Bank." This program would provide clean energy projects with steady, low-cost credit to accelerate the development and commercialization of new technologies. It would use well-understood financial tools to work hand in hand with the private sector to boost lending and investment in a diverse range of clean energy projects that would otherwise have difficulty accessing steady, affordable commercial financing. And it would allow the United States to catch up to countries like China, which is already investing more than 3 percent of its total GDP in green programs, compared with America's current investment of less than one half of 1 percent.