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Buried Code
The unexamined federal regulation in a House energy bill

Sunday, June 7, 2009

THE RUNNING joke in Washington is that nobody has read the 900-plus-page energy bill sponsored by Reps. Henry A. Waxman (D-Calif.) and Edward J. Markey (D-Mass.), which the House will consider in coming weeks. What you hear from its backers is that its cap-and-trade provisions would create a market-based program to reduce greenhouse gas emissions -- which should mean that a simple, systemwide incentive encourages polluters to make the easiest reductions in greenhouse gases first, keeping the costs of fighting global warming to a minimum. In fact, the bill also contains regulations on everything from light bulb standards to the specs on hot tubs, and it will reshape America's economy in dozens of ways that many don't realize.

Here is just one: The bill would give the federal government power over local building codes. It requires that by 2012 codes must require that new buildings be 30 percent more efficient than they would have been under current regulations. By 2016, that figure rises to 50 percent, with increases scheduled for years after that. With those targets in mind, the bill expects organizations that develop model codes for states and localities to fill in the details, creating a national code. If they don't, the bill commands the Energy Department to draft a national code itself.

States, meanwhile, would have to adopt the national code or one that achieves the same efficiency targets. Those that refuse will see their codes overwritten automatically, and they will be docked federal funds and carbon "allowances" -- valuable securities created elsewhere in the bill that give the holder the right to pollute and can be sold. The Energy Department also could enforce its code itself. Among other things, the policy would demonstrate the new leverage of allocation of allowances as a sort of carbon currency -- leverage this bill would be giving to Congress to direct state behavior.

According to the bill's advocates, America's buildings account for perhaps 40 percent of U.S. greenhouse emissions, and technology is available for builders to meet the targets in ways that are economical for building owners. Much of the problem is old buildings that waste huge amounts of energy, which wouldn't necessarily be touched by the new code. But it would be good if builders met these efficiency goals with new construction.

Is the best way to achieve that, though, to federalize what has long been a matter of local concern? And if the point of cap-and-trade is to change market incentives, why does Congress, and not the market, need to dictate these changes? Those are a few questions that emerge when you begin to read through the 900 pages.

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