It was close, but on June 25 the U.S. House of Representatives passed a landmark bill that promises to fundamentally change the way we produce and consume energy. In a nutshell, the American Clean Energy and Security Act would put a price on greenhouse gas emissions by forcing major emitters to purchase permits through a national cap-and-trade system. Over time, the cap would be ratcheted down making it prohibitively expensive for major emitters to continue operating well above the cap. For these reasons, the cap-and-trade system is expected to catalyze a shift from carbon intensive fossil fuels to clean and renewable energy supplies. More specifically, the bill mandates that America must cut 2005 level emissions by 17 percent by 2020 and by 83 percent by 2050.
Because energy touches every aspect of our lives, everything could change. While the visionaries offer many different scenarios, it is safe to say that lighting, the design of our homes, cars, agriculture, the way urban centers are designed, building materials, and the way material goods are manufactured are just a few of the things that could be radically different.
As our energy economy undertakes this mammoth transition, each of us will be impacted. According to a recent congressional study, the bill would result in an estimated $175 annual increase for every American household. This is a modest price to pay since most experts agree that the cost of doing nothing will exact a much greater economic, geopolitical, and environmental toll now and every year into the future.
Fortunately, Colgate is better off than most as we prepare for the new energy economy. Over 70 percent of our heating needs are met through locally produced renewable wood-chips and 84 percent of our electricity comes from non-carbon emitting and relatively cheap hydroelectricity. Unfortunately, Colgate still burns over 400,000 gallons fuel oil annually to meet the remaining 30 percent of our heating needs. This results in the release of over 5,000 metric tons of greenhouse gases into the atmosphere. We also rely heavily on ground and air travel to meet our business and educational missions. The cost of gasoline, diesel, and jet fuel are all expected to increase under a new cap-and-trade system. Therefore, it is in our best interest to consider mitigation strategies that reduce our consumption of these fuels.
Next up the bill must make it through the Senate where it is sure to be altered and possibly even killed. However, no matter what happens in the short-term one reality seems increasingly likely: soon enough greenhouse gas emissions will be regulated at the federal level. It would be wise for Colgate to aggressively pursue a carbon neutral energy future with this scenario in mind.