Middle-class Americans’ standard of living is threatened by human-caused climate change, which will result in more disease, heat-related death, extreme weather, and economic disruption if left unchecked. To address the threat, the federal government must shift public investment away from an unsustainable economy and environment that have not worked for middle-class families to ones that will be based on sustainable, equitable growth and good jobs. The Clean Energy Jobs and American Power Act can help accomplish this by reducing the economy’s reliance on dirty fuels while for the first time making polluters pay the true cost of their emissions. The Act establishes the Pollution Reduction and Investment program to reduce emissions of greenhouse gases such as carbon dioxide. The program is a market-based cap-and-trade system that sets an upper limit on nationwide emissions and then issues allowances, which are rights to emit a particular amount of greenhouse pollutants. The allowances can be bought and sold: polluters that do not use all of their allowances can sell them to emitters who want to emit more than their own allowances permit. This creates a financial incentive to reduce emissions.

The cap-and-trade program imposes a declining cap on greenhouse gas (GHG) emissions on facilities responsible for approximately three quarters of U.S. emissions, including approximately 7,500 refineries, power plants, and other polluters. Beginning in 2012, emissions would be capped at 3 percent below 2005 levels increasing to 20 percent below 2005 levels in 2020 and 83 percent below 2005 levels in 2050. The legislation uses the allowances and proceeds from their sale to moderate the potential negative effects of the emissions cap on workers and emitters and to encourage energy efficiency. An oversight body would regulate the GHG emissions allowance market in which allowances could be bought, sold, traded, and borrowed. A national GHG registry would track and inventory GHG emissions. In certain cases, the legislation allows polluters to release additional emissions using domestic and international offsets, which represent a reduction in emissions achieved through unrelated pollution-reduction projects. The Act contains measures to mitigate sharp increases in the cost of allowances.

The Clean Energy Jobs and American Power Act uses the allowances and proceeds from their sale to moderate the potential negative effects of the emissions cap on workers and emitters and to encourage energy efficiency. The bill also creates energy-saving standards for buildings and appliances; provides incentives for the production of nuclear power and so-called clean coal; and includes provisions to reduce deforestation.

The American Clean Energy Leadership Act is a companion bill that creates a renewable electricity standard. The American Clean Energy and Security Act is the House companion to these two pieces of legislation.