As I previously mentioned, the House of Representatives began debate on the Waxman-Markey energy bill Wedneday. The House Energy and Commerce Committee is hearing 67 witnesses this week, and will begin subcommittee work next week. Even if the bill manages to pass the House, the Senate is not scheduled to start work on it until this fall.

The bill has several provisions including mandates for renewable electricity and carbon capture in burning coal (for an explanation of this process, and the gloomy results of trials so far in the Netherlands, click here. The most important part of the bill, however, is carbon cap and trade. If implemented, the bill would limit the amount of carbon dioxide the U.S. produces and eventually reduce it significantly. A market for carbon allowances would allow companies to buy more than their fair share of emissions from other companies that use less than they need. The bill is currently silent on how many allowances the government will give away for free versus selling at auction, and what the government plans to do with the billions raised by selling allowances.

Carbon cap and trade is, of course, controversial. House Minority Leader John Boehner described the effort to paint carbon dioxide as the source of climate change as “comical”, reasoning that cow flatulence contributes carbon dioxide to the environment. At yesterday’s hearings, Representative Fred Upton (R-MI) called the legislation a proposal that would “kick working families when they’re down.” Even the Obama administration has apparently stopped short of endorsing the bill as written. The EPA, however, has released an analysis of the bill. The EPA concludes that carbon prices will trade in the $13-$17 per ton range by 2015, and up to $22 a ton by 2020.

It’s still highly unlikely that Congress will take any action on the Waxman-Markey energy bill until after the 2010 midterm elections next year. The battle in the Senate will be significantly more difficult for Democrats to win unless (as I predict will happen) they add more seats in their column next year. For at least 24-36 months, I would predict that the IT industry, including data centers, will not have to worry much about carbon caps or buying allowances.