A Climate Bill Written by and for Polluters

Tue, 09/15/2009 – 05:37 — maggie_zhou

A Climate Bill Written by and for Polluters

In June, the House of Representatives passed the American Clean Energy & Security Act (ACESA), a.k.a. Waxman-Markey.  This bill started out as an extremely weak and compromised measure, and was further watered down during its journey through the House.  Much of the bill was written directly by corporate lobbyists.  The final result was a thorough polluter protection bill that, in the words of the nation’s top climate scientist, Dr. James Hansen, will “do more harm to the environment than doing nothing at all.”

Many climate activists are captive of the notion that this bill – any climate bill, is a start, a first step, and can always be improved later.  There are two fallacies with that: 1. Global warming is proceding with such rapid pace, we do not have time for trial and error, or for slow initial action. 2. This legislation actually locks us onto a damaging path, that could make global warming even worse.

First, the time window.  Many scientists are now warning that we have a very short time window (if any) left to take decisive actions to bring down greenhouse gas levels, before climate amplification mechanisms proceed too far along and take the matter out of our control.  Dr. James Hansen warned there may only be a few years window for taking critical actions, and a Jan 2009 McKinsey report concluded that, “Delays in action of even 10 years would mean missing the 2 degrees Celsius target.”  And, their benchmark target of peaking at 480 ppm, long term stabilization at 400 ppm, actually only corresponds to about a 70% chance of not exceeding 2 degrees Celsius[13], so it’s hardly a target that provides any degree of certainly to remain below 2 degrees rise above pre-industrial, even if achieved.  And, that’s without considering the IPCC conclusion that no more than 1 degree rise above pre-industrial levels is all coral reefs could possibly take – and the ecosystems that depend on them[14].

Second, ACESA locks in many damaging provisions that will sabatage any climate mitigation effect its proponents hope/claim would be achieved.

At the heart of ACESA is a carbon pollution trading scheme.  Proponents of cap-and-trade, largely based in the USCAP, a partnership between a handful of corporate environmental NGOs and representatives of the most polluting industries including Shell, Duke Energy, BP, DuPont and the like, claim that it will be “most effective”, and will “spur innovation”.  However –

  • Previous cap-and-trade experience all proved less effective, even disastrous[1,2], compared to straightforward regulation or pollution tax, both internationally and domestically, and in fact inhibited, rather than stimulated, innovation.
  • Such a scheme as applied in ACESA is extremely complex and non-transparent, requiring oversight on tens of thousands of entities, takes years to implement, is highly fraud- and influence- prone, and creates a massive carbon trading market prone to the same manipulations that crashed the financial market, and even assembles a powerful new alignment of economic interests and lobbying forces among the financial, agribusiness (when offsets are allowed as in ACESA), utilities and fossil fuel industries to further weaken climate legislation[3-5].
  • Meanwhile, because trading allows reduced demands from one place to lead to reduced market price for carbon permits, leading to increased emission some place else, cap and trade does not privide additive benefit to other policies such as efficiency standards or renewable energy standards, or to the benefits provided by technology innovation or personal/business initiatives that leads to reduced emissions.  The market mechanism could simply cancel out such reductions with increased emissions somewhere else.[15,8]
  • Most of the permits are initially given to polluters for free, leading to windfall profits.  Peter Orszag, director of the Office of Management and Budget, testified before a Congressional Hearing saying that free allowances “would represent the largest corporate welfare program that has ever been enacted in the history of the United States.”  This also creates a perverse incentive to increase, not decrease pollution, because polluting more in the near term enables a higher baseline for obtaining free allowances when the program starts in 2012[7].
  • On top of all that, astronomical quantities of “offset” credits can be cheaply purchased in place of real emission reductions to meet the already extremely weak cap (see below), quantities that is over 7x greater than what the entire Kyoto Protocol’s mechanism approves each year, the latter being estimated to not meet the “verifiable, additional, and permanent” criteria at least half the time[9], in part due to the high-throughput of the approval process.

Much better frameworks exist, e.g., rule based, direct regulations that mandate efficiency or performance, and feed-in-tariffs and/or renewable energy standards, all of which can work additively to a revenue-neutral carbon tax-dividend (or tax-swap by reducing income/payroll tax), charging a simple, uniform carbon tax (per ton of CO2) based on carbon content, and returning the tax revenue to consumers in equal dividends or reduced other taxes, in a way that is equitable and uncoupled to carbon consumption.  Lower income families will come out ahead under such a system, bringing home more than enough cash to compensate for the higher prices of goods and services as a result of the carbon tax passed on to them.  Such a system is simple, robust, transparent, cost effective, equitable and just, provides a reliable price signal (that further strengthens with time) for carbon reduction, while avoiding the inherent risks of a highly volatile carbon market.

Compared to cap and trade, carbon tax is considered the superior option by most economists, and by the non-partisan Congressional Budget Office.  The recent speedy implementation of such a mechanism in British Columbia, followed by the successful re-election of the implementer (and his party), demonstrates its political viability.  France also recently unveiled such a system, and the entire Scandinavia has been applying stiff carbon taxes for years (currently $187/ton CO2 in Sweden – compare that with around $10/ton starting price for ACESA) while their economies did not suffer.

Among numerous other problems of ACESA are (see also my previous blog here):

  1. It sets extremely weak emission targets. The scientifically sound target for atmospheric greenhouse gas concentrations is no more than 350 parts-per-million (ppm).  ACESA guarantees that we will fail to meet that goal.  In fact, ACESA does not even require that we target 450 ppm, – an outdated target which many industrialized countries have been considering, but which itself only offers less than 50% odds of averting catastrophic global warming.
  2. It pre-empts existing EPA power to regulate carbon pollution under the Clean Air Act.
  3.  It grandfathers in dirty coal power plants and permits numerous new ones for years to come without emission restrictions.  ACESA invests tens of billions of dollars in the illusive and unproven Carbon Capture & Storage technology, even though the buried CO2 could eventually escape, threatening nearby communities and devastating the climate.  ACESA will allow coal mining and coal waste to continue to destroy the environment.
  4.  It subsidizes “renewable energy” generation from biomass and trash incineration – techniques that release more CO2 and other pollutants per MWatt hour than a coal plant[10-12]. By not counting biomass incineration emissions, ACESA threatens to decimate our forests.

The Senate is expected to come up with its version of the bill in September, which by all accounts will only be further weakened.  A strong outcry is building in the environmental, social/justice, and peace communities, opposing the counterproductive ACESA, and demanding real and swift climate action.  In August, over 300 organizations signed a strong letter to US Senators demanding a return to below 350 ppm, and opposing many of the fatal flaws discussed above.

Climate SOS, a network of 26 grassroots organizations (as of the time of this writing) in the environmental, social/justice, and peace communities have come together to oppose ACESA, declaring “Worse than nothing is not good enough”!  Massachusetts Coalition for Healthy Communities (the parent organization of Secure Green Future) is one of the founding members of this growing network.  We can not afford to allow this bill to lock us onto a deadly path that will prevent real climate action for years, and lead to climate destruction. Help us spread the word and make our voices stronger.  Please urge other organizations to join Climate SOS.  Visit your senators and representative’s offices to demand this bill be scrapped and completely re-written.  Sign on to the mailing list of both SecureGreenFuture.org and climateSOS.org, and be prepared to take action!

[1] Emissions trading: A mixed record, with plenty of failures, published in Grist,  by Gar Lipow

[2] http://www.ejmatters.org/docs/Cap_Trade_Trail_of_Failures_1pg.pdf

[3] Carbon Tax Center

[4] Breakthrough Institute Climate Bill Analysis Part 19: ACES Could Align Economic Interests to Weaken Climate Legislation

[5] Friends of the Earth report: Subprime Carbon?

[7] AMERICAN CLEAN ENERGY AND SECURITY ACT OF 2009 — (House of Representatives – June 26, 2009), see for example: SEC. 782. ALLOCATION OF EMISSION ALLOWANCES

[8] Kahn and Franceschi, Ecological Economics 58 (2006) 778– 787 http://home.wlu.edu/~kahnj/ECON%20381/Kahn-Beyond%20Kyoto.pdf

[9] See page 4 of the analysis by International Rivers and Rainforest Action Network, and also the references given in Payal Parekh’s response to a comment at the bottom of this page

[10] http://massenvironmentalenergy.org/docs/biomass%20factsheet%20from%20MEEA.pdf

[11] http://www.maforests.org/Biomess.pdf

[12] http://www.stopspewingcarbon.com/biomass-vs-coal.html

[13] Meinshausen, M. (2006): ‘What does a 2°C target mean for greenhouse gas concentrations? A brief analysis based on multi-gas emission pathways and several climate sensitivity uncertainty estimates’, pp.253 – 280 in Avoiding dangerous climate change, H.J. Schellnhuber et al. (eds.), Cambridge: Cambridge University Press.

[14] IPCC AR4 WGII. Climate Change 2007: Climate Change Impacts, Adaptation and Vulnerability. WGII Contribution to the IPCC AR4 (Cambridge University Press, 2007), pp 12, 16 (Figure SPM.2.), 321, and 853.

[15] www.carbontax.org/blogarchives/2009/08/07/does-cap-and-trade-punish-virtue/