Waxman: Focus on the Cap

The EPA today took a major step in declaring greenhouse gas pollution a danger to the public, increasing the urgency to regulate CO2.

Environmental Protection Agency Administrator Lisa Jackson is officially confirming today that greenhouse gas pollution endangers the health and welfare of the American public, finally obeying the mandate set down by the U.S. Supreme Court on April 2, 2007. Following a review from the White House and agencies across the administration, Jackson is announcing this morning that she has signed the Clean Air Act endangerment finding for six greenhouse gases. By the time the decision is finalized after two months of public comment, it will have been nearly two years since the EPA was blocked by the Bush White House from issuing such a finding.

The implications of this ruling loom large over proposed climate and energy legislation under consideration in the Congress. I agree with Barbara Boxer that this finding will provide a serious boost to those efforts, because now the EPA is obligated under the Clean Air Act to regulate carbon emissions.

The EPA's endangerment finding will open the door for the Obama administration to regulate greenhouse-gas emissions under the 1970 Clean Air Act.

Although the president would prefer not to tackle this issue through his administration's regulatory power, the threat of EPA regulation could be used as a hammer to persuade moderate senators of both parties to get behind cap-and-trade legislation.

"What it says to the senators on the fence is that it's not really a question of whether regulation is happening. It's a question of how it will happen," a senior aide to Boxer told ABC News.

Call it "blackmail," as the corporate lobbyists do in this piece, or call it what it is, a requirement under the law mandated by the Supreme Court. So the obstructionists can block legislation in Congress and watch the EPA enact strict mandates, or they can have a say in the regulation. Their choice.

Respective of Congressional legislation, I recently had a great opportunity to sit down as part of a lobbying delegation with Henry Waxman, my Congressman and the chair of the House Energy and Commerce Committee, to discuss the Waxman-Markey clean energy legislation introduced on March 31. There are actually two bills, one in Energy & Commerce and one in the tax-writing Ways and Means Committee, both following similar tracks and expected to be out of committee by Memorial Day. And it can be argued that this provides a wealth of options for Congress to consider in pricing carbon, and thus the multiplicity of bills makes sense. But clearly, by virtue of its expansiveness and impact on a host of energy/climate issues, not just carbon pricing and hard caps but energy efficiency and renewable energy standards, the Waxman-Markey bill will be the template for energy legislation in this Congress.

Waxman brings an interesting perspective to the debate. He believes that the best way to get energy legislation through the Congress is to just start moving it, with tight deadlines, and dare the Republicans to stop it. He frames the issue as one of national security, to reduce our dependence on foreign sources of energy; of environmental imperative, to mitigate the catastrophic impacts of climate change; and of economic necessity, to move the country into a renovated, clean energy economy.

There's a lot of talk about how the cap and trade portion of the bill will be handled. The bill is somewhat murky on these points. The potential exists in the bill for offsets that would give a substantial portion of the carbon permits away for free. And the bill has no mention of how the revenues gained from what permits are auctioned off would be used (Waxman said that he would like to see some money directed to ratepayers, and some money directed to R&D for innovation in the energy space, and he would like to see the money targeted rather than applied as a broad tax cut). But Waxman de-emphasizes these concerns in favor of looking at the cap part of cap and trade. If the cap is firm and based on what the scientists have set as a goal to mitigate the effects of climate change, he reasons, the rest will fall into place. He used the example of acid rain, which used a similar cap and trade system in the 1980s. Industry feared that they'd have to spend billions for compliance, but lawmakers focused on the cap, and the problem was resolved for 1/10th of the expected cost. The goal, then, must be the cap. Waxman believed that offsets would have to be verifiable, and in exchange for the offsets there would have to be more reductions (a 1-to-1 1/2 ratio rather than 1-to-1). But if that's the cost to make the bill more politically attractive, Waxman is content to focus on the cap. Waxman also responded to a question I had about Europe's cap and trade system, which was marred by offsets and giveaways, by saying that the committee worked with Europe's regulators in drawing up the legislation, and that they will not fall into the same traps.

Waxman also played up the economic possibilities of the legislation, that only the innovation unleashed by having to get under the cap will be sufficient to actually create valuable goods for America and "get us out of the recession." Dozens of new industries can be developed and tremendous potential realized through innovation and technological advancements.

The other problematic element of the bill, for the progressive citizen lobbyists in the room with me, was the inclusion of clean coal technology in the bill, something that has been accepted by the White House and the Department of Energy as part of the solution. The typical response to this is that India and China will keep using coal even if the Western world stops, and we'd better come up with a way to capture and store the carbon produced or else our efforts will come up lacking. Waxman said that "we have to figure out if we can keep coal in our future." Obviously, the cap will eventually be too stringent for coal to remain a going concern in the United States without capture and storage technology advancing. And hopefully, the cap can force that, and develop new industries and new exports in the process. I don't know that I totally agree with that, but it's the party line on this, anyway. And besides, renewable energy has its own trade-offs.

Overall, I am far more optimistic about the prospects of climate and energy legislation coming through the Congress than I was before walking into that meeting. We still need to work hard to make the bill stronger, but the combination of the EPA ruling and the deliberate pace of the legislation moving through the House could provide the necessary momentum. We have to get this done, and hopefully we can create that sense of urgency. Also, we need to use the leverage of the EPA ruling to ensure this bill doesn't get weakened as it goes through the legislative sausage-making.