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.

John McCain, Global Warming, and the "D+R/2=Right" Myth

So yesterday John McCain delivered a speech unveiling his plan to fight global warming. Unfortunately, it's not so much a plan to fight it as a plan to, well, acknowledge it. There are a lot of great discussions of the actual plan, but my favorite is from Dave Roberts at Grist:

It comes as no surprise that the focus is on a cap-and-trade program, something McCain has supported for five years. In fact, there is virtually no mention of any emission reduction policies outside of cap-and-trade -- no efficiency or fuel economy mandates, no electrical utility decoupling, no mention of public transit. McCain obviously retains his conservative allergy to regulation and public spending. There is some discussion of funding research and incentivizing market deployment of new technology, but the details are tantalizingly vague. Perhaps they'll be fleshed out in the energy speech.

One area where McCain deserves big kudos: He devotes a good chunk of his speech and his policy plan to adaptation, something that's been too far under the radar in climate discussions. Substantial impacts from climate change are inevitable, and it's high time the federal gov't got serious about coordinating and funding local efforts to prepare.

As for the cap-and-trade program itself, McCain's basic targets and mechanisms are roughly in line with what others have proposed. He would aim for 1990 emission levels by 2020, and 60 percent below 1990 levels by 2050. That long-term target falls short of the "80 percent by 2050" recommended by the IPCC and beloved of climate activists, but the short-term target is roughly in line with what's offered in the Lieberman-Warner bill and Barack Obama's plan [...]

So what's the overall verdict? I'll explore the plan more in coming days, but my initial reaction is that it's better than expected, somewhat short of Lieberman-Warner, and far short of what Obama has proposed. It should comfort us that a McCain presidency will mean real action on climate change, not the shell game Bush is engaged in. But it's hard to see how McCain can claim the allegiance of voters who rank climate change as a top concern. He's still behind the curve.

Saying that McCain's plan is an improvement upon George Bush's efforts at combating climate change is damning with faint praise. Conservative talkers are going nuts about this today because McCain "sounds like a liberal Democrat," but the actual problem is that he only sounds like it. McCain's trying to thread the needle here, saying that one side denies the existence of global warming and the other side wants massive new taxes and regulation. The gambit here is to lie about what Democratic plans would do.

But what “extreme thinks high taxes and crippling regulation is the solution”? Those calling for a carbon tax instead of a cap-and-trade system to set a price on emissions are primarily conservative economists like Glenn Hubbard and Gregory Mankiw, the chairmen of Bush’s Council of Economic Advisers from 2001 to 2005. Is McCain calling Wall Street conservatives “extreme”?

And what “crippling regulation”? The only thing McCain describes as a “regulation” is an energy efficiency standard for building codes. The global investment firm McKinsey & Company has found that mandatory energy efficiency standards, far from being crippling, overcome present market failures and policy distortions and can drive massive return on investment. Is McCain calling McKinsey “extreme”?

McCain’s just trying to have it both ways — his campaign is trying to promote the complex system of government regulation necessary to establish a fair and national carbon market and still pay homage to a right-wing ideology that considers any governmental solutions anathema.

I don't think this balancing act will work. As we can see, the right is going apeshit just from McCain daring to let the world "global warming" pass his lips. People committed to fighting global warming understand that his program doesn't go far enough. His cap-and-trade program includes weaker targets than Obama's. It includes all kinds of offsets that can be bought and sold by polluters to extend beyond those caps. And it doesn't sell carbon credits to polluters but instead gives them away, which is a completely insufficient proposal.

Third, McCain's cap-and-trade plan initially gives away emission permits instead of auctioning them. I mentioned a few days ago that that a 100% auction of emission permits is what distinguishes a real plan from a fake one, and later that day Mike O'Hare begged to differ: "The difference between a giveaway and an auction of the same total emissions is not a difference in environmental outcome or the economic cost of getting to it; it's only a matter of whose ox is gored." That's true, but it's worth unpacking that gored ox a bit.

Environmentally speaking, it doesn't matter whether you auction permits or give them away. What matters is the cap. If you cap total emissions at 90% of current levels (and enforce it), then that's what you'll get no matter which kind of system you use. And since both systems allow permits to be traded between companies, they each provide similar levels of economic efficiency. Our ox lurks elsewhere.

Here's the difference. If you auction permits, then power plants and other GHG emitters have to buy permits to operate, and this raises their cost of doing business. This will get passed along to consumers and energy prices will go up. The revenue from the permits will go to the government, just like a tax.

If you give away permits instead, common sense suggests that since there are no additional costs to emitters, they won't raise their prices. But it turns out this isn't true. Thanks to the opportunity cost of the permits, they'll raise their prices just as much as if they'd bought the permit in an auction. (This isn't just a theory, either. That's how the European cap-and-trade system worked initially, and prices really did go up. If you want the gritty detail on why it works this way, read this paper.) So: power plants end up raising their prices, but since the emission permits are free their costs don't change. Result: a huge windfall profit for GHG emitters. Some get more and some get less, but the overall net result is lots of extra profit, with the biggest polluters getting the biggest profit.

The proceeds for such an auction can go toward investment in renewable energy or mass transit, or directly to the public in the form of a rebate. Plus, polluters would be encouraged to innovate and produce their goods without using as much carbon. Any cap-and-trade program which gives away the right to pollute doesn't work.

There's also the little added knowledge that McCain is historically pretty bad on the environment - his lifetime rating from the League of Conservation Voters is just 24% - and his priorities are very erratic:

But an examination of McCain's voting record shows an inconsistent approach to the environment: He champions some "green" causes while casting sometimes contradictory votes on others.

The senator from Arizona has been resolute in his quest to impose a federal limit on greenhouse gas emissions, even when it means challenging his own party. But he has also cast votes against tightening fuel-efficiency standards and resisted requiring public utilities to offer a specific amount of electricity from renewable sources. He has worked to protect public lands in his home state, winning a 2001 award from the National Parks Conservation Association for helping give the National Park Service some say over air tours around the Grand Canyon, work that prompts former interior secretary and Arizona governor Bruce Babbitt to call him "a great friend of the canyon." But he has also pushed to set aside Endangered Species Act protections when they conflict with other priorities, such as the construction of a University of Arizona observatory on Mount Graham.

Obama attacked McCain on his record on the environment just yesterday.

Look, we know that something needs to be done almost immediately. World CO2 levels are at their highest point in 650,000 years. Bill McKibben and top climate scientists have designated this as a battle to "preserve a planet similar to that on which civilization developed". While politicians are primarily concerned with dropping gas prices to save their political necks, the technology exists to significantly lower greenhouse gas emissions right now. We can power 20 percent of the US energy grid with wind power within 20 years. There are concrete steps available to us. It's not enough to try and triangulate between solving the problem and denying it exists and automatically see that at the proper strategy. McCain is acknowledging man-made global warming, but patting ourselves on the back saying how right we were while the world goes underwater is not an attractive option. We can't wait for so-called "bipartisan" solutions.

SD-23: Vote For Me Or I'll Have This Polar Bear Shot

I don't think that's the message Fran Pavley wanted to convey in this mailer (PDF), but that's pretty much what I'm getting out of it. The front page is a polar bear standing on a lonely block of ice after much of it has fallen away into the sea, looking forlorn. Accompanying the picture is the text "Save a Polar Bear, Vote Carbon Free For Fran Pavley." The inside of the mailer explains why; Pavley is an environmental leader, and fighting global warming will help save the polar bears, the reasoning goes.

Now, I've already explained once why this carbon-free voting idea is kind of a joke, particularly when it's being conveyed to the public by using multiple full-color mailers. I know from my mailbox that Pavley has been far more aggressive in direct mail than her opponent Lloyd Levine. The new information in this mailer is that Pavley's campaign has "purchased carbon offsets to cover every vote-by-mail ballot in the 23rd Senate district," but I'm not getting what the metric is. Does that cover the ballots? The constant stream of mailers? The carbon used by the post office to deliver the ballots? Does it cover the fact that carbon offsets are kind of an environmental shell game that assuages liberal guilt without taking the meaningful steps needed to reduce our carbon output?

Kind of unclear from this mailer.