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Finally! We’ve got Obama in the White House, a solid Democratic majority in Congress, and the Senate is now taking up climate legislation…. Time for celebrating, right? Not so fast....
To be fair, the Clean Energy Jobs and American Power Act, S. 1733, sponsored by Senators Kerry and Boxer, represents an improvement over the Waxman-Markey bill that passed the House earlier this year. The improvement isn’t enough, though—Kerry-Boxer’s reliance on a market-based cap-and-trade system, weak emissions-reduction targets, and subsidies for dirty energy significantly weaken its ability to stave off a climate crisis.
In order to reduce atmospheric CO2 concentrations to the 350 ppm experts say is necessary to avoid a climate “tipping point,” the Kerry-Boxer bill needs to be overhauled in six major areas.
Eliminate Cap-and-Trade and Substitute Direct Carbon Pricing
We can learn from the European Union’s experience with cap-and-trade in dealing with global warming. In 2005 the EU implemented a cap-and-trade market that resulted in windfall profits for electric utilities, higher energy costs to industrial and residential customers, and questionable reductions in emissions. Although Kerry-Boxer gives away fewer emission allowances to industry than does its counterpart, Waxman-Markey, (77.78% vs. 84%), it still amounts to a transfer of wealth from taxpayers to the nuclear and fossil fuel utilities. The bill would put Wall Street in charge of an unregulated secondary energy market which could easily be gamed—look at what Wall Street did with the subprime mortgage market!
Instead, PDA is supporting direct carbon pricing, which would take Wall Street out of the picture by eliminating carbon trading. One example of direct carbon pricing is a carbon tax. A revenue-neutral carbon tax would raise taxes on carbon and cut taxes on workers. The tax would be levied on upstream sources associated with carbon production—oil and natural gas wells, coal mines, etc.—with the purpose of encouraging consumers to transition to lower-carbon energy sources; the tax would also provide an incentive for the energy industry to develop and produce new sustainable forms of energy.
A substantial portion of the revenue from a carbon tax could be “recycled” to consumers through a direct payment or payroll tax deduction to offset rising energy costs. Proceeds from the carbon tax could also be invested in renewable energy, creating jobs and business opportunities in wind and solar power, for example. Revenue-neutral direct carbon pricing would hasten the transition to an affordable clean-energy economy, while shifting the tax burden away from the consumer.
Strengthen Emissions Reduction Targets
Kerry-Boxer’s emission targets sound like a pretty good deal—a 20% reduction by 2020. The problem is the bill uses 2005 emissions as its benchmark. Conservative estimates by the IPCC back in 2007 put emissions targets at 25-40% below 1990 levels by 2020, and that was just to return atmospheric concentrations to 450 ppm. PDA is joining the likes of Dr. James Hansen, IPCC Chair Rajendra Pachauri, and other prominent climate scientists, in calling for emissions reduction targets that will reduce CO2 levels to the 350 ppm level necessary to maintain a habitable planet.
Eliminate Subsidies for Dirty and/or Dangerous Energy Sources
In their New York Times op-ed on the Kerry-Boxer bill, Senators Kerry and Graham laud the bill’s subsidies for nuclear power, expanded domestic oil drilling, and carbon capture and sequestration technology. If that weren’t enough to make the energy industry happy, the Senators speak about the need to “jettison cumbersome regulations that have stalled the construction of nuclear power plants in favor of a streamlined permit system.” These are proposals that should raise red flags for all of us.
There are good reasons no new nuclear power plants have been built in the U.S. in the past 13 years. Nuclear reactors are expensive, expose the public to health and safety risks, and are vulnerable to terrorist attacks. As it stands, the Nuclear Regulatory Commission does not enforce the regulations currently on the books and Wall Street considers nuclear power plants too risky to finance, with up to an estimated 1.6 trillion dollars in financial risk exposure, collectively. Why should American taxpayers pick up the bill?
The bill’s subsidies for domestic oil drilling and carbon capture and sequestration will stifle our transition to clean energy sources like solar and wind power and perpetuate America’s dependence on carbon-laden fuels. Expanded drilling would put vulnerable ecosystems at risk (Does anyone remember Santa Barbara?), while carbon capture and sequestration (CCS) still faces many hurdles. As it now stands, CCS technology would greatly increase the cost of building and operating coal-fired plants, while substantially reducing their power output. CO2 leakage and groundwater contamination also pose great challenges.
Wouldn’t our money be better spent transitioning to a clean energy economy which has the potential to create new American jobs, get green businesses on their feet, and help ensure a sustainable future for our children?
Protect EPA’s Authority to Regulate Greenhouse Gas Emissions Under the Clean Air Act
In a hard-fought landmark case, several states sued the federal government to give the Environmental Protection Agency (EPA) jurisdiction over greenhouse gas emissions. The case made it all the way to the U.S. Supreme Court, which in a 5-4 decision granted the EPA this regulatory authority under the Clean Air Act.
After all that hard work, Senator Kerry has signaled that he is willing to strip EPA of its hard-won regulatory authority, if necessary, to get big greenhouse gas emitters to the bargaining table.
EPA’s authority to regulate greenhouse gas emissions must be protected in the Kerry-Boxer bill. Why give up a sure thing?
Eliminate or Significantly Reduce Offsets and Strengthen Offset Quality
Since 2002, The Kyoto Protocol’s Clean Development Mechanism (CDM) has relied heavily on offsets, allowing certain industrialized countries to pay for emission reduction projects in developing countries, where costs would be less. Theoretically, these projects would be used to offset emissions in the industrialized nations.
The offset program has been a colossal failure in the battle against global warming. Kyoto’s offset program has resulted in fewer emission reductions, delayed sustainable development, and undermined the transition to low-carbon energy in developing countries. Our own Government Accountability Office (GAO) found that many of the offset projects that were subsidized in developing countries would have happened anyway—all of this despite a rigorous review process.
Eliminate Free Allowances to Industry and Recycle Revenue Directly to Households
Low income and middle-income families get the short shrift in the current draft of Kerry-Boxer, while polluting industries come out smelling like a rose. In essence, you and I are expected to subsidize the huge, unregulated carbon trading market for polluting industries, while our energy costs rise. What it would really amount to is a redistribution of wealth in the wrong direction—another taxpayer bailout of big business.
Kerry-Boxer would give away almost 78% of the pollution allowances to industry, while auctioning off only 15% of the allowances to help customers with increased energy costs.. Not only does this give industry the keys to the carbon-trading kingdom, but it does little to encourage investment in new technologies that could effectively lower greenhouse gas emissions.
To help neutralize the impact of rising energy costs, PDA is recommending the elimination of free allowances and the recycling of revenue to low and middle-income families . The revenue could be derived from direct carbon pricing, either a carbon tax, or cap-and-dividend, as in Senator Cantwell’s proposed bill, and could be recycled to customers in the form of payroll tax deductions, increased Social Security benefits, etc. Proceeds from the direct carbon pricing could also be invested in a clean energy economy, to create new jobs and industries.
We have a historic opportunity and a moral imperative to solve this most critical of all challenges—halting global warming. We can’t rely on business as usual by rewarding the very industries that got us into this mess. Overhauling the Kerry-Boxer bill in these six major areas will help us ensure a sustainable future for our children, while opening up new opportunities for jobs and businesses in a clean energy future. A win-win for all!
Kathy Callan is a member of PDA’s Stop Global Warming/Environmental Issues Organizing Team. Learn more about the team and how to join the effort to halt catastrophic climate change, here.
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