Climate Bill Analysis, Part 13: EPA Analysis Projects Waxman-Markey Would Not Require Emissions Redu

June 16, 2009 | Jesse Jenkins,

[Updated 6/18/09 with graphics that more clearly reflect banking of offsets under EPA's projected offsets scenario.]

The Waxman-Markey climate bill (HR 2454) will not require emissions reductions below projected business as usual (BAU) growth in emissions for at least a decade ahead, according to an EPA analysis [pdf]. EPA projects that firms covered under the bill's cap and trade program will opt to purchase over one billion tons of offsets each year from 2012-2020 rather than reduce their own emissions.

EPA predicts that firms would use 110 - 120 million metric tons (mmt) of available domestic offsets each year between 2012 and 2020 [see graphic, p. 6] and the full 1 billion mmt of international offsets permitted under the cap and trade program [p. 5].

If offsets are utilized at the levels projected by EPA, cumulative emissions in the sectors of the U.S. economy covered by the Waxman-Markey cap and trade program will be legally permitted to exceed EPA's business as usual emissions rates from 2012-2020 by nearly five billion mmt. If emissions in covered sectors were actually required to fall to the 17% below 2005 levels by 2020 targeted by the legislation, cumulative emissions would be just 49.5 billion mmt, 10.1 billion mmt lower than the levels legally permitted under EPA's projections for offsets utilization.

EPA_Cumulative_Covered_Sectors.jpg

However, the EPA analysis was of the early "discussion draft" version of the Waxman-Markey bill and was issued on April 20, 2009. The version of Waxman-Markey passed by the Energy and Commerce Committee (HR 2454) included several changes, including an increase in the permitted quantity of international offsets limit to 1.5 billion metric tons if supplies of domestic offsets fall below the billion tons of domestic offsets also permitted by the bill (see "Climate Bill Analysis, Part III: Waxman-Markey eliminates key offset provision, increasing domestic offset use, lowering allowance prices"). Total offsets would still be limited to 2 billion tons per year. This provision would very likely be triggered -- both EPA and CBO estimate that domestic offset supplies will fall well below 1 billion tons per year.

EPA has not yet published an updated analysis of the version of Waxman-Markey now heading towards debate on the House floor. However, a brief EPA update [pdf] examines some of the ways the revisions from the discussion draft effect EPA's analysis of the bill. The memo notes that revisions to the bill would lead to an 11% increase in the use of domestic offsets and an unspecified increase in the use of international emissions offsets under the version of the Waxman-Markey bill passed by the Energy and Commerce Committee, relative to their analysis of the discussion draft version of the legislation [p. 2]. The graphics and analysis presented here include the 11% increase in domestic offset usage but does since EPA does not specify the increase in international offset usage, we continue to assume 1 billion tons of international offsets each year. This is therefore a conservative representation of the potential outcomes of Waxman-Markey under EPA's revised assumptions.

EPA_Annual_Covered_Sectors_2009_2030.jpg


You can download Breakthrough's calculations based on the EPA analysis here [.xlsx]


See also: "CBO Projects Waxman-Markey Would Cut Cumulative Emissions by Just 2% Through 2020"


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See here for the Breakthrough Institute's full collection of ACES analyses (also collected here):


Comments

A quick comment - why all the harping on
emission reductions in capped US sectors?
Do you or do you not agree that global greenhouse
gas emissions would decrease by the amount mandated by the bill (ie by an amount equal to 20% of US emissions by 2020, etc.)? And isn't that what
ultimately matters?

By Prasad Kasibhatla on 2009 07 21


Well, Romm has said a lot of things about Breakthrough that are not true. This "politics of personal destruction" is all to typical of his writing.



If you have specific questions for us, I'm happy to answer.



As far as Joe's accusations that we are deliberately lying about President Obama's position, please simply refer to WhiteHouse.gov where the Administration's position is unequivocally stated:



"Investing in the Next Generation of Energy Technologies. Invest $150 billion over ten years in energy research and development to transition to a clean energy economy."



(We cited this in our post clearly)



Or refer to Secretary of Energy Steven Chu's testimony before the Senate Energy and Natural Resource Committee in March where he states:



"The president's proposed budget allocates $150 billion for research and development of new green technologies. ... That is putting back the [carbon auction] money into developing better solutions."



Or look at Obama's Budget outline wherein $15 billion per year of cap and trade revenue is specifically dedicated (starting in 2012), in addition to other line-items for DOE's existing budget, to clean energy R&D (as per Chu's testimony).



Whatever Obama's position during the campaign, which was always a vague commitment to "$150 billion investment in clean energy technology" generally (hence my concerned post here), the Administration's current position has been stated in clear terms which we cite in our analysis.



As to Joe's assertion that Breakthrough has somehow flip-flopped and now supports only R&D, that assertion is blatantly groundless. We have always supported, and continue to support, dramatic scale-up in investment in both R&D and direct deployment incentives/investments. We support at least $15 billion for R&D and $30 billion for deployment. Overall, we believe a $30 billion investment in R&D and deployment is a bare minimum for effective climate and clean energy policy, and like the Apollo Alliance, call for at least $50 billion per year in RD&D ideally ($50-80 billion being the ideal range).



We simply happen to be capable of analyzing the R&D component of Waxman-Markey separately from the overall investment component, and we present our analysis of both provisions in our posts and in our presentation. For those curious about our policy recommendations, they are clearly stated here: http://www.thebreakthrough.org/ideas.shtml



As for Romm's assertion that emissions fall 8% according to CBO, he provides no supportive analysis or evidence so neither I nor anyone else has any way to evaluate his claim. That claim is inconsistent with the findings our our analysis (which you can examine here.)

By Jesse Jenkins on 2009 06 18


Joe Romm bans comments he doesn't like, so any response would have to be here. I would say this .5% reduction is misleading since it doesn't include purchased offsets. However, the numbers are technically accurate as the 5000+ in offsets is about equal to the estimated reduction.

By MikeN on 2009 06 18


Hey all, this is penetrating stuff. One suggestion, could you do up a chart that combines the 2 insights? That is, take the over-supply of emissions credits in the pre-2030 period and apply them to total emissions/business as usual? (I guess you'd have to make some assumption on period, unless the permits lapse, but you could arbitrarily use same period as now-2030). That chart would have more impact than first one alone - which, graphically tends to cut against your argument, as the subliminal communication is of cuts - and, I think, have more impact then the bar chart because it tells story better. Best, Ken

By Ken Ward on 2009 06 18


I still think this bill is worth criticizing and I'm not convinced it is better than nothing. But Joe Romm over Climate Progress is lambasting you guys and it does look like he's caught you guys in some contradictions. And now I read that your funding is suspect.

I liked your book and recommend it to colleagues but I'm starting to wonder what motivates you guys.

You need to respond (constructively).

By Mark on 2009 06 18


Joe Romm at ClimateProgress is calling you a liar.
He says the CBO projects an 8% cut in emissions.

By MikeN on 2009 06 18


I don't understand why this bill isn't criticized more. The argument that this "is at least a start" and may be our "last chance" just don't hold water. It seems to me that if enacted, this bill will construct a facade of success that will make much of the public think we've done something. It will lead to complacence and very little actual improvement.

Scary.

By Mark on 2009 06 17