July 30, 2007
Obama’s Climate Suicide Threat
This morning brought more bad news for supporters of cap and trade climate legislation. It came in the form of an appearance by House Energy and Commerce Chairman Rep. Henry Waxman (D-Santa Monica) on PBS' Tavis Smiley. When asked how cap and trade would create technology innovation, Waxman said:
When we raise the price of energy, which will happen if we reduce the amount of carbon emissions, and industries have to figure out how to live in a carbon-constrained environment, they are going to have to figure it out because it is in their profitable interest to figure it out.
Waxman's call for raising energy prices comes after a month of setbacks for cap and trade proponents. In March, the White House floated the idea of passing cap and trade and health care bills as part of the budget in order to avoid reaching the 60 votes needed to avoid filibuster. Moderate Senate Democrats led by Evan Bayh (D-IN), whose state is over 92 percent dependent on coal electricity, joined Republicans in opposing passing cap and trade as a budget resolution.
Then, on March 31, the day after Waxman and Rep. Edward Markey (D-MA) introduced their climate legislation, the Senate passed a resolution 89-8 saying that the Senate will not pass climate legislation that raises energy prices -- a direct contradiction of what Waxman says his bill will do. The following day, the Senate passed a resolution 98-0 that effectively defined cap and trade as a tax. Unless the Senate can manage to do a cap and trade that does something different than what its sponsor say it will do, historians will likely look back on these resolutions as the moment that cap and trade was buried in the Senate.
If there is a strategy coming from the White House, it's not obvious what it is. Waxman-Markey left enough details unanswered in their legislation that the sponsors could still potentially create a huge, pork-filled bill to buy off moderate Dems and Republicans. But there is no obvious strategy to deal with the problem created in the Senate, where the chamber has said it will not allow cap and trade to raise energy prices. Given the recent turn of events, climate czar Carol Browner's statement at MIT yesterday that she believes cap and trade will pass Congress by December is either extremely bold or delusional.
Stung by the Senate moderates who publicly sided with Republicans against passing cap and trade budget resolution, the White House seems either paralyzed about what to do or focused on its many higher priorities: Afghanistan, Pakistan, the banking crisis, and the auto crisis. Last Friday Times' John Broder noted that the Obama administration would use the possibility of EPA regulating carbon dioxide as a club to move Republicans and moderate Dems to pass legislation.
But Roger Pielke makes the point that such a strategy is certain to backfire on Democrats.
Republicans must be drooling over the possibility that EPA will take extensive regulatory action on climate change. Why? Because the resulting political fallout associated with any actual or perceived downsides (e.g., like higher energy prices) will fall entirely on Democrats and the Obama Administration. Far from being an incentive for Congress to act on its own, the looming possibility that EPA will take regulatory action is a strong incentive for Republicans to stalemate Congressional action and a nightmare scenario for Democrats.
In other words, the White House "threat" to Republicans and moderate Democrats to regulate carbon is the equivalent of threatening your enemy with suicide. ("Don't make me raise energy prices! You'll really be in trouble with your voters when I raise their energy prices!")
The White House and Congressional Democrats are now in a lose-lose situation. They can either pass cap and trade legislation which does not raise energy prices -- which would thus not, according to Waxman, result in any innovation -- or it could continue to try to raise energy prices, handing Republican consultants a powerful political advertisement for restoring bi-partisan balance to Congress as a check on a too liberal White House.
Signs of disarray and division among greens and Democrats are everywhere. Friends of the Earth released a scathing critique of cap and trade just before Waxman introduced climate legislation, warning of "carbon derivatives" markets that could be as dangerous to the economy as credit default swaps. The New York Times' green columnist Thomas Friedman wrote a column last week saying that environmental groups were lousy spokespersons for climate legislation, and then in a Newsweek interview blamed Al Gore for why increasing numbers of Americans are telling Gallup that they think global warming is being exaggerated. And a substantial portion of grassroots environmentalists including author Bill McKibben and Middlebury's Jon Isham, endorsed Rep. Van Hollen's legislation instead of Waxman-Markey.
Gore has been notably silent during the cap and trade debate, with his "We Campaign" reduced to asking members to send letters to the editor which explain that cap and trade won't raise energy prices as much as Republicans say it will. This is part of the larger blame-the-media strategy pioneered by Joe Romm of Climate Progress, who attributes the increase in voters telling Gallup that they believe that news of global warming is being exaggerated to the media, and not to Gore, Friedman, himself, and other greens who routinely use apocalyptic language when describing climate impacts.
Environmental groups are quiet, too. They are not running advertisements, releasing reports, or sending much in the way of email to their members. Into the vacuum has rushed Rep. Waxman and Thomas Friedman, who keep insisting to large television and other audiences that the key to developing clean energy is raising fossil fuel prices -- a claim that has been contradicted by large evaluations of the evidence by the International Energy Agency, McKinsey, Stern and others, who all point to the need for direct government investment in technology.
Another legislative loss on cap and trade would be very hard on green groups. It would come under a Democratic president and Democratic Congress, and would thus force greens to ask themselves a hard question about cap and trade: if it can't pass under those legislative conditions, when can it pass? Even more devastating for greens will be if Republicans can use cap and trade to take back one or both houses of Congress in 2010. If that occurs, greens will be viewed increasingly skeptically on the Hill. And it could undermine the ideological consensus on the Hill among Democrats that cap and trade is the only or the best way to deal with climate change. Moderates who refuse to raise electricity and gasoline prices on their constituents will find common cause with liberal members who favor greater government spending on energy technology, infrastructure and education.
None of this is to say that Congress can't or won't pass cap and trade. It may do so, either next year or after mid-term elections in 2010. But the legislation will not set a price on carbon that will be high enough to result in technology innovation. Given that, the critical question will be whether the legislation can raise enough money through auctioning pollution allowances to fund the technology innovation policies needed to make clean energy cheap and widely available.