September 22, 2008
Nancy Pelosi: "You Cap so you can Invest"
Yesterday, in an article in House Speaker Nancy Pelosi's hometown paper, the San lFrancisco Chronicle, arguably the second-most-powerful person in the country made a significant break from carbon pricing orthodoxy in remarks she made on future cap-and-trade legislation.
"I believe we have to [pass a cap-and-trade bill] because we see that as a source of revenue," she said, noting that proposed cap-and-trade bills would raise billions of dollars by forcing major emitters to buy credits to release greenhouse gases. "Cap-and-trade is there for a reason. You cap and you trade so you can pay for some of these investments in energy independence and renewables."
This description of the reasons for enacting a cap-and-trade scheme is a remarkable--and laudable--shift in climate legislation discourse. Speaker Pelosi's remarks show an increased understanding of the importance of technology investment in reducing carbon emissions and securing energy independence.
The language Pelosi used is significant: "Cap-and-trade is there for a reason," and that reason is "so you can pay for some of these investments in energy independence and renewable." This statement puts investment at the front and center of energy policy, as the primary reason for enacting a cap-and-trade program.
Traditionally, the main objective of cap-and-trade proposals has been characterized as establishing a "hard" cap on emissions in order to effectively monitor and reduce the amount of carbon emitted into the atmosphere. Enacting this kind of legislation that would provide a "certainty" of emissions reductions has been an almost messianic imperative for greens. However, the challenges faced by the Lieberman-Warner Climate Security Act last summer and recent developments in Europe--where a 40 dollar price on carbon dioxide has not been able to stop plans for new coal plants--have called into question the effectiveness of any cap-and-trade proposal likely to pass Congress at establishing a truly "hard" cap on emissions. In addition, after last summer's Senate debate over the Lieberman-Warner bill and subsequent political battle over off shore drilling, Democrats have learned the political danger of enacting legislation that raises energy prices--a danger that's all the more apparent during harsh economic times like the current recession.
However, Pelosi's remarks seem to point to a new frame for energy politics which is focused on driving technology innovation and deploying low-carbon technologies. Perhaps this recognition will allow liberal Democrats to put aside the illusory "hard" cap for carbon, opening up a new way forward that embraces cap-and-trade with cost containment provisions that can keep energy bills for consumers low (and avoid political backlash) while generating significant revenue to fund critical clean energy investments to make clean energy cheap and abundant.