Senate Says No to Pollution Pricing Paradigm

April 1, 2009 | Michael Shellenberger,

Republicans deftly succeeded in calling greens and Democrats on their bluff that cap and trade won't cost anything, winning yesterday an 89 to 8 vote on a resolution stating that any climate legislation must not raise gasoline or electricity prices. The Senate vote is timed to coincide with yesterday's release of a climate bill "discussion draft" in the House (more on that bill from the Breakthrough Blog coming soon).

The implications of this vote are that just eight out of 100 senators believe, and have the courage of their convictions, to openly state that fossil fuel prices should rise to deal with climate change. That is to say, there are only eight senators who agree with Thomas Friedman, EDF, NRDC, David Leonhardt, AEI, and all the others who believe that the most important, and perhaps only thing we should do to combat climate change and drive clean energy innovation is to set a price on carbon.

(I exclude Al Gore from that list given his recent embrace of public investment in clean energy)

That's a pretty stunning number -- the clearest indication yet that a strategy requiring a high price on carbon to succeed is doomed to political failure.

I guess this vote is perfectly fine if you believe that fossil fuels are simply no less expensive than clean energy. But for those who recognize the real price gap between emerging clean energy technologies and their well-entrenched dirty energy competitors and believe that a "price signal" is the key to radical transformation of the global energy economy, this seems to be yet another sign that meaningful action on climate change is not in the cards anytime soon (with an emphasis on "meaningful").

Procedurally speaking, this vote doesn't present any new hurdles for climate policy, beyond the 60 votes already required to clear any climate policy out of the Senate. What this is really all about is preparation for a torrent of television ads and direct mail leaflets that will be unleashed in October 2010 and the run-up to Republicans taking back both houses of Congress against "Democratic excesses." Republicans will use yesterday's vote to campaign against anyone who "breaks their promise" and casts a vote for a cap and trade bill.


Jesse, in fact that's the point I'm trying to make. I for one would like to see the the bloated historic subsidies for the incumbent fossil fuel industries light a little more fire in the public's demand for clean energy. I know that it won't eliminate the concern over potential costs, but we have other options to do that, as you mention. But it wouldn't hurt to add a little outrage into the public demand for clean energy. I heard somewhere that the best defense is a good offense. Seems to me like we need to play a little more offense here.

By Juliana on 2009 04 02

Juliana, you have a point in that one way to advocate clean energy investments is to point to the large historic - and even ongoing - subsidies enjoyed by well-entrenched dirty energy competitors and now embedded in their costs. It's not really about helping people be ok with their rates going up though. There's little you can do, especially during a recession, to make them ok with that, and all polling evidence we've seen shows that the best approach is to limit the up-front impact as much as possible and reinvest their money in something they actually want to see - e.g. green jobs, clean energy technologies and industries, greater energy independence, lower gas prices, etc. - rather than just give them their money back. Canada has tried that model and it doesn't go over well at all. When we talk about the subsidies enjoyed by the fossil fuel industry, it's far more about helping policymakers and pundits get over their market fundamentalist, knee-jerk reaction to "picking winners" in the clean energy sector. In the energy industry, we've always picked winners. And in an industry so fundamental to our economic and national security, with clean energy so clearly in demand, why NOT do what we need to to ensure a clean energy economy?

By Jesse Jenkins on 2009 04 02

It's true that removing subsidies from fossil fuels won't change the current situation, but it is one glaring example of the role that government has played continuing their dominance. I brought this up largely to emphasize the fact that billions of dollars of taxpayer money has been spent in those subsidies, which is useful as we look to communicate to the public why energy prices are expected to go up under a cap and reduction plan. There are ways to protect individual consumers from rate-hikes from the fossil energy companies under a cap system. I know this would be hugely unpopular with the industries and the politicians they buy, but there are options for keeping the increase in cost from severely impacting consumers in the near term.

By Juliana on 2009 04 01

Hi Juliana, thanks for weighing in. I'm not sure that if we removed all subsidies for fossil fuels overnight that it would change much. Fossil fuels are, in the words of Marty Hoffert, an affirmative action program for humans. Clean energy just doesn't compare in terms of the energy density, low cost, and widespread availability of coal, oil and gas.

By Michael Shellenberger on 2009 04 01

One thing to remember is that fossil fuels are incumbent energy sources, thanks to Rep. Bob Inglis (R-SC) for the phrase. This means that fossil fuels have a pre-existing advantage over renewable sources because of the billions of dollars in subsidies provided to the fossil fuel industries for over a century. Given this unequal playing field, it's no surprise that the Senate is talking about energy prices going up. We have been spending taxpayer money keeping the cost of fossil energy low for decades. Unfortunately because the money for the subsidies comes from the federal budget and not from consumers wallets each month, the public hasn't seen their billions of dollars going to fossil industries with record breaking profits.

By Juliana on 2009 04 01