As it becomes clear that chasing an illusory "hard" cap on carbon emissions is a losing proposition, green groups must turn to new strategies to address the urgent threat of climate change.
The U.S. Climate Action Partnership (USCAP), a coalition of corporations including General Electric and Duke Energy in addition to environmental groups such as the Natural Resource Defense Council and Environmental Defense Fund, released a "blueprint" for climate legislation today. Essentially a Cap-and-Trade system, the legislative recommendation reads like a sequel to the Lieberman-Warner Climate Security Act.
The report was released today, and already the fallout has perfectly captured the existential moment that the major green groups are experiencing right now in their increasingly urgent efforts to address climate change on a national and global scale.
The defeat of Lieberman-Warner, the oil drilling debate, and global recession have awakened the greens to the immovable political truth that politicians will never enact, and the public will always reject climate legislation that significantly increases energy prices. This truth undermines the power and attraction to cap and trade that has made it the preferred legislation of climate activists for two decades.
Different green groups have reacted to this news in different ways. NRDC and EDF have cast their lot with USCAP, clinging to a carbon cap, regardless of how shot through with holes (in the form of cost containment and offsets) it is, hoping that it will be more politically feasible with the endorsement of some of America's biggest corporations. It is not that they have sold out, however. These organizations believe that the climate challenge is just too urgent, and some progress, any progress, is needed. Not seeing another way forward beyond the carbon regulation and pricing paradigm they've been so enmeshed with for years, they'll continue ahead with an ineffective cap and trade bill, just to keep moving.
However, other organizations such as 1Sky, Friends of the Earth and Greenpeace U.S.A. have rejected USCAP's proposal, objecting to the free permits and easy loopholes. In fact, the National Wildlife Federation withdrew from USCAP over the new climate legislation blueprint for these same reasons, stating they would independently try to "enact a cap-and-invest bill that measures up to what scientists say is needed and makes bold investments in a clean energy economy."
As these organizations break from their old brethren at EDF and NRDC, many seemed to have been seduced by the simple appeal of cap and dividend, a proposal similar to cap and trade in that it sets a hard cap and price for carbon emissions. However, cap and dividend is designed to be revenue neutral: money raised from this auction of carbon permits is given back to consumers. The logic is that polluters pay for their carbon emissions, but while this cost is passed on to consumers, they are shielded from the increased price of energy by annual per capita dividend checks. These dividends are supposed to increase the public appeal of the cap and dividend program, allowing a hard cap to be established free of the offsets, free allowances and cost off-ramps that render other cap and trade proposals ineffective.
However, supporters of this system have either not considered or chosen to overlook the regional inequities that will inevitably result from cap and dividend. Consumers in the Pacific Northwest won't see energy prices rise much due to the large amounts of hydropower that lights and heats their homes. Yet residents of Oregon or Washington will be receiving the same amount of cash back as residents in Indiana who will be sweating energy bills from utility companies that draw 90% of their energy from coal. These regional disparities can be the death of any climate policy. Just look to the EU, where differences between carbon-intensive, coal-heavy nations like Poland and Italy and low-carbon nations like France have strained the EU's climate plan almost to the breaking point, the only solution being major concessions to Poland, et al. in the form of free carbon allowances and lots of subsidies for carbon capture and storage.
But what keeps drawing green groups to schemes like cap-and-trade and cap-and-dividend is the "certainty" of a binding cap on emissions, which supposedly guarantees that less carbon will be put in the atmosphere as the cap decreases over time. But again, if we look to Europe, we see that there is no real certainty from a "hard" cap. There, a $40 price per ton of CO2 has not stopped plans for the construction of new coal plants, and the liberal use of free allowances and dubious international offsets - just like those called for by USCAP - have undermined the EU's Emissions Trading Scheme.
Ultimately, what all of these green groups are wrestling with - and what is now dividing them - are the political realities symptomatic of the current price gap between readily scalable clean energy technologies and conventional fossil fuels. While green groups now seem painfully aware of the political challenges facing strategies centered on making dirty energy more expensive, they have yet to develop a new strategy that addresses the price gap that's driving it all.
The "price gap," sometimes referred to as the "technology gap," is the gap in price between cheap, dirty, carbon-emitting coal technologies and expensive, clean, emissions-free green technologies. Any attempt to price carbon effectively must make burning coal more expensive than clean energy technologies. But voters and politicians routinely reject these attempts to make dirty energy more expensive. A more politically feasible and direct way of addressing this gap is major and sustained federal investment in a strategy to make clean energy cheap. Investments on the scale of $50 billion annually in the research, development, demonstration and deployment of clean energy technologies would propel the necessary innovations that will bring down the price of clean energy technologies and accelerate the transition to a low-carbon energy economy.
As it becomes clear that chasing an illusory "hard" cap on carbon emissions is a losing proposition, green groups must turn to new strategies to address the urgent threat of climate change. It's time for anyone who cares about the climate challenge to think clearly about how to make meaningful and significant progress without a high price on carbon or a hard cap on emissions. It just doesn't seem possible we'll see either implemented in the coming year. And yet, the entire world is watching us and waiting to see what the United States will do before the international climate talks in Copenhagen this December. Until climate advocates and green groups acknowledge the technology gap and embrace new solutions to address and overcome it, the climate movement will continue to tread water. That's simply not something we can afford.
