By Leigh Ewbank, Breakthrough Fellow

This week, the Australian government unveiled the details of its long-anticipated carbon-pricing scheme, which include a fixed-carbon price of $23 per tonne as well as several measures to encourage the research, development, and deployment of renewable energy technologies. In contrast to the death of cap-and-trade in the United States last year, the passage of Australia's national carbon price legislation is virtually guaranteed. Unfortunately, much of the legislation rests with the magical thinking that international offsets will drive the country's decarbonisation, rather than full-scale efforts to drive the development and deployment of clean energy technologies.

Under the proposal, Australia will have a fixed-carbon price of $23 per tonne from July 1 2012, before moving to a cap-and-trade scheme in three years' time. A Climate Change Authority will be established to advise the government on emission reduction targets and a minimum target of 5 percent below 2000 levels by 2020 has been agreed on. Starting in July of next year, the nation's 500 largest emitters (excluding the agricultural sector) will be charged for each tonne of carbon they emit. To assuage voters, petrol is excluded from the scheme and compensation will be available for nine out ten households. Industry will receive $9.2 billion to manage the introduction of the carbon price.

Carbon pricing was not an issue the centre-left Labor government chose to champion. It is well known that as Deputy PM, Julia Gillard advised her predecessor Kevin Rudd to drop Labor's first attempt to price carbon--the Carbon Pollution Reduction Scheme. Under Julia Gillard's leadership, the party contested the 2010 election with an explicit pledge not to pursue a carbon tax, but after an inconclusive election result the measure was reluctantly accepted as the price of forming a minority government and hanging on to power.

Throughout the carbon price debate Labor politicians have propagated the myth that a carbon price alone will decarbonise the economy. Addressing the Committee for Economic Development of Australia earlier in the year, the Prime Minister claimed "a carbon price will drive another sweeping technological revolution like Information Technology did in the 1980s and 90s." As I have argued previously, when it comes to clean technology innovation and deployment, carbon price is no silver bullet. Now, with The Greens holding the balance of power in the Senate, the government was forced to concede the limits of carbon pricing and adopt additional renewable energy support measures.

Continue reading "Australia Unveils Carbon Price Policy" »

by Ted Nordhaus and Michael Shellenberger

It is a great pleasure to be here at the Yale School of Forestry and Environmental Studies for this retrospective on "The Death of Environmentalism." In early 2005 Yale invited us to debate that essay, and since then the School has continued to demonstrate a genuine interest in what our friend and colleague Peter Teague has taken to calling ecological innovation. You train your students to ask hard questions -- we saw this first hand in 2010 Breakthrough Fellow and Yale School Masters candidate David Mitchell -- and your flagship publication, Yale360, is publishing some of the most interesting green thinkers today. We are grateful once again for this opportunity to reflect on the nearly seven years since we wrote our essay, and make some new arguments about what the green movement must do now.

Seven years ago the two of us started interviewing America's environmental leaders with the intention of writing a report on the politics of global warming for the October 2004 meeting of the Environmental Grantmakers Association. We came away from the experience deeply disappointed. Not one of the environmental leaders we interviewed articulated a compelling vision or strategy for dealing with the challenge. None expressed much interest in rethinking their assumptions about the problem or the solutions. What we heard again and again during our interviews were the same old riffs that green leaders had been repeating since the late 1980's. Global warming would be solved through the same kinds of policies that we had used to address past pollution problems such as acid rain. Most were confident that John Kerry was, with their help, about to be elected president, and the biggest funders in the movement told us they were just a few steps away from passing cap and trade legislation.

That October we delivered our paper, "The Death of Environmentalism," at the Environmental Grantmakers Association conference. While leaders at environmental philanthropies and national green groups hoped that the debate the essay started would just go away, "The Death of Environmentalism" struck a cord with many others and sparked a spirited debate. Many took the paper's arguments personally and, without question, the most common reaction to our essay was "I'm not dead." Our friend Adam Werbach gave a speech called "Is Environmentalism Dead," wherein he suggested that environmentalists make common cause with a broader coalition of progressive interests in hopes of building a broader and more diverse movement. And Yale's own Gus Speth questioned whether capitalism itself was compatible with ecological sustainability and suggested a radical shift in values was required to deal with the problem.

Continue reading "The Long Death of Environmentalism" »

Over at the Economist, Ryan Avent notes that economists are beginning to move beyond a simple reliance on carbon pricing as the sine qua non of climate policy:

The typical baseline economist response to the problem of global warming is a very simple and straightforward one. Climate change is a negative externality, and the carbon emissions that generate it are easily targetable. The clear thing to do, then, is to place a tax on carbon emissions which will lead economic actors to internalise the cost of the warming they create with their decisions. This will discourage carbon-intensive activities and contribute to the development of clean alternative, reducing emissions and climate change.

Easy enough. Unfortunately, this strategy quickly runs into difficulty. One big problem is political. It's very difficult to convince people to accept higher energy costs, and it's very difficult to coordinate policy across countries, which is necessary to ensure that the policy works correctly. But there are also economic challenges. ... Economies are good at finding substitutes for key technologies, but it does take some time. And so because the world has waited so long to act, it now seems that the disaster-avoiding carbon tax path may itself be too economically damaging. So what's an economist to advocate?

Continue reading "Economists Moving Beyond Carbon Pricing" »

Here's an intriguing story to kick off the new year with a little retrospection...

Flash back to 2008, and nearly all of the top GOP contenders for a 2012 presidential run were taking global warming pretty seriously and offering real, if measured, endorsements of Congressional or state action to curb pollution and GHGs.

On the campaign stump, in books, speeches and nationally-televised commercials, aspiring GOP White House candidates such as Tim Pawlenty, Mike Huckabee and Mitt Romney have warned in recent years about the threats from climate change and pledged to limit greenhouse gases. Some have even committed the ultimate sin, endorsing the controversial cap-and-trade concept that was eventually branded "cap and tax."

Back in 2008, Newt Gingrich took to a couch next to the Right's current-day arch-nemesis, Nancy Pelosi, to endorse Congressional climate action in an ad sponsored by Al Gore's Alliance for Climate Protection.

And as Politico notes, even Sarah Palin has flip flopped on the issue:

Just days after McCain picked her as his running mate, Palin told ABC News she believes human activities "certainly can be contributing to the issue of global warming, climate change" and that "we've got to do something about it, and we have to make sure that we're doing all we can to cut down on pollution."

Politico's Darren Samuelsohn calls it the McCain effect, with John McCain's prominent endorsement of cap and trade legislation making it safe for GOPers to talk about climate.

"I think McCain is moving in a responsible direction," then-House Minority Leader John Boehner (R-Ohio) told E&E News in May 2008. "Clearly the issue of climate change is on the minds of a lot of people. Humans clearly contribute to this. It just really depends on what kind of a cap-and-trade system, what kind of safety valves are in there."

Flash forward just a few years and each of these prominent GOPers are likely running for an excuse, a mea culpa, or another way to distance themselves from green records that are now liabilities with a Republican base strongly influenced by the Tea Party movement.

So what happened? Was it simply the polarizing direction of the cap and trade debate? The shift in the economic winds? The rise of the Tea Party? The inherent politics of a proposal centered on making our current base of energy sources more expensive, rather than making the cleaner alternatives cheaper?

Whatever the constellation of causes, the change is quite stark. Looking ahead to 2011 and beyond, can we build a new and enduring consensus around an innovation-centered approach to energy reform, building a clean economy, and responsibly reducing pollution? And can we make it sustained enough to avoid the factors that turned the endorsements of prominent GOP leaders into liabilities just a few years later?

We welcome thoughts from our readers...

This should come as no surprise...

According to E&E news ($ubscription required):

There will be no cap-and-trade climate bill considered in the next Congress, Majority Leader Harry Reid (D-Nev.) promised a colleague today.

Newly sworn-in Sen. Joe Manchin (D-W.Va.) said today that Reid made a "total commitment" to him that there would be no cap and trade next session.

Reid's office confirmed the promise. "Given the election results, there is no chance we can deal with cap and trade," Reid spokesman Jim Manley told E&ENews PM.

New ideas will clearly be needed to make clean energy progress in the next Congress and beyond.

For more on that, see the "Climate Next" series now underway at the Atlantic, Slate, Mother Jones and the other participating partners in the Climate Desk project. Breakthrough's Michael Shellenberger and Ted Nordhaus kick off the series with their essay, "Innovate First, Regulate Later."

In a recent interview with NPR's Robert Siegel, Breakthrough Senior Fellow Roger Pielke Jr. discusses why cap and trade policy collapsed under the weight of its political and practical limitations. He proposes a new path forward focused on making clean energy cheap, instead of continually trying to make fossils fuels more expensive.

Below is an excerpt from the interview transcript. Click here to listen to the full interview and read the entire transcript:

Continue reading "NPR: Pielke Jr. Explains Energy Policy Future After Cap and Trade" »

In an effort to develop a truly effective post-cap and trade climate strategy, policy is not the only aspect that requires deep reflection - philanthropists, too, must reconsider the best way to channel grants in order to successfully fund solutions to climate and energy challenges. Breakthrough's Director of Climate and Energy Policy Jesse Jenkins recently spoke to a foundation about re-thinking philanthropic efforts in a post-cap and trade policy environment, offering insight into how policy makers, activists, and philanthropists, alike, must re-orient away from the focus on limits and toward an approach that harnesses human ingenuity to directly confront the scale of the global climate and energy challenge.

The transcription of the talk is below:

Continue reading "The Future of Philanthropy in a Post-Cap and Trade World" »

With the GOP set to make significant electoral gains on November 2nd, Republican Senator Lindsey Graham is urging the GOP to work together with Democrats and President Obama in the coming Congress to make bipartisan progress on the nation's energy challenges. But the South Carolina Republican pointedly rejected further work on a cap-and-trade proposal he briefly backed during the 110th Congress.

According to E&E news (subscription required) Graham recently told South Carolina's WVOC radio last night:

"My belief is, if we get back in power in the House and get close in the Senate, that we ought to really clamp down on spending and reform the government. ... But we ought to not put ourselves in the position of being the party that said 'no' to hard problems, that we ought to ... come up with an energy policy without cap and trade that will create energy jobs in America, break our dependency on foreign oil and clean up the air. ... There's plenty of things that we could do that would be good for job creation by challenging the president to come to the middle and find ways to move forward as a nation, and put the burden on him to say 'no' to us."

Graham added:

"Energy legislation in the Senate has stalled, and our energy policy in America is nonexistent. The EPA's going to start regulating carbon in January if the Congress doesn't act. So one of the real priorities of the Congress and the nation ought to be energy independence."

Continue reading "Sen. Graham: GOP should seek bipartisan progress on energy policy" »

Support for a technology-first approach to America's energy and climate needs is rapidly growing in the wake of the October 14 release of the "Post-Partisan Power" proposal by scholars at the Brookings Institution, AEI and Breakthrough Institute. Here is a sampling of the many reactions and widespread discussion generated by the report...

Joshua Green, Atlantic Monthly & Boston Globe: "Unlike most of what gets introduced just before an election, this was not a soon-to-be-forgotten political ploy, but a long-term project to accomplish what Congress and the president could not: put the country on the path to a clean energy future."

David Leonhardt, New York Times: [T]he death of cap and trade doesn't have to mean the death of climate policy. The alternative revolves around much more, and much better organized, financing for clean energy research. It's an idea with a growing list of supporters, a list that even includes conservatives -- most of whom opposed cap and trade."

Tim Mak, Frum Forum (a site started by former Bush speechwriter David Frum): "If Americans want to fight the challenges of climate change and reduce their dependence on foreign oil, this piece sets a good baseline for discussion."

Ezra Klein, Washington Post: "It's not that PPP is a sure thing, nor that it will pass Congress anytime soon. The Tea Party Republicans will need to sow their wild and crazy oats for awhile before they feel any need to tack to the center. But when they do, they aren't going to embrace cap and trade. They might, on the other hand, embrace a limited and direct approach to energy innovation."

Michael Levi, Council on Foreign Relations: [T]his idea may well make a lot of sense... most of the paper is actually a smart and thoughtful discussion of how to do energy innovation policy right".

Kirsten Powers, New York Post: " If America wants to remain the leader of the world economy, Washington has to attack this issue."

Bryan Walsh, TIME Magazine: "A truly bipartisan approach on energy and climate won't be easy--sometimes, especially right before an election, it seems completely impossible--but it's the only approach we can hope for, if we still hope."

Nature: "[G]iven the lack of consensus in other areas, long-term R&D intended to bring the cost of clean energy down might well be one area where lawmakers will be able to agree."

Case Western professor Jonathan Adler writes: "While not without flaws, the proposal represents a serious alternative to politically-moribund cap-and-trade proposals and the regulate-everything mindset that produced the Waxman-Markey bill."

Newsweek: "Cap-and-trade is on life support, but its weakness is giving other ideas room to breathe. Emerging proposals focus on investment in clean energy, pitched to the public with a narrative that omits a doomsday point of view about global warming and instead focuses on more practical considerations like job creation or the need to stop certain types of pollution."

Economists Dani Rodrik and Tyler Cowan also saw hope in the new proposal.

All that convergence around a politically centrist, technology-first approach alarmed some climate warriors on left and right.

Climate skeptic Steven Milloy of Green Hell blog (and Junkscience.com) wrote: "The left isn't oscillating at all. They are focused on establishing a one-world socialist paradise. Whatever path gets the comrades there, they'll follow. Global warming has just been there most successful gambit to date."

Said Grist.org's David Roberts: "The Republican Party don't want to spend government money on clean energy, Hayward notwithstanding."

Joe Romm, ClimateProgress.org: [It] should also be obvious we're not going to get a massive federal clean energy program either."

Not all long-time climate warriors were sour on the proposal.

While EDF chief economist Nathaniel Keohane reiterates that "we need both cap and trade and sustained investment in clean energy R&D," he went on to tell the New York Times' David Leonhardt, "if it turns out that we can't get cap and trade in the near term, we need R&D investment all the more."

Harvard's Robert Stavins still insists "there is no other feasible approach that can provide meaningful emissions reductions" beyond cap and trade, but he acknowledges: "New path-breaking technologies will be needed to address climate change, and public support for private-sector or public-sector R&D will be crucial to meet this need."

MIT's Michael Greenstone, a long-time cap and trade supporter, isn't so sure about the real-world viability of the policy he once advocated. "The first best hope was getting a world price for carbon, and that now looks remote in the coming years," he told Leonhardt. "But there are ways in which the other options may be preferable to a price only in the U.S." Greenstone endorses the need for $25 billion in clean energy R&D investments and rightly explains, "All the action is really going to be occurring in developing countries" who will need clean and affordable energy to power their economic growth.

In a second post, Washington Post's Ezra Klein looks the realpolitik in the face as well and concludes: "The best of all worlds would've been a price on carbon married to a big investment in clean-energy research. But this is not the best of all worlds. This is our world. And this [technology-first proposal] ... might be our last, best chance to protect it."

Update The Washington Post editorial page endorses Post-Partisan Power's call for a bipartisan energy innovation strategy, noting: "Even if cap-and-trade had passed, the logic goes, the government would still have had to invest in scientific research to make green energy affordable; might as well make those investments, anyway ... incremental action is better than none."

Continue reading "Technology-First Consensus Grows" »

In an essay at YaleE360, Roger Pielke Jr., a Breakthrough Senior Fellow and author of the recently released book, "The Climate Fix," explains the "iron law of climate policy" and what it suggests about the way forward on national and international climate and energy policy.

Here's an excerpt from Pielke's essay:

When policies on emissions reductions collide with policies focused on economic growth, economic growth will win out every time. Climate policies should flow with the current of public opinion rather than against it, and efforts to sell the public on policies that will create short-term economic discomfort cannot succeed if that discomfort is perceived to be too great. Calls for asceticism and sacrifice are a nonstarter.

The "iron law" thus presents a boundary condition on policy design that is every bit as limiting as is the second law of thermodynamics, and it holds everywhere around the world, in rich and poor countries alike. It says that even if people are willing to bear some costs to reduce emissions (and experience shows that they are), they are willing to go only so far...

To succeed, any policies focused on decarbonizing economies will necessarily have to offer short-term benefits that are in some manner proportional to the short-term costs. In practice, this means that efforts to make dirty energy appreciably more expensive will face limited success.
...

The unavoidable reality is that policy makers and those they represent are committed to sustaining economic growth, bringing populations out of poverty, and expanding access to energy. Emissions reduction goals will not be achieved by policies that seek to stimulate innovation by constricting, much less by reducing, economic activity.

Continue reading "YaleE360: Pielke's "Iron Law" of Climate Policy " »

Yesterday, scholars from the American Enterprise Institute, the Brookings Institution, and the Breakthrough Institute released a joint report proposing a post-partisan way forward on climate and energy policy that moves beyond the framework of cap and trade. The report, "Post-Partisan Power," ignited a firestorm of discussion.

To answer some of major questions about the report, E&E News OnPoint TV host Monica Trauzzi invited Breakthrough Institute Director of Climate and Energy Policy Jesse Jenkins and Brookings' Senior Fellow and Director of Policy for the Metropolitan Policy Program to join her show.

The segment can be viewed at E&E TV here, and we've excerpted some important parts below that we hope will be clarifying and useful to future discussion:

Continue reading "OnPoint: Muro and Jenkins talk Post Partisan Power" »

By Michael Shellenberger and Ted Nordhaus

Cover for the Oct. 28, 2010 issue

An abridged version of this article appears in the October 28, 2010 print edition of The New Republic (and online here, subscription required)

In August 2008, then-candidate Barack Obama traveled to Lansing, Michigan, to lay out an ambitious ten-year plan for revitalizing, and fundamentally altering, the American economy. His administration, he vowed, would midwife new clean-energy industries, reduce dependence on foreign oil, and create five million green jobs. "Will America watch as the clean-energy jobs and industries of the future flourish in countries like Spain, Japan, or Germany?" Obama asked. "Or will we create them here, in the greatest country on earth, with the most talented, productive workers in the world?"

Two years later, the answer to that second question appears to be no. Obama's environmental agenda is in tatters. His green jobs plan has done little to make a dent in unemployment, which persists at close to 10 percent. Obama's signature environmental initiative, cap-and-trade, died in the Senate in July. And, during the first year of Obama's tenure, China massively outspent the United States on clean-energy technology.

The story of how Obama's green agenda came up empty is more complicated than the one conventionally told by Democrats and greens, who imagine that cap-and-trade would have been transformational had Republicans and global-warming deniers not gotten in the way. In truth, the president's strategy was flawed from the start. Cap-and-trade would not have birthed a domestic clean-energy economy -- indeed, it wasn't designed to. Meanwhile, the administration's green stimulus spending was split between short-term, if worthy, investments in green technology, to which far too little money was allocated, and over-hyped public-works projects that would never have delivered the new industrial economy Obama promised as a candidate.

Continue reading "Green Jobs for Janitors: How Neoliberals and Green Keynesians Wrecked Obama's Promise of a Clean Energy Economy" »

The death of cap and trade and the collapse of Kyoto/Copenhagen has driven a discernible movement of old ideological foes toward a new consensus energy policy framework centered on making clean energy cheap.

On the right, Bjorn Lomborg, long a leading skeptic of efforts to address climate change, has wholeheartedly embraced a new clean energy innovation agenda, calling for massive global investments--on the order of $100 billion per year--in energy R&D. New York Times conservative commentator David Brooks has also acknowledged that the government should invest much more--around $25 billion per year--in research and development.

On the left, the Center for American Progress (CAP), the Democratic think tank whose spokespersons have in the past attacked Breakthrough's proposal to "Make Clean Energy Cheap," appears to be embracing just such a strategy -- at least rhetorically. According to a recent news report, Democratic lawyer Reed Hundt, former chairman of the Federal Communications Commission, is working with CAP and Al Gore's Alliance for Climate Protection on a new energy bill for the next Congress that focuses first and foremost on "lowering the cost of clean."

Hundt and CAP/Gore are also talking about measures to scale out the "breakthrough technologies" that the Department of Energy has funded.

Continue reading "Right and Left Move to New Climate Center" »

Democrats pulled the plug on ill-fated climate and energy legislation that finally collapsed under its own weight and - believe it or not - that is a good thing. Now a new window is open to shift the overarching goal of climate policy toward unleashing a clean energy revolution brought about by large scale government investment in clean energy technology innovation. In a series of posts, Breakthrough highlights the means by which we can develop a new strategy for achieving transformative clean energy progress that is capable of overcoming the policy and political barriers that have always doomed cap and trade.

Myths About the Death of Cap and Trade

"Time to Bury Cap and Trade and Plan Anew"

"Shellenberger Q&A with Ezra Klein: 'This is the end of cap-and-trade for a long time'"

"Cap & Fail: The Collapse of our Climate Policy Paradigm"

In another clear sign of the steadily unraveling pollution paradigm, Yvo De Boer, the former head of the UN climate negotiations, has acknowledged that the long debate over targets and timetables for the reduction of carbon dioxide emissions is irrelevant. Asked by Bloomberg about emissions reductions targets in the context of the upcoming climate negotiations in Cancun, De Boer replied:

"Discussions about targets have become largely irrelevant in the context of the Copenhagen outcome. I don't think that we're going to see a dramatic increase in the level of ambition."

De Boer was singing a different tune in the run up to last year's Copenhagen climate negotiations, which ended, predictably, without a comprehensive and legally binding emissions treaty. In August 2009, de Boer told TIME Magazine that even if the U.S. didn't show up to Copenhagen with a new climate change law in hand, an ambitious target would be enough to placate the international community:

"The international community is keenly interested in seeing what steps America is making at home to get its emissions under control, but it also wants to see what the Administration says it will do. If the Administration in Copenhagen commits to a target that is good enough for the international community, that will work. It's up to the U.S. to see how the target will be implemented nationally."

Continue reading "Former UN Climate Chief: Emissions Targets and Timetables are Irrelevant " »

If you live in states like Delaware, Pennsylvania, West Virginia or Kentucky, you may have already seen them: new political hatchet ads attacking Democrats and even some moderate Republicans for support of Congressional cap and trade bills.

According to E&E News ($usbcription required), the climate policy, which narrowly passed the House of Representatives last year before stalling in the Senate, is the latest weapon wielded by conservative Republican Congressional candidates across the country, who are trying to ride a wave of anger over perceived, out-of-control big government policies into office.

Continue reading "Republican Candidates Wield Cap and Trade as Political Weapon" »

In a new interview with Technology Review, Bill Gates nails the global energy and climate challenge and discusses the need for dramatic increases in energy innovation funding to make clean energy cheap.

Bill Gates has been speaking out publicly over the last few months--first in a blog post on his website, then in a talk at the TED conference, and now as part of the American Energy Innovation Council--for radical energy innovation to drive carbon emissions to zero.

In a climate discourse dominated by emissions targets and carbon caps, Gates has provided a refreshing and clear-eyed look at the first-order importance of direct public investment to develop clean, affordable technologies to replace fossil fuels on a global scale.

In this new interview, Gates discusses why dismissing the difficulty of the challenge is counter-productive, and argues that carbon pricing can never drive the dramatic innovation required to transform the global energy system. Instead of raising the price of fossil fuels, Gates argues that the time has come to shift our attention to raising the revenues necessary to fuel innovation and make clean energy cheap.

Below the fold, you can find excerpts from Gates' interview, which can be read in full here.

For more, the NYTimes Andy Revkin and TIME magazine's Bryan Walsh each spotlight the interview here and here, respectively.

Continue reading "Gates: Invest in Innovation to Make Clean Energy Cheap" »

By Yael Borofsky and Jesse Jenkins

Updated 8/9/10. See below...

Seemingly inspired by the death of cap and trade, over at the Daily Dish Andrew Sullivan has tied together two interesting threads of conversation -- "Waiting on Innovation" and "Why Not?" -- that deal with the issues of energy innovation and energy taxes.

Highlighted in "Why Not?" the Economist's Ryan Avent is on to something when he suggests a $5 per barrel petroleum tax since it could generate about $40 billion in revenue annually. But to suggest, as Avent does, that the tax should rise by $5 each year with the objective of forcing consumers to drive less or purchase more fuel-efficient cars is a strategy that risks falling into the same political trap that ultimately ensnared cap and trade.

Continue reading "Talking Energy Innovation at the Daily Dish" »

Originally posted at Roger Pielke Jr's Blog

Last week I suggested that Julia Gillard, Australia's Prime Minister, was asking for trouble by promising that carbon pricing would transform society:

When will politicians learn that climate policies are a political loser if they require that people "transform the way we live and the way we work"? The vast majority of people simply do not want their lives transformed. Promising that government will transform your life is one way to ensure a rough political road for any policy -- climate change, health care, economic, whatever.

Michael Levi of the Council on Foreign Relations presents a similar argument with respect to "green jobs":

Basically, cap-and-trade introduces uncertainty at an individual level (though it does the opposite for actual investors); in the current economic climate, that scares people into thinking that they will lose their jobs. . . Anything that the public is unfamiliar with adds to uncertainty - and that is precisely what people don't want. Second, green jobs may poll well across a wide spectrum of voters, but that doesn't mean that selling regulation or taxation with a jobs message will work.

To succeed, policies focused on decarbonizing the global economy must not be seen as adding to personal insecurities, better yet, they should add to personal security. This should be a major lesson taken from the failure of US climate legislation.

By Jesse Jenkins and Devon Swezey

Cap and trade is dead. Again. For real this time.

Reports put the time of death at 1 P.M. EST, July 22nd, 2010. That is when Senate Majority Leader Harry Reid emerged from a meeting of the Democratic Caucus without enough support for even a severely weakened and scaled-back emissions cap on the utility sector.

With that, recognition has finally set in everywhere: the United States Senate is not going to enact any form of cap and trade. Not this year. And probably not any time in the foreseeable future.

Worse yet, clean energy progress this year has gone down with the long-sinking cap and trade ship.

Continue reading "Time to Bury Cap and Trade and Plan Anew" »

Over at online environmental magazine Grist.org, I've been featured among a panel of "seven of Grist's favorite journos and wonks" each offering their two cents on what (if any) changes to climate and clean energy strategy should be made now that cap and trade is on the ropes.

Part 1 focuses on what to do with the remainder if this quickly-waning Congressional year, while Part 2 focuses on longer-term strategy. Here's my response to each question:

Continue reading "Jenkins 'Empanelated' At Grist" »

Update (Jul 16, 2010): Expanding on a Washington Post op-ed, Vinod Khosla delineates his argument "about the deficiencies of an isolated cap-and-trade or carbon-pricing bill," and joins the climate technology consensus. Khosla writes, "If we want to make a significant difference, we need to get on the path to reducing carbon worldwide by 80 percent now by focusing on what I call "carbon reduction capacity building" -- in other words, we need to develop radical carbon-reduction technologies. A utility cap (or a carbon price) won't build capacity -- it will just increase our utility costs and decrease our manufacturing competitiveness without any increase in our technological competitiveness. On the other hand, although a policy that promotes capacity building will increase research investments in the short term, it will likely decrease overall electricity costs in the medium to long run (through the magic of competition, technology and regulatory certainty), while simultaneously reducing carbon. Disruptive technologies require investment; they don't come from the status quo."

Update (Jul 14, 2010): Other observers have reached similar conclusions about the faltering pollution paradigm. Walter Russell Mead and Clive Crook weigh in on "The Big Green Lie" but can't agree on what it is. Mead argues that it is "that the green movement is a source of coherent or responsible counsel about what to do" while Crook argues that "it's the diminished credibility of the claim that we have a problem in the first place." But both agree that cap and trade and the effort to establish a global carbon pollution regime are dead. Meanwhile, Newsweek's Stefan Theil observes that "the whole concept of radical, top-down global targets is coming under scrutiny" and suggests that the "new climate realism" will "look at other options beyond the current set of targets" and "include a broader mix of policies" including "a shift of subsidies into research and development" and "greater efforts to adapt society to a warmer climate."

Update (Jul 10, 2010): See Andrew Pendleton and Matthew Lockwood of the UK-based IPPR think tank response to Alex Evans' contention that real action on climate will only occur after a major global warming disaster. "There is simply no reason to believe that a climate shock big enough to bring about major changes in thinking will come along before we reach a tipping point (how would we know?)" they write. "Climate change is by its nature long-term and insidious, more like a frog in a warming pot than a sudden Anschluss."

The twenty-year effort to create a single global pollution framework to reduce carbon emissions is in a state of collapse. Meanwhile, a new climate policy consensus is emerging, one which prioritizes direct investment in technology innovation to make clean energy cheap. The new framework begins from the understanding that the root cause of the failure of the pollution paradigm was the technology and price gap between fossil fuels and their alternatives. But hard and important questions are being asked of the new investment-and-innovation paradigm. How is it different from just increasing subsidies for clean energy? How can we be sure it will reduce emissions? What role should carbon pricing play? Here Breakthrough Institute answers frequently asked questions of the climate technology paradigm and responds to challenges raised by Alex Evans on the left and Robert Michaels on the right, among others, who have taken aim at Breakthrough's and Bill Gates' proposals, respectively.

By Ted Nordhaus and Michael Shellenberger

The twenty-year effort to create a single global pollution framework to reduce carbon emissions is in a state of collapse. Europe's Emissions Trading Scheme (ETS) has not reduced emissions and is quickly fading as the central effort to decarbonize European economies. The UN process is becoming a forum for nations to compare and coordinate national policies and measures, not create or enforce a binding global treaty. And it is now clear that, if energy legislation passes the U.S. Senate, it will not create an economy-wide cap-and-trade system, nor will it increase the deployment of clean energy.

Meanwhile, a new climate policy consensus is emerging, one which prioritizes direct investment in technology innovation. This consensus begins with the recognition that the root cause of the failure of the pollution paradigm was the technology and price gap between fossil fuels and their alternatives. No nation -- not even the wealthiest in Europe -- is willing to price carbon enough to cover the difference. Until the technology gap is closed, little will be done to accelerate the transition to a low-carbon economy.

Continue reading "The Emerging Climate Technology Consensus" »

Over at NRDC, David Doniger writes a last-ditch defense of a diminished, utility-only cap and trade proposal while categorically rejecting any "energy-only" legislation -- e.g. legislation lacking a cap and trade component.

Unfortunately, Doniger, NRDC (and EDF) wind up clinging onto a "cap" on carbon they have already given away while at the same time standing opposed to a new clean energy strategy that could still salvage a substantive win despite what little time remains on the Congressional clock.

Continue reading "In Defense of 'Energy-Only'" »

Fred Krupp, the Environmental Defense Fund's iconic cap and trade champion, has finally conceded that cap and trade is dead:

"A comprehensive, economy-wide cap and trade system is not going to be passed by the Senate," Fred Krupp said...

Continue reading "EDF Throws in the Towel on an Economy-Wide Cap" »

With the final seconds ticking down on the Congressional clock, President Obama and Senate Democrats emerged from a White House summit with Republican moderates Tuesday still lacking any plan to score a last minute win for clean energy.

Wasted opportunity

Establishing a price (any price) on carbon pollution through a(n increasingly weak) cap and trade system continues to be the the preferred climate and energy approach of environmental advocacy groups and Democratic leadership. This preference holds despite the fact that for at least three years, that plan has consistently failed to uncover any route to securing the sixty votes necessary for passage in the Senate (a similar bill narrowly passed the House last June).

Heading into the Tuesday morning White House summit, Republicans eyed as key swing votes for any clean energy or climate bill telegraphed clear intentions: cap and trade would be a practical non-starter, but they were ready to act with the President on measures to promote zero-carbon electricity, electric and plug-in hybrid vehicles, and greater energy technology innovation, clean up dirty coal plants, and improve energy efficiency.

The summit offered President Obama a prime opportunity to reset the Senate energy debate by calling a new play: take up the energy provisions Republicans have offered, counter with a more aggressive proposal on similar fronts, and begin earnest negotiations with GOP swing votes to ensure passage of a final bill that could move America towards a clean energy economy before the Congressional clock expires.

Unfortunately, President Obama let this chance to break from the failed and increasingly desperate cap and trade agenda slip by, using the meeting, instead, to reiterate to the assembled Senators - and greens watching from the sidelines - that "he still believes the best way for us to transition to a clean energy economy is ... by putting a price on [carbon] pollution."

Continue reading "With Seconds on the Clock, Democrats May Waste Last Chance for Clean Energy Win" »

The White House has postponed a scheduled meeting with a group of bi-partisan Senators to discuss plans for comprehensive energy legislation, and while Republicans have made it clear they plan to unanimously block cap and trade, that may prove to be a good starting place for a non-controversial route forward centered on vehicle electrification, nuclear power and energy technology innovation.

As Politico reported:

Republicans also would press Obama to reach consensus on less aggressive energy options, including incentives for electrification of cars and trucks, more nuclear power and offshore oil and gas production, and research and development for low-carbon energy technologies.

The GOP has several "clean energy proposals which we are for and he's for too," [Sen. Lamar] Alexander said.

Although cap and trade efforts have consumed most of the legislative clock this year and there's dwindling time for any big plays, if Republicans are really willing to support a big technology push Democrats could have the bargaining chip they need to make some real progress, perhaps even mounting a more aggressive push into key technology areas - research and innovation, vehicle electrification, and accelerated deployment of clean electricity sources. This type of bipartisan effort would not be the "comprehensive" solution to our nation's multifold energy and climate challenges, but it would prime the Congressional pump for a greater bipartisan collaboration in 2011...or so one could hope.

Now that Obama has officially opened the door to alternatives to the conventional cap and trade framework, Congressional Democrats are finally willing to admit the policy is dead and focus on finding an economically and politically viable Plan B.

According to E&E (subs. req'd), efforts to formulate that Plan B have just begun and are as yet indecisive. One thing, however, is now clear:

Senate Democrats may have emerged from their much-hyped caucus meeting without a clear plan for this summer's energy bill, but they appeared to agree on one point: Cap and trade doesn't have the votes...

It is unclear whether Obama and Senate Democratic leadership intend to push aggressively for cap and trade or any mechanism to price carbon this year. Obama failed to call for it directly in his Oval Office address this week and Senate Majority Leader Harry Reid (D-Nev.) yesterday declined to promise to include a price on carbon in an energy package slated for floor debate next month.

Reid said yesterday that his goals for energy legislation are dealing with the crisis in the Gulf of Mexico, creating jobs and cutting pollution. "There are many strong passions and arguments about the best way to achieve these goals," Reid said yesterday after the Democratic caucus met to discuss an energy bill. "And I'm always focused on what is possible."

...

Democrats hope that another caucus meeting slated for next week will help push them closer to a consensus about how to proceed...

"Sooner or later, hopefully sooner, people will come together and come up with a comprehensive plan," said Sen. Carl Levin (D-Mich.). "There's a lot of hurdles to be jumped."

With time now short in the Congressional calendar this year, it is unlikely that Congress will implement a comprehensive response to our nation's multifold energy and climate challenges. But as the failed cap and trade framework falls away, space is now opening for new and productive ways forward.

Cap and trade didn't make the cut in President Obama's address to the nation earlier this week regarding the catastrophic Deepwater Horizon offshore oil spill.

As Breakthrough Senior Advisor Teryn Norris noted:

Instead of using last night's prime-time opportunity to push cap and trade in the form of the Kerry-Lieberman American Power Act -- as many climate advocates saw as their last hope for "comprehensive" climate reform -- President Obama pressed the reset button on energy and climate policy, saying he was "happy to look at other ideas and approaches from either party, as long they seriously tackle our addiction to fossil fuels." He made no mention of setting a price on carbon or establishing an emissions cap and trade system.

The omission has the blogosphere abuzz, and while some criticized other glaring omissions, overwhelmingly pundits and analysts recognize that Obama actualized the writing that has been on the wall for the last few months - cap and trade is dead and it is time to focus on a powerfully viable alternative.

Below are some of the many voices who are adding to the consensus:

Continue reading "Cap and Trade: Dead to Obama" »

For Breakthrough Institute's full collection of analysis of Congressional climate legislation, see here.

Published analysis in chronological order (most recent first):

• The Power to Compete: Benchmarking the Kerry-Lieberman American Power Act on Clean Energy Innovation and Competitiveness - June 9, 2010

Continue reading "Analysis of Kerry-Lieberman American Power Act Climate Bill: Full Breakthrough Institute Collection" »

It comes as no surprise that a broad-based coalition of activists are calling the bluff of 19 companies earning carbon offset credits through the Carbon Development Mechanism created by the Kyoto Protocol. The activists accuse the companies, based largely in China and India, of creating greenhouse gas emissions for the sole purpose of earning credits from destroying them.

According to a review by E&E News (subs. Req'd):

"Sometimes they produce gas just to burn it and get some CDM money, and it's not at all an honest way of behaving," said Chaim Nissim, an engineer with Noe21, a Geneva-based climate change advocacy organization that has researched carbon offsetting projects at industrial gas companies.

"It's fake," Nissim said.

CDM officials say they are investigating the allegations...

With countries still unable to negotiate a second commitment period to the Kyoto Protocol, the future of the entire CDM is in limbo. No one could say what it meant for the carbon market as a whole if it is indeed determined that one third of the whole volume of CERs don't represent any actually abated or avoided greenhouse gas emissions.

Continue reading "Carbon Offsets Fraud Continues" »

PRESS CONTACT:
Teryn Norris (510-593-3716)
norris@leadenergy.org

Jesse Jenkins (503-333-1737)
jesse@thebreakthrough.org

A new policy brief released today by the Breakthrough Institute and Americans for Energy Leadership provides the first independent analysis of how the Kerry-Lieberman American Power Act would impact U.S. competitiveness in the global clean energy industry, benchmarking its provisions against key policy components for technological innovation and industrial development in the low-carbon power and transportation sectors.

The policy brief, titled "The Power to Compete: Analysis of Key Clean Energy Technology and Competitiveness Provisions in the Kerry-Lieberman American Power Act of 2010," assesses the proposal's key technology provisions, including research and innovation, manufacturing, and domestic market demand -- the central pillars of a national clean energy competitiveness strategy -- as well as supportive mechanisms in infrastructure, workforce development, and industry cluster formation.

Download Full Briefing (PDF, 2.3 MB)

Federal energy policy has become a primary U.S. national priority in the wake of the Deepwater Horizon oil spill and amidst the ongoing Senate debate over comprehensive climate and energy reform. The May 2010 release of the Kerry-Lieberman American Power Act (APA) currently represents the flagship proposal for comprehensive reform in the Senate, and its future within the context of broader energy legislation will be determined in the weeks ahead.

The renewed urgency for energy reform arrives among growing national concern that the United States is falling behind its competitors in the growing clean energy industry. Thus, in addition to reducing emissions of greenhouse gases, one of the core objectives of the Kerry-Lieberman proposal is to enhance U.S. competitiveness in clean energy technology markets. As Senator Kerry declared in the opening of the APA release press conference, "The bill that we are introducing today and revealing today, the American Power Act, will restore America's economy and reassert our position as a global leader in clean energy technology."

Continue reading "The Power to Compete: Benchmarking the Kerry-Lieberman American Power Act on Clean Energy Innovation and Competitiveness" »

Not only did Lindsey Graham (R-SC) withdraw from talks surrounding a climate and energy bill eventually released by Senators John Kerry (D-MA) and Joe Lieberman (I-CT) in early May, yesterday he announced that he wouldn't vote for the legislation should Kerry and Lieberman successfully bring it to the Senate floor.

Graham cited disagreement over added restrictions on offshore drilling and doubt that the bill could ever get 60 votes on the Senate floor.

According to coverage by the National Journal (subs. req'd):

"What I have withdrawn from is a bill that basically restricts drilling in a way that is never going to happen in the future," Graham said. "I wanted it to safely occur in the future; I don't want to take it off the table."...

He said he will offer up later this year a "hodgepodge of ideas out there that I think form a potential pathway forward."

This includes introducing as early as this week a "clean energy" production standard that would include a "more aggressive definition of biomass" and give nuclear power the "same standing as other alternative energy sources." The standard needs to be higher to make these sources more deployable and financially attractive, he added.

Graham's announcement is likely the last nail in the coffin for cap and trade this year.

The latest from the Brookings Institution's Mark Muro is a perfectly succinct summary of how one should judge the coming Kerry-(Graham?)-Lieberman Senate climate and energy bill, reportedly scheduled for release this Wednesday:

What is clear, though, is this: To get to a good bill senators need to deal properly with the revenue--whether from offshore oil drilling or pollution allowance auctions or whatever else is in the bill. And to do that they need to make sure a huge chunk of it gets applied to clean-energy research and development. Get that right and much else needn't be perfect. Blow that, and the bill is likely not worth it.

... The bottom line is this: Putting a price on carbon, or regulating emissions, ... while absolutely necessary, will not be sufficient to address the nation's climate problem and will, importantly, not put the U.S. in the position to seize the extraordinary opportunities that will come with rebuilding to global energy economy. Also necessary, as we keep saying, will be a major drive to promote large-scale technology breakthroughs. No matter how you measure it, U.S. government investment in clean energy R&D remains grossly inadequate. Right now clean energy R&D accounts for only around $3 billion a year. But if we're going to see real progress in de-carbonizing the present economy and creating the next one this number should be closer to $15 billion and probably as much as $25 billion per year.

So that's the target: $15 to $25 billion a year is "the number"--the critical investment threshold for federal clean energy investment that must become a core benchmark for evaluating any and all federal climate, energy, or indeed appropriations deal making.

Mark notes the rumors and reports of the still-not-yet-public drafts of the K-G-L bill do not bode well for the bill's ability to clear this critical clean energy innovation threshold...

Continue reading "Clearing the Clean Energy Innovation Threshold" »

Breakthrough's Jesse Jenkins joined Senator Lamar Alexander (R-TN) and moderator Marc Gunther of Fortune Magazine and Greenbiz.com to discuss the fate of climate and energy legislation in the U.S. Senate in a webinar, hosted by theEnergyCollective.com.

Jenkins and Alexander discussed the embattled Kerry-(Graham?)-Lieberman climate bill and potential alternatives to modernize our energy system, secure dependence from oil, and reduce U.S. emissions. Listen to the archived webinar here.

Published by the ABC, Australia's national broadcaster. Cross posted at The Real Ewbank.

By Breakthrough Fellow, Leigh Ewbank

Australia needs a Plan B for climate policy. We need a nation-building project on the scale of the Snowy Mountains Scheme to invest in renewable energy and sustainable infrastructure. This is the fresh approach needed to drive Australia's transition towards a clean economy and protect the nation from dangerous climate change.

The Prime Minister's announcement yesterday that the government will delay its Carbon Pollution Reduction Scheme until 2013 is a tacit admission that pricing carbon is not viable in the current political environment.

Labor and proponents of emissions trading have been living a fantasy for too long. They have ignored the realities of politics to pursue a policy that had no reasonable chance of being implemented at a time when climate change experts agree we must act. Now, Australia is set for yet more inaction.

Continue reading "Australia Needs a Solar Snowy Mountains Scheme " »

The U.S. Senate isn't alone in putting the breaks on cap and trade legislation plans. Australia's Prime Minister, Kevin Rudd has also "put its carbon emissions trading plan on hold," until the end of 2012 according to the New York Times.

Some analysts believe the government's decision was a tactical one. Though Mr. Rudd's approval ratings remain strong, recent polls have suggested that climate change is becoming less important to an electorate that has shifted its focus to education and health care reform, skyrocketing housing costs and immigration. National elections are due this year.

Continue reading "Cap and Trade De Ja Vu " »

Out of the scramble over the thrice-delayed Kerry/Graham/Lieberman (KGL or "keggles") climate bill have emerged various alternatives, with grassroots greens arguing for cap and dividend and high tech leaders including Bill Gates calling for an explicit technology innovation agenda.

Earlier this month, Bill McKibben advocated in The New Republic for the Cantwell-Collins CLEAR Act, claiming it would solve the political problem of raising energy costs because it would rebate some of the pollution allowances to consumers -- "three-quarters will come out ahead," McKibben claims, "with only real energy hogs hurting .

Continue reading "In Pursuit of Plan B" »

The climate negotiations in Copenhagen resulted in a 193-nation agreement that included 154 policy commitments -- "the highest number of new government initiatives ever recorded . . . in a four-month period," according to Deutsche Bank -- but do they really matter?

In the months since the frenetic, and at times, apoplectic UNFCCC meeting, two conflicting views have emerged.

A report released earlier this month by Deutsche Bank (DB) presented analysis like those from Natural Resources Defense Council (NRDC) and the Center for American Progress (CAP) showing the talks were "no failure."

Continue reading "Climate Paradigm in Collapse" »

For Breakthrough Institute's full collection of analysis of Congressional climate legislation, see here.

Posts on Kerry-Graham-Lieberman Senate climate bill, in chronological order (most recent first):

• Clearing the Clean Energy Innovation Threshold - May 10, 2010
• Senate Climate Bill Trio Scrapping Oil and Gasoline Fee? - April 22, 2010
• New "Tri-Partisan" Climate Framework Aims to Clear High Senate Hurdle - December 10, 2009

Continue reading "Analysis of Kerry-Graham-Lieberman Climate Bill: Full Breakthrough Institute Collection" »

[Update at end of post - 4/22/10 at 5:20 PST]

According to several reports, the trio of senators leading the effort to craft a climate and energy bill for release next Monday are back-peddling from earlier plans to implement a new fee on petroleum-based fuels such as gasoline amidst concerns that any new "gas tax" would trigger voter backlash.

Earlier reports of ongoing, private negotiations on a Senate climate and energy bill led by Senators John Kerry (D-MA), Lindsey Graham (R-SC), and Joseph Lieberman (I-CT) indicated that the trio were planning to drop the 'economy-wide' cap and trade plan included in the House-passed Waxman-Markey bill in favor of a 'three sector' approach to regulating emissions from power plants, industry, and petroleum-based fuels.

A cap would be implemented on the power sector to begin with, with industry phased in at a later date, while the oil sector would be exempted from the plan. Instead, petroleum-based fuels, including gasoline and diesel fuel, would be subject to a "linked fee" that would be tied somehow to the price of carbon pollution credits under the power sector cap and trade program -- in effect, a variable tax on gasoline and other petroleum products.

Now however, the Wall Street Journal reports that Sen. Kerry vehemently declares, "There is no gas tax, there was no gas tax and there will never be a gas tax."

Continue reading "Senate Climate Bill Trio Scrapping Oil and Gasoline Fee?" »

Politicians talking about clean energy jobs like to claim "they can't be shipped overseas." From President Obama's State of the Union to Rep. Ed Markey stumping for the climate bill he co-authored with Rep. Henry Waxman, the promise of new "green jobs that pay well and can't be outsourced" is an all too common refrain.

The only problem with it is that it's wrong on its face.

America is already exporting clean energy jobs -- or seeing them created abroad in the first place. After pioneering wind and solar power, electric cars, and nuclear plants, America turned its back on the public investments in cutting edge technology that catalyzed these innovations, forfeiting cleantech industries to foreign countries who did not make the same mistakes. The cap and trade program at the heart of the climate bill authored by Rep. Markey may help create more clean energy jobs overseas, but it won't bring those jobs back to America. Conventional responses to today's competitiveness challenge won't cut it. Here's what will...

Continue reading "Clean energy jobs CAN be shipped overseas (and what to do about it)" »

Speaking at a panel on building a clean energy economy, ITIF President and "Rising Tigers, Sleeping Giant" co-author Rob Atkinson declared that current technologies are not enough to create a competitive domestic clean energy industry and that major investments in energy innovation are necessary to make clean energy cheap and abundant.

Ironically, the panel, titled "The American Clean Energy Economy In 2020: What Should It Look Like And How Should We Get There?" was hosted by the Center For American Progress (CAP), which has uncritically supported the Waxman-Markey climate legislation even though it invests a paltry sum in clean energy innovation.

Continue reading "Into the Lion's Den: ITIF's Atkinson Tells CAP Why We Need to Make Clean Energy Cheap" »

This Thursday April 22, 2010, Breakthrough President Michael Shellenberger will debate cap and trade at the San Francisco Commonwealth Club at 6 pm PST. For more information and tickets, click here:

Since the passage of the Waxman-Markey climate bill last summer, many have questioned the bills effectiveness in creating a prosperous clean energy economy due to its reliance on dubious carbon offsets, weak renewable electricity standard, and low level of investment in clean energy technology.

A comprehensive analysis of the Waxman-Markey legislation conducted by Breakthrough Institute revealed that the bill would not require emissions reductions in U.S. capped sectors, would not increase the deployment of renewable energy beyond business-as-usual projections, and would invest only a fraction of annual revenues -- less than two percent -- in clean energy innovation.

Continue reading "Cap and Charade? Shellenberger to Debate at Commonwealth Club" »

The Breakthrough Institute team works to publish quantitative analysis of Congressional climate and clean energy legislation, often working to publish a series of analyses "in real time" as the Congressional debate unfolds. Here is our collection of analysis of climate bills in the current Congress:

Senate:

• Kerry-Lieberman "American Power Act" (APA)


• Kerry-Graham-Lieberman (Discussion Drafts)


• Kerry-Boxer "Clean Energy Jobs and American Power Act" (CEJAPA, S.1733)


• Cantwell-Collins "Carbon Limits and Energy for America's Renewal Act' (CLEAR Act, S.2877)

House:

• Waxman-Markey "American Clean Energy and Security Act" (ACESA, H.R.2454)

Who killed cap and trade? Harvard economist Robert Stavins and the New York Times' John Broder blame a conservative political environment. Breakthrough Senior Fellow Roger Pielke's not having it:

"[Stavins'] argument is wrong in at least two dimensions. First, since the 2008 elections the US has large Democratic majorities in both the House and Senate (including a Senate "supermajority" for much of 2009) and a Democratic President. This fact alone renders Stavins argument flawed. The problem was not a lack of political support, but failed policy design despite the strong political support."

Continue reading "Who Killed Cap and Trade, Part II" »

After the governing conservative party of French President Nicolas Sarkozy got clobbered in regional elections this week, France's proposed carbon tax is going the way of the Canadian Liberal Party's 'green shift' carbon tax proposal and Australian Prime Minister Kevin Rudd's Carbon Pollution Reduction Scheme (a cap and trade plan), according to the NYTimes' Green Inc. blog:

After his governing conservative party took a pounding in regional polls on Sunday, French President Nicolas Sarkozy has dropped a key environmental goal: setting up a carbon tax to limit the growth of carbon emissions and spur the development of renewable fuels.

"We want decisions that are taken in common with other European countries, or else we will see our competition gap widen," said François Fillon, the French Prime Minister, according to The Financial Times.

The idea of a carbon tax had been widely opposed by France's business lobby, which argued that it would increase costs, as well as by members of the governing party which opposed the idea of a new tax. A law was initially voted by parliament last year but was censured by France's top court, the Constitutional Council because it was too weak on polluting industries.

For Breakthrough Institute's full collection of analysis of Congressional climate legislation, see here.

This post summarizes the Breakthrough Institute's analysis of the Cantwell-Collins "Carbon Limits and Energy for America's Renewal" Act (S.2877, known as CLEAR).

Full series of posts:

• A CLEAR Look at the Cantwell-Collins Climate Bill, Part 1: Climate Goals
  
• A CLEAR Look at the Cantwell-Collins Climate Bill, Part 2: Structural Advantages
  
• Think Tank? Or In the Tank? - Does CLEAR Act reveal that the World Resources Institute slanted its analyses of climate bills?
  
• Cantwell-Collins Calls the Question on Offsets

Summary of analysis:

• The CLEAR Act targets a 20% reduction in U.S. greenhouse gas emissions by 2020, relative to a 2005 benchmark, but the bill's emissions cap on fossil fuel emissions would require cuts just 5 percent below 2012 levels, making that target aspirational. If the most recent EIA projections of depressed emissions levels due to the economic recession prove accurate, those cuts could be in the range of 9% below the 2005 benchmark by 2020. The cap would apply only to CO2 emissions, and does not cover the non-CO2 greenhouse gases responsible for roughly 15 percent of U.S. emissions, when weighted by their impact on global warming. To achieve additional reductions necessary to hit the bill's 20% by 2020 target, the legislation directs the President to achieve additional emissions reductions in non-capped sectors of the U.S. economy by directly funding programs to encourage land-use changes that sequester carbon in forestry and agriculture or reduce emissions of non-CO2 greenhouse gases such as methane. The bill sets aside a portion of the cap and auction revenues in a trust fund that prioritizes spending on these additional reductions, but precise uses of that fund is subject to Congressional appropriations, and the 20% by 2020 target should be considered aspirational. See more here.
  
• The CLEAR Act's clean technology investments fall far short of expert recommendations, amount needed to ensure emissions goals are achieved. Ensuring emissions reduction goals can be achieved at affordable and politically sustainable costs, without triggering the bill's cost cap (see below), will require proactive and aggressive investments in clean technology innovation and deployment to ensure a steady supply of affordable emissions reduction technologies. The CLEAR Act will raise an estimated $42-126 billion annually by auctioning 100 percent of the emissions permits created under the bill's upstream carbon cap, leaving sufficient funding for necessary clean technology investments. However, the legislation devotes three-quarters of the carbon auction revenue to sending monthly rebate checks to households on an equal, per-capita basis. That leaves just one quarter of the bill's revenue that is set aside in a "Clean Energy Reinvestment Trust Fund," for an estimated $10-32 billion annually at the outset of the cap and auction program, increasing over time as carbon prices rise to roughly $16-46 billion by 2020. CERT funds would be prioritized to meet additional emissions reductions of non-CO2 greenhouse gases to meet the bill's 20% by 2020 aspirational target, and the bill names a number of other competing potential uses for the fund. Breakthrough Institute estimates that the CLEAR Act could easily devote as little as $2.5-8 billion annually at the range of initial carbon prices to catalyze clean technology innovation, directly support clean energy manufacturing capabilities and domestic market growth, and spur the construction of critical enabling infrastructure, such as long-distance transmissions lines, smart grid technologies and electric vehicle charging stations. That level of investment in clean technology could grow to $4-11.5 billion by 2020 but falls far short of expert recommendations, which call for targeted investments to remove key barriers to widespread clean energy adoption totaling on the scale of $30-80 billion annually. See more here.
  
• The CLEAR Act does not allow carbon offsets and is transparent about the emissions reductions the bill's carbon cap will drive. Fossil fuel importers and producers regulated under CLEAR are not permitted to use emissions offsets to prove compliance with the bill's emissions cap. Unlike other climate bills, CLEAR keeps emissions reductions in non-capped sectors strictly separate from efforts to transform the U.S. energy system through the bill's carbon cap. This enables a transparent debate over how quickly the U.S. energy sector can (or must) transition away from fossil fuels towards cleaner alternatives while ensuring that emissions reduction efforts in other sectors, including agriculture and forestry, are pursued in conjunction with, rather than instead of, the critical transformation of the energy system. Instead of relying on offsets to achieve reductions outside the cap at the expense of reductions under the cap, CLEAR pursues additional emissions reductions outside the energy-sector cap by using a portion of the bill's cap and auction revenues to directly provide incentives for land-use changes that sequester carbon in forestry and agriculture and fund programs to reduce non-CO2 gases such as methane. Competing climate bills, including the House-passed Waxman-Markey bill and the Senate Kerry-Boxer bill, allow regulated entities to rely heavily on emissions offsets for compliance with their emissions caps, despite widely documented difficulties (even outright fraud) in verifying the actual emissions impacts of many offset projects. Both of these competing bills permit regulated polluters to offset up to two billion tons of their emissions annually. That's a huge amount -- roughly one third of all U.S. energy-related emissions -- and is enough to completely negate any pressure on the energy sector to transition towards cleaner energy technologies for much if not all of the next two decades, rendering their emissions "caps" effectively non-binding for the foreseeable future.See more here and here
  
• The CLEAR Act features transparent, predictable cost-containment. Public (and policymaker) tolerance for increased energy prices is a key constraint on politically viable carbon pricing policies. Mechanisms to constrain the cost of carbon are thus an inevitable component of any politically successful cap and trade policy. Securing passage of any carbon pricing proposal will require a clear and transparent debate over the costs (and benefits) of such a policy and political consensus that such costs are worth it. To date, the most prevalent cost containment mechanisms have been complex and opaque, including the massive reliance on offsets. Eschewing the traditional reliance on offsets, CLEAR offers a simple and transparent approach to cost containment that can help end these debates: the bill provides assurance that carbon prices will not rise (or fall) outside of a prescribed and predictable range of prices. This approach, sometimes dubbed a "cost collar," guarantees that auction prices for carbon emissions permits will fall between both a floor and a ceiling, initially set at $7 and $21 respectively in CLEAR, with each value rising steadily each year. If the ceiling is reached, additional permits will be auctioned at that price, increasing the supply of permits to contain prices, and raising additional revenues. Unlike complicated and unpredictiable cost containment measures in other bills which subject climate policy to an endless war of competing economic models, CLEAR's transparent approach to cost containment offers a predictable mechanism that enables a transparent debate about how high the body politic is willing to allow carbon prices to rise, or where we want to limit the economic damage in any worst-case scenario. See more here.
  
• The CLEAR Act's transparent emissions cap calls the question on offsets. Until just recently, carbon offsets appealed to environmentalists, polluting firms, farmers, timber interests, and development agencies alike because they promised to hold down the cost of reducing greenhouse gas emissions while promoting sustainable development. But things that seem too good to be true usually are, and the awareness that offsets all-too-often do not represent real emissions reductions is growing. Rather than resolving the political and economic tradeoffs inherent in reducing emissions, offsets obscured them. Such was the case with Waxman-Markey cap and trade legislation, which passed the House last year. The bill's heavy reliance upon offsets obfuscated the fact that Waxman-Markey would not require emissions reductions by regulated firms for the first decade or two of the program. Thus, the bill would not result in the radical technological transformation required to make clean energy cheap and reduce emissions globally. By eschewing offsets entirely and featuring both a transparent emissions cap, the CLEAR Act would actually mandate greater emissions reductions in capped sectors of the U.S. economy than Waxman-Markey, and thus reveals the way offsets can undermine both the clean energy transformation and environmental objectives. The question now is whether policymakers, green groups and reporters will be able to continue representing offsets as real emissions reductions, and whether they will in the future continue to use them to mask two of the most unpopular elements of emissions trading legislation: higher energy costs and wealth transfers from consumers in developed nations to businesses in developing ones. See more here and here.
  
• The CLEAR Act features a number of other streamlined features, each of which offers advantages. The CLEAR Act would establish a simplified "upstream" cap on the few thousand fossil fuel importers and producers that first bring carbon-laden fuels into the U.S. economy. Unlike competing climate bills, 100% of the emissions permits would be auctioned at a regular (monthly) basis, and only the fuel producers/importers regulated under the emissions cap would be able to purchase permits. Wall Street derivatives marketers, speculators and other interests can't buy or sell emissions permits or create and trade in carbon derivatives or other secondary products under CLEAR. See more here
  

By Ted Nordhaus and Michael Shellenberger

Summary

Until just recently, carbon offsets appealed to environmentalists, polluting firms, farmers, timber interests, and development agencies alike because they promised to hold down the cost of reducing greenhouse gas emissions while promoting sustainable development. But things that seem too good to be true usually are, and the awareness that offsets all-too-often do not represent real emissions reductions has now been recognized by both a new alternative cap and trade proposal (Cantwell-Collins) in the Senate and by the World Resources Institute.

Rather than resolving the political and economic tradeoffs inherent in reducing emissions, offsets obscured them. Such was the case with Waxman-Markey cap and trade legislation, which passed the House last year. The bill's heavy reliance upon offsets obfuscated the fact that Waxman-Markey would not require emissions reductions by regulated firms for the first decade or two of the program. Thus, the bill would not result in the radical technological transformation required to make clean energy cheap and reduce emissions globally.

Green groups like World Resources Institute (WRI) were complicit in the obfuscation, and major media outlets including The New York Times followed their lead, duly reprinting WRI's graph showing that the legislation would reduce emissions reductions 17 percent by 2020, even though all of those reductions could be purchased as offsets.

Continue reading "Cantwell-Collins Calls the Question on Offsets" »

Originally posted at The Real Ewbank

By Leigh Ewbank

Australia's new Opposition Leader Tony Abbott has declared war on the Rudd Government. He has kicked-off his leadership by implementing a polarisation strategy, with the emissions-trading policy forming a central part of the political battlefield. The Opposition's new strategy provides some insight into the way in which the cap and trade politics might unfold in the United States.

The new Opposition Leader has identified the proposed emissions-trading scheme as a weak point for the Rudd Government. Labor exposed its vulnerability with efforts to keep the public debate centred on climate change 'skeptics' and 'deniers', the best example of which being Rudd's high-profile speech at the Lowy Institute late last year.

The Rudd Government has created the perception that emissions trading is the only available climate policy option. They have framed opponents of the so-called Carbon Pollution Reduction Scheme as 'climate skeptics' and opposition to the policy as preventing action on climate change. Former Opposition Leader Malcolm Turnbull bought into this logic--or played along with it--throughout the emissions trading debate and diminished the need for the Government to explain the details of the CPRS to the general public. The result is that while the Government's emissions trading policy is well known to the electorate, how it functions remains largely unknown--excluding of course the climate campaigners, policy wonks, and politicos closely following the passage of the legislation.

Continue reading "Australia Update: Opposition Attempts to Brand Emissions Trading a Tax" »

Cap and trade has been the go-to policy in the effort to mitigate climate change but it is predicated on the idea of making carbon more expensive. In an interview with "Living on Earth" Breakthrough co-founder Michael Shellenberger explains to host Jeff Young why technological advancements that make clean energy cheap, and not carbon regulations, are the key to controlling climate change.

Download the mp3 directly
Or read the transcript that follows...

Continue reading "Michael Shellenberger on "Living on Earth"" »

Republican Scott Brown's upset victory over Democratic incumbent Martha Coakley for the late Ted Kennedy's Senate seat spells the almost certain demise of cap and trade in the Senate.

Yesterday, with eyes fixed on the Brown vs. Coakley race Sen. Bryan Dorgon (D- N.D.) declared cap and trade dead.

Now today Democratic House whip Steny Hoyer says House leadership may strip cap and trade off the other parts of the climate bill:

"We ought not to let one be the victim to the other," Hoyer declared.

It's not the end yet, though. Senate President Harry Reid must dutifully insist that cap and trade is not dead and Senators Kerry and Lieberman will continue to tell themselves that they can pull vibrant (and by necessity, bipartisan) support for a withering policy.

Continue reading "What Comes After Cap and Trade? " »

In Part 1 of our analysis of the new Cantwell-Collins CLEAR Act, we demonstrated how the bill fails to make the investments needed to jumpstart a competitive American clean energy economy and fund the technology innovation and deployment needed to affordably secure deep cuts in U.S. carbon emissions. In Part 2, we focus on several important structural advantages of CLEAR that open the door to a more transparent debate about the costs and benefits of climate action in Congress.

Simplicity and transparency are the strengths of the CLEAR Act, a climate bill recently introduced by Senators Maria Cantwell (D-WA) and Susan Collins (R-ME).

In contrast to competing climate proposals, which weigh in at several hundred pages in length, CLEAR contains just under 40 pages of text. Some of this brevity is achieved by punting on the development of a clean technology investment and competitiveness strategy (see more in Part 3, forthcoming), but much of the bill's simplicity comes from avoiding many of the complex and opaque measures in competing bills, creating new opportunities for transparent and open debate of climate action that may prove critical to securing real political consensus.

CLEAR does not allow offsets, is transparent about emissions reductions carbon cap will drive

Fossil fuel importers and producers regulated under CLEAR are not permitted to use emissions offsets to prove compliance with the bill's emissions cap. Unlike other climate bills, CLEAR keeps emissions reductions in non-capped sectors strictly separate from efforts to transform the U.S. energy system through the bill's carbon cap.

This enables a transparent debate over how quickly the U.S. energy sector can (or must) transition away from fossil fuels towards cleaner alternatives (and there will surely be much debate on that subject). Avoiding offsets also ensures that emissions reduction efforts in other sectors, including agriculture and forestry, are pursued in conjunction with, rather than instead of, the critical transformation of the energy system.

CLEAR's transparent cap on energy-related CO2 emissions is thus much better than competing climate bills at providing the kind of certainty that energy sector players need to plan investments in technology and infrastructure.

Continue reading "A CLEAR Look at the Cantwell-Collins Climate Bill, Part 2: Structural Advantages" »

A new climate bill, introduced Friday by Senators Maria Cantwell (D-WA) and Susan Collins (R-ME), would invest only a tiny fraction of the bill's revenues to catalyze clean energy technology innovation while implementing an emissions cap that requires CO2 emissions to fall roughly 5% below 2012 levels.

[Note: post updated 12/17/09 with a correction and additional information]

At least $15 billion must be invested annually to boost federal R&D budgets and jumpstart clean energy innovation to improve the price and performance of clean technologies, according to a wide consensus of energy experts, along with additional investments in clean energy demonstration, deployment, manufacturing and infrastructure.

All told, direct public investment of an estimated $30-80 billion annually is necessary to make clean energy cheap, accelerate clean tech adoption, and ensure climate objectives can be met in an affordable and timely manner.

In contrast, the Cantwell-Collins bill would initially direct just $2.5-8 billion annually to support U.S. clean energy technologies and industries, the Breakthrough Institute estimates based on the bill's supporting documents.

The Carbon Limits and Energy for America's Renewal, or CLEAR Act proposes to limit U.S. emissions of greenhouse gases through a simplified cap and trade system that auctions permits to polluters and rebates the majority of revenues directly to households through monthly, per capita dividend checks.

The legislation targets a 20 percent, economy-wide cut in U.S. greenhouse gas emissions by 2020, relative to a 2005 benchmark.

To achieve this target, the bill sets an upstream cap on importers and producers of fossil fuels that would require CO2 emissions to fall just over 5 percent relative to 2012 levels. If the most recent EIA projections of depressed emissions levels due to the economic recession prove accurate, those cuts could be in the range of 9% below the 2005 benchmark. [Note: post updated with correction on 12/17/09; rate at which emissions cap declines was misreported in prior version.]

That falls short of the bill's 20% by 2020 target and the CLEAR Act's emissions cap covers CO2 only, which is responsible for roughly 85 percent of U.S. greenhouse gases when each gas is weighted by their impact on global warming.

To fill this gap, the legislation directs the President to achieve additional emissions reductions in non-capped sectors of the U.S. economy by directly funding programs to encourage land-use changes that sequester carbon in forestry and agriculture or reduce emissions of non-CO2 greenhouse gases such as methane. The bill sets aside a portion of the cap and auction revenues in a trust fund that prioritizes spending on these additional reductions, but precise uses of that fund is subject to Congressional appropriations.

While it offers several structural advantages over competing cap and trade proposals (discussed in Part 2, forthcoming), CLEAR is principally focused on pollution reduction and does not implement a clean economy strategy sufficient to keep the U.S. competitive in the global clean energy race (see forthcoming Part 3).

Continue reading "A CLEAR Look at the Cantwell-Collins Climate Bill, Part 1: Climate Goals" »

Promising "we can and will pass climate change and energy independence legislation this Congress," Senators John Kerry (D-MA), Lindsey Graham (R-SC) and Joseph Lieberman (I-CT) unveiled a new framework intended to form the core of a "compromise" climate and energy bill capable of clearing the 60-vote hurdle needed to secure passage.

The framework aims to cut U.S. emissions of greenhouse gases by 17% below 2005 levels in the "near-term," by which the senators apparently mean the year 2020. The three senators brand such a target "achievable and reasonable" and also declare their support for "a long term target of approximately 80 percent below 2005 levels," presumably by 2050.

According to the five-page summary document circulated today on Capitol Hill and published online by EnviroKnow.com, the "tripartisan" framework is meant to "build upon the significant work already completed in Congress" -- a nod to climate and energy bills already crafted by the Senate Committees on Energy and Natural Resources and Environment and Public Works earlier this year as well as the House's Waxman-Markey climate bill, narrowly passed in June.

Details of the new proposal are still scant, in an apparent nod to several Senate committee chairs -- and the numerous swing votes -- who will no doubt shape the final legislation.

Sen. Liberman told reporters today "there are well over 60 votes in play in the Senate, not that we have 60 votes yet." He'll have a steep hill to climb by all accounts.

Will details still vague, we can only get a sense of where the new Kerry-Graham-Lieberman framework is headed, but here's a run-down of notable passages...

Continue reading "New "Tri-Partisan" Climate Framework Aims to Clear High Senate Hurdle" »

Touted as a model for future U.S. cap and trade policy, the EU Emissions Trading Scheme (ETS) is on track to help the EU comply with their Kyoto Protocol obligations, according to a recently released EEA report and liberal climate bloggers. But a recent story by E&E News Greenwire published in the New York Times checked the fine print, and gets at the truth behind this "success" story: creative accounting.

Current greenhouse gas emissions from Western Europe still exceed their U.N. commitments, the report says, and 10 countries will have to rely on emissions trading, land-use changes or carbon offsets to meet their legally binding levels. In general, Mediterranean countries like Spain and Italy have been most delinquent about meeting their targets, the agency said.

Of the wealthy, older E.U. members, only France, Germany, Greece, Sweden and the United Kingdom are currently below their Kyoto agreements, the report says...

A close reading of the report reveals that European ambitions have only begun to catch up with the bloc's commitments, with many of the greenhouse reductions achieved by countries partially derived from secondary benefits, like the gasification of the energy industry in Britain or the economic collapse of the former East Germany.

The 15 Western European nations that accepted a joint target as part of the last U.N. climate deal -- which covers 2008 to 2012 -- committed to cutting emissions on average 8 percent below Kyoto's baseline, typically set at 1990 levels. Even with the help of the recession, emissions for the region sat at 6.2 percent below this baseline in 2008, and the most recent five-year average was 3.9 percent.

The gap is especially pronounced because of the inability of several southern countries to meet the reductions promised as part of the bloc's burden-sharing agreement, which divvied up the bloc's emission commitment in the late 1990s.

"This [emissions] average would have been substantially lower without the large absolute gaps observed between actual domestic emission levels and burden-sharing targets in Italy and Spain," the report says.

These countries will be joined by Austria, Belgium, Denmark, Finland, Ireland, Luxembourg, the Netherlands and Portugal in using Kyoto accounting mechanisms to close their emissions gap.

Some additional emission credits -- enough to increase the E.U. average by 1.4 percentage points -- will come from financing clean energy projects in the developing world. Improved forest management and other land-use changes will account for an additional percentage point, the report estimated.

Another 2.2 percent will come from excess emission credits purchased from other Kyoto members. Already, a host of European countries have purchased these credits from flush post-communist nations, largely through what are called green investment schemes, which seek to mollify criticisms that the emission credits amount to "hot air" (Greenwire, Nov. 9).

By using these accounting schemes, only Austria will be projected to be above its Kyoto commitments. Excess Kyoto credits from Germany, France and Britain will be essential for the region meeting its overall target, the report adds.

Continue reading "Fine Print: Greenwire finds the truth about the EU Cap and Trade "Success Story" " »

Two EPA staff attorneys, who published an op-ed in the Washington Post last week arguing that cap-and-trade was fatally flawed, are being reined in by the Environmental Protection Agency on reportedly ethical grounds and were asked to take down their informational video "The Huge Mistake." But attempts to prevent the attorneys from citing their EPA experience as background for their opinions may be born of an effort to muzzle their outspoken disagreement with pending climate legislation that has garnered significant media attention, rather than a need to comply with federal regulations.

According to the New York Times blog, Dot Earth, the EPA has insisted that Laurie Williams and Allan Zabel remove the video from YouTube as well as from their own website, explaining:

"...they could mention their E.P.A. affiliation only once; must remove language specifying Mr. Zabel's expertise and their years of employment with the agency; and must remove an image of the agency's office in San Francisco."

The demand came just days after the couple's op-ed was published, despite the fact that the video had been available online previously and that the couple had included a satisfactory disclaimer stating, ""Nothing in this video is
intended to represent the views of EPA or the Obama Administration."

Continue reading "EPA Attempts to Rein in Lawyers' Critique of Cap and Trade" »

By Leigh Ewbank, Breakthrough Fellow

Less than three weeks from the Australian Senate's highly anticipated second vote on the Carbon Pollution Reduction Scheme (CPRS) bill, the Australian Government's Mid-Year Economic and Fiscal Outlook (MYEFO) has revealed new problems with the Rudd Government's deeply flawed cap-and-trade plan. Crikey's national politics correspondent Bernard Keane has found that the CPRS will require a massive $5 billion of taxpayer subsidies in its first five years, and that taxpayers won't break even until 2022. With the Labor Government releasing this crucial data so late in the game, it's no wonder that Australia's policy analysts are finding some interesting surprises.

In addition to the billions of dollars in public money the scheme requires to function, Keane shows that the government will give away more free permits to polluting industries than originally thought, concluding that:

"In 2012-13, free permits to [Emissions Intensive Trade Exposed Industries] EITEs account for 28% of revenue. By 2020, they account for nearly 35% of scheme revenue..."

Such giveaways will keep downward pressure on the domestic price of carbon and increase the viability of polluting industries for a decade.

Continue reading "Australian Prime Minister Ignores Cap and Trade Critique" »

Cross-posted from Roger Pielke Jr.'s Blog

Mark Blumenthal of The National Journal has an insightful blog post about the perils of public opinion polls. Here is an excerpt:

How do Americans feel about cap-and-trade legislation?

In recent weeks, two media pollsters reported results on the point. "Six in 10 Americans support a 'cap-and-trade' proposal to cut pollution," said the CNN/Opinion Research Corporation poll. Despite "growing public skepticism about global warming," the Pew Research Center found "more support than opposition for a policy to set limits on carbon emissions."

How accurately do these questions measure public opinion on cap-and-trade legislation?

To answer that question, you may want to consider how Americans answered another: "Some people say the 1975 Public Affairs Act should be repealed. Do you agree or disagree with this idea?"

As a well-informed reader of NationalJournal.com, you are probably inclined to wrinkle your brow and ask, "What's that?" For good reason: It never existed. But its fictitious nature didn't stop 34 percent from expressing an opinion when University of Cincinnati political scientist George Bishop and his colleagues asked a sample of Cincinnati adults that question in 1978. Bishop and other scholars have consistently replicated that finding using national samples and similarly fictitious or unknown legislation. As summarized in Bishop's book, The Illusion of Public Opinion, between 30 and 40 percent of Americans will offer opinions on legislation they have never heard of.

Blumenthal asks "what are we to make of responses to questions that use possibly unfamiliar terms like "greenhouse gases" and "carbon dioxide emissions?""

He put that question to George Bishop, author of the 1975 study referenced above, here is Professor Bishop's response:

"'Cap-and-trade' legislation is so obscure and so little-known by the vast majority of Americans," he concluded via e-mail, that questions about it generate the same sort of "pseudo-opinions" as the fictitious 1975 Public Affairs Act. "Reliable and valid measures of public opinion on such a complex policy issue," he writes, "cannot be so simply simulated by merely telling respondents what it's about and then asking them to react to it on the spot. Down that road lie misleading illusions and the manufacturing of public opinion -- a disservice to the Congress, the president and the press that covers them."

My view is that public opinion is plenty strong enough for action to occur, in other words, there is nothing politically intrinsic about the issue that stands out as being a barrier to action. By contrast, legislation to make abortion illegal might face such an intrinsic political barrier. That means that the issue is about the specifics of policy, and the political implications of specific policies -- who wins and who loses in specific bills. Consequently, at this point in the debate public matters very little. What matters are the perceptions of various decision makers in Congress. Crafting policy that can be effective, be seen to be effective and provide parochial as well as national benefits is the political challenge facing the Congress. From what I read, they are not doing so well in meeting these criteria.

Update: NASA climate scientist James Hansen has affirmed Williams and Zabel's criticism of cap-and-trade in pending climate and energy legislation. To read his commentary see Andy Revkin's Dot Earth blog here.

Two lawyers at the Environmental Protection Agency (EPA) with more than forty years of collective experience, wrote this week in the Washington Post criticizing pending climate and energy legislation and enumerating the flaws of the cap and trade system both House and Senate versions of the bill espouse.

According to Laurie Williams and Allan Zabel:

"Cap-and-trade means a declining "cap" on total emissions, while allowing trading of pollution permits. Confidence in the certainty of declining caps is based on the mistaken assumption that cap-and trade was proven in the EPA's acid rain program. In fact, addressing acid rain required relatively minor modifications to coal-fired power plants. Reductions were accomplished primarily by a fuel switch to readily available, affordable, low-sulfur coal, along with some additional scrubbing. In contrast, the issues presented by climate change cannot be solved by tweaks to facilities; it requires an energy revolution through investments in building clean-energy facilities.

The biggest obstacle to this revolution is that uncontrolled fossil fuel energy remains much cheaper than clean energy. Cap-and-trade alone will not create confidence that clean energy will become profitable within a known time frame and so will not ignite the huge shift in investment needed to begin the clean-energy revolution. In recent interviews, even the economists who thought up cap-and-trade have said they don't believe it's an appropriate tool for climate change."

Williams and Zabel go on to point out that perhaps the biggest flaw of the proposed cap and trade system is its inclusion of dubious carbon offsets, that are not only close to impossible to verify, but allow major carbon emitters to continue to maintain business-as-usual practices for the majority of the next two decades.

Continue reading "EPA Lawyers Criticize Cap and Trade, Carbon Offsets in Pending Climate and Energy Legislation" »

Breakthrough's Jesse Jenkins joined former Senator John Warner of Virginia on the KPFA Morning Show today to discuss Senate climate and energy legislation, the focus of hearings this week in the the Environment and Public Works Committee. (listen to the full interview below)

Senator Warner, a rare Republican champion of climate action, was the co-sponsor of the 2007 Lieberman-Warner "Climate Security Act." He retired in 2008 after thirty years in the Senate but remains an active advocate of Congressional climate legislation, and is working to convince his reluctant Republican former colleagues to embrace the climate and energy legislation authored by Senators John Kerry (D-MA) and Barbara Boxer (D-CA).

Jenkins was honored to join the discussion with Senator Warner (who's spent more time in the Senate than Jenkins has on this warming planet). He was also pleased to find consensus with the veteran Republican on the need for final Senate climate legislation to include much greater investments to ensure U.S. innovators, entrepreneurs and businesses invent and commercialize clean energy technologies here in America.

Agreeing with the strong consensus of energy innovation experts, the former Senator said that the current Kerry-Boxer bill invested too little in clean energy R&D and did not provide enough proactive support for American firms commercializing, manufacturing and installing clean energy technologies, but he noted that final legislation is still taking shape. Hopefully his common-sense attitude on clean energy innovation and technology investment will prevail on Senate Republicans, who so far have resorted to threatening to boycott hearings on the Kerry-Boxer bill, rather than work constructively to ensure the bill includes more funding for American innovators and clean energy firms.

Senator Warner, the long-time Chairman or Ranking Member of the Senate Armed Services Committee and a former Secretary of the Navy, also highlighted the need to avert climate change in order to mitigate future conflicts and humanitarian crises that would sap the resources of the U.S. military. For more on the Senator's views on climate legislation, you can read his testimony before the Environment and Public Works Committee on earlier this week here.

Listen to the full interview here or using the player below. The segment starts at 1:08:00 into the Morning Show.

Late Friday night, Senator Barbara Boxer's Environment and Public Works Committee released a new draft of the Kerry-Boxer "Clean Energy Jobs and American Power Act" (S.1733), the first version of the legislation to detail how emissions allowances created by the bill will be divvied up. These allowances, which give polluters the right to emit greenhouse gases under the bill's cap and trade program, will be worth nearly a trillion dollars over the first ten years of the program alone.

Breakthrough Institute staff worked over the weekend to dig through the new legislation and get an accurate picture of the allowance allocation pie [see summary tables and graphics below and click here to download a comprehensive spreadsheet (*also in xls format) of allowance allocations in both Kerry-Boxer and the House Waxman-Markey/ACES bill. Note: updated after initial posting to convert EPA forecasts to 2009 constant dollars. Hat tip to Jason at 1Sky for catch].

Overall, the allowance allocation scheme mirrors the bill's House-passed sibling, the American Clean Energy and Security Act (ACES), aka the Waxman-Markey bill (HR 2454) [for a side-by-side comparison of the two bills, click here].

Depending on the value of emissions allowances under the cap and trade program, an average of roughly $70 billion to $126 billion in emissions allowances will be created and distributed on each year under the first ten years of the bill's cap and trade program, 2012-2021.

Of that value, by far the largest share, roughly 64% of the total allowances, will be distributed for free to shield energy consumers and industry from the higher energy prices driven by the establishment of a price on carbon dioxide and other greenhouse gases under a cap and trade system. This includes both direct rebates to end consumers and low-income energy assistance, as well as free allocations to electric and natural gas utilities (aka "distribution companies"), which they are directed to use "on behalf of" their customers. It also includes direct transfers of billions of dollars in free allowances to various industries, ranging from the relatively defensible (11.3% of allowances to heavy industries vulnerable to international competition), to the pretty indefensible, (e.g. a windfall-profit generating allocation of over 3% of the allowances -- worth at least $2 billion annually -- to the "merchant" operators of conventional coal plants).

By contrast, only about 13% of the value of allowances will be invested in various clean energy technologies, including incentives for the deployment of carbon capture and storage technology (aka CCS, given 2.2% of permits on average each year), federal, state and local government funds to incentivize renewable energy and energy efficiency (6.4%), and investments in advanced clean vehicle technologies (1.7%).

Just 1.9% of the allowances are dedicated to critical clean energy research and development (R&D) efforts, which amounts to an investment of just about $1.4 billion annually under EPA-projected allowance prices (in 2009 constant dollars).

Overall, the "Clean Energy Jobs and American Power Act's" investments in clean energy technologies will total under $9.5 billion per year under allowance prices projected by the EPA.

Continue reading "Kerry-Boxer Climate Bill Allowance Allocation Breakdown" »

Friday Factoids time again...

As President Obama challenges the U.S. to lead in the global clean energy race today, here's a quick comparison of methods that can drive clean energy deployment. Which do you think will be more effective...

• Average CO2 prices under the cap and trade system that would be implemented by the House-passed Waxman-Markey bill are expected to be roughly $15 per ton average through 2020.

  Ignoring for a moment free allocations that could undermine these permits, that will raise the price of coal-fired power plants and natural gas fired power plants against which clean energy must compete by roughly $15 per MWh and $8 per MWh respectively. A typical coal plant emits roughly 1 ton CO2 per MWh and a natural gas plant emits about 40% less.

• The production tax credit that has driven the rapid expansion of the wind industry (when it isn't expiring every other year...) drives down the cost of wind power by roughly $20 per MWh.


• Feed-in tariffs responsible for rapid growth of the solar industry in Germany lower the net cost of solar power by over 50 cents per kilowatt-hour, or $500 per MWh. In the U.S., an investment tax credit nocks off a full 30% of the cost of solar projects and state-level incentives offer even greater support in big solar states like California, Pennsylvania and New Jersey. The value of solar renewable energy credits (SRECs) supplied to solar energy generators in New Jersey has averaged well above $400 per MWh over the last few years.


• This year and next, new wind, solar and other renewable energy projects can enjoy a cash grant in lieu of these tax credits worth 30% of the total cost of the projects, funded through the stimulus bill. That incentive is expected to drive up to $10 billion in grants supporting over $33 billion in clean energy projects.

In summary: CO2 price from cap and trade = effective clean energy subsidy of $8-15/MWh. Current PTC is worth $20/MWh. Solar incentives typically top $400-500/MWh. Stimulus bill driving big investments with cash grant worth 30% of clean energy project costs. How again is the House-passed cap and trade program going to spur a clean energy revolution?

Click to enlarge

*All figures in this post are approximate and meant for comparison purposes only.

Climate change legislation recently passed by the U.S. House of Representatives and now under consideration in the Senate will "succeed in perpetuating business as usual and fail to avert catastrophic climate change," according to a new Greenpeace report quietly released yesterday.

Titled "Business as Usual," the report was prepared on behalf of Greenpeace by David Sassoon, who publishes the climate news site, SolveClimate. It is written as a "plain-spoken" analysis meant to be "a call to action to the President of the United States," according to the document.

"In order for federal climate legislation worthy of this nation to pass Congress, we see no alternative to active and principled engagement from the Oval Office," Greenpeace writes.

The report levels five key criticisms of current Congressional legislation, calling attention to what Greenpeace describes as "five points of maximum danger" that the environmental group argues must be addressed to ensure climate legislation is capable of spurring "a swift transition to a clean energy future."

While we certainly don't share Greenpeace's position on all (most) climate matters, this new report levels a pointed and impassioned critique of current Congressional climate action well grounded in the details of the pending legislation. Here's a 'Cliffs notes' version of the full report below the fold...

Continue reading "Greenpeace: Climate Legislation More Likely to Perpetuate Fossil Fuel Economy than Spur Swift Transition to Clean Energy" »

Senator Barbara Boxer (D-CA), chair of the Environment and Public Works Committee, said she's ready to green light debate by month's end on the Senate climate bill she has co-authored with Senate Foreign Relations Committee Chair John Kerry (D-MA). According to Politico:

A major Senate climate change bill is written and ready to be debated before the Environment and Public Works committee, the chairwoman of the panel said Tuesday.

Sen. Barbara Boxer's legislation would distribution of tens of billions of dollars of pollution allowances to power plants, manufacturing, and other industries. It will mirror cap and trade legislation passed by the House in late June with, she noted, "a few tweaks."

For a summary of those "tweaks" - at least as of the discussion draft version circulated by Kerry and Boxer two weeks ago, see my post "Anatomy of a Bill: Key Features of Kerry-Boxer Senate Climate Bill" over at theEnergyCollective.com.

Continue reading "Sen. Boxer Green Lights Senate Climate Debate" »

By Yael Borofsky and Jesse Jenkins

Initial modeling of the Kerry-Boxer climate bill (full text), the Senate sibling of the House-passed Waxman-Markey bill (aka ACES), reveals that carbon prices are likely to remain at the floor price set by the legislation through at least 2019, averaging just $15 per ton (in nominal dollars) through that period. According to E&E (subscription req'd), Point Carbon, the Norwegian consulting and carbon market analytics firm that released the analysis, was the first firm to model and analyze future carbon prices under the proposed legislation, and their findings corroborate Breakthrough's own analysis of Congressional climate legislation (see full series here).

In the Senate version of the bill, the Point Carbon model, which the firm dubs its "holistic" model because it accounts for major policy pieces within the legislation, identifies supply of domestic and international offsets as a major carbon price driver:

"Point Carbon analysts identified what they see as the major price drivers, including the supply of domestic and international offsets. The Senate bill, compared to the House version, includes more domestic offsets and allows fewer international credits into the system. Offsets are credits companies can buy for emissions reductions they contribute to in other parts of the country or globally."

Point Carbon concludes that the supply of permits and offsets will be sufficient to hold market prices for carbon to the lowest levels permitted by the legislation, a $10 per ton (in 2005 dollars) floor price, rising each year at 5% above inflation.

"The price of carbon emissions permits is expected to stay at the price floor through 2019. A price floor, if adopted, would provide an incentive for industrial plants and utilities to save, or "bank," their pollution permits in the early years, so they can be used in the later years as prices rise."(emphasis added)

As Breakthrough has shown in a series of analyses on the emissions cap under House climate legislation, banking of excess permits during early years helps delay required emissions reductions under the cap and trade program for many years into the future.

Continue reading "Kerry-Boxer Carbon Price Will Remain at Price Floor According to First Modeling of Draft Bill" »

Cross-posted from Roger Pielke Jr.'s blog

When the primary issues involved in the U.S. climate bill ares about how much subsidies are going to be devoted to fossil fuel interests such as coal and petroleum, then you can guess that the bill is not going to do much to decarbonize the U.S. economy. From The Hill:

The climate bill coming this week from Sens. Barbara Boxer and John Kerry will likely leave some big questions unanswered, including the biggest: how to divvy up carbon allowances.

Allowances are permission slips to release emissions, and they function as a currency in the market the cap-and-trade legislation would create. For Boxer (D-Calif.) and Kerry (D-Mass.), they are chits to use to negotiate support for their bill as they attempt to form a winning coalition.

How are those "chits" being used?

The draft is also expected to have "placeholders" for some additional subsidies for coal and nuclear power. . .

Most energy lobbyists expect the bill to pass Boxer's committee but not get much further this year.

That would give President Barack Obama some progress on climate to show off in Copenhagen, Denmark, where world leaders will discuss what to do about global warming, but leave a final push in the Senate for early 2010.

Several Democratic senators are already on record as being uneasy about the climate bill. The distribution of the allowances is one way to ease those concerns.

Some sectors, namely the oil and gas industry, feel like they weren't treated fairly under the allowance system Waxman and Markey eventually settled on. Jack Gerard, the president and CEO of the American Petroleum Institute, said the sector was seeking more "equitable" treatment.

Refiners got 2 percent of the allowances to cover emissions at their own facilities. But the sector is also responsible for the emissions that come from the use of their products -- in total, around 44 percent emitted by human activity in the United States.

The Institute is flying in Hispanic workers this week as part of its grassroots push to change its image from that of the corporate fat cat. The group was preceded by a group of women and African-Americans who work in the industry, and will lobby on taxes and access issues beyond climate.

"We want to show the human face of the oil and gas industry in the United States," Gerard said.

Continue reading "Politics Trumping Policy in the U.S. Emissions Bill" »

As the Senate's climate and energy bill takes shape, it looks broadly similar to the House-passed Waxman-Markey American Clean Energy and Security Act, with a couple key exceptions, according to E&E News' ClimateWire service.

ClimateWire has obtained an early version of the bill (pdf) being written by Senators Barbara Boxer (D-CA) and John Kerry (D-MA). Key sections are still under development as Senate staffers put the finishing touches on the discussion draft version of the bill scheduled for public release tomorrow, but the early draft appears to mirror closely the structure and content of its House sibling.

Emissions targets in 2020 are stronger than the House-passed version (20% below 2005 levels instead of 17%) and the EPA's authority to separately regulate greenhouse gas emissions from major sources is reportedly preserved. A modest new nuclear title has been added as well. Other major provisions, including the extensive permitted use off offsets and a strategic reserve pool to control allowance prices, appear consistent with the House climate bill.

[Update, 9/29/09, 5:33 PST: additional details are emerging as successive drafts of the legislation are leaked to reporters and bloggers. An 801-page draft bill was leaked this afternoon, which is reportedly more current than the 684-page draft reported by ClimateWire earlier today. This version is still not the final, which we'll have to wait until tomorrow for.

The current draft apparently contains a cost collar on emissions allowance prices backed up by the same kind of strategic allowance reserve in the House bill. The floor price begins at $11 per ton in 2012 and the ceiling at $28 per ton, both rising steadily each year. The House version had a $10 floor price in 2012 and a ceiling that floated at 60% above a rolling average of market prices for allowances, providing little certainty of an upper price on carbon under the bill. E&E News also reports that the new bill contains greater support for research and commercialization of advanced biofuels and greater incentives to replace coal-fired power plants with new natural gas plants.]

Key sections on how the climate bill will divvy up hundreds of billions of dollars in allowance allocation revenue will remain blank, to be filled in later when Senator Boxer releases a "chairmans mark" before formal markup of the bill in the Environment and Public Works Committer, likely sometime in October. However, if theHill.com's observations are accurate, as in the House bill, these billions in new revenue will likely be considered "chits to use to negotiate support for their bill as they attempt to form a winning coalition," rather than a funding source for critical, proactive investments to spur clean energy technologies, industries and jobs.

Key excerpts from the ClimateWire story follow...

Continue reading "Waxman-Markey's Senate Sibling Mirrors House Climate Bill" »

For readers of Climate Progress looking for some help sorting through Joe Romm's latest vituperation, here's a cliff-notes version: he agrees with our conclusions showing that climate legislation passed by the House in June would over-allocate emissions permits in the early years of the program, resulting in a collapse of carbon prices to the bill's $10 floor and the banking of excess permits that will undermine the stringency of the emissions cap in future years. He warns readers about precisely the same likely outcomes here.

Breakthrough conducted analysis of the implications of the economic recession and lower-than-expected emissions levels, concluding that the House climate bill would not require regulated firms to reduce emissions at all, either through offsets or actual reductions in their own emissions, until as late as 2018 under likely economic recovery scenarios. With offsets utilized at just 6 to 25 percent of the maximum levels permitted, the bill's cap and trade program would not require any actual reductions in emissions from regulated firms until 2020 or later.

Romm doesn't like these conclusions because it challenges his contention that Waxman-Markey is a strong bill. So, unable to actually challenge our analysis, Romm calls our analysis "crap" -- and then says we "glommed" it from him. He then quotes at length from an egregiously unbalanced E&E article about our analysis.

So, long story short: Breakthrough's analysis stands, as do the 19 prior analyses we have conducted of House climate legislation.

Cross-posted from Roger Pielke Jr.'s blog

Paul Krugman has confused an end -- stabilizing concentrations of carbon dioxide in the atmosphere -- with a means to achieve that end -- cap and trade. Krugman writes:

In the absence of government action, the private sector will increase emissions up to the point where there is no further marginal benefit. That is, emissions will rise to whatever level is implied by profit-maximization, paying no attention to the effects on the environment.

Krugman is making a case for limiting emissions, and that argument is pretty solid accordng to basic economic theory. But he goes too far when he says that because a case for reducing emissions makes sense, it necessarily means that cap-and-trade makes sense. The problem with cap and trade lies not in economic theory, but in political realities. Cap and trade cannot work in the real world -- Krugman's means cannot achieve the ends he seeks. He just assumes policy success, which is easy to do in theoretical arguments, but pretty far from the real world where we actually have to live with the policies that emerge from the messy legislative process.

If cap and trade cannot work, then it would be logical that we should be exploring other means to reducing emission. But instead, Krugman tries to shut down any discussion of alternative approaches by saying that if you don't accept his means, then you must not accept his ends. Krugman is ironically contributing to the very policy failure he seeks to avoid. Nothing like some messy facts to trouble an elegant theory.

Almost as soon as the calls for global cooperative action on climate change finished echoing around the halls of the United Nation Building during the UN Climate Summit in New York on Tuesday, an EU court may have undermined its own climate change mitigation policy by ruling on Wednesday that the governing body overstepped its power when it imposed "excessively strict" emissions quotas on Poland and Estonia in 2007.

Upon hearing the news, the urgent need for climate change action was easily forgotten, and Italy, with other EU members considering following suit, quickly petitioned the EU to increase its carbon emissions quotas - action that is hardly indicative of global cooperation against climate change and demonstrates the unwillingness of countries to submit to any international climate policy that could potentially constrict their economic growth. As Breakthrough Senior Fellow Roger Pielke, Jr. noted on his blog:

"Absent a world government, the ruling should make clear that which should already be obvious -- there is no global set of institutions capable of overseeing any sort of interlocking, multi-national cap-and-trade programs. If it can't work in the EU it certainly won't work in the UN."

The viability of Europe's emissions trading scheme, which allows firms that exceed their carbon emissions allowances to purchase permits from firms that have successfully reduced theirs, may be threatened by the EU's ruling. In addition to Italy's written request to have its emissions quotas re-considered, the EU court is now facing similar cases involving Bulgaria, Romania, Latvia, Lithuania, and the Czech Republic, according to Deutsche Welle.

Continue reading "EU Court Ruling Reveals "Cracks" In Kyoto Framework" »

Robert Stavins, Director of the Harvard Environmental Economics Program and a leading proponent of cap and trade, acknowledged in an op-ed for the Huffington Post last week that capturing energy efficiency opportunities is more challenging and costly than many have predicted.

In his recent report entitled, "Too Good To Be True? An Examination of Three Economic Assessments of California Climate Change Policy," Stavins found that three separate studies of the California Global Warming Solutions Act of 2006 - all reporting that emissions reductions targets were achievable at no, or negative, cost to the economy - grossly underestimated the economic burden through errors of omission.

An older but similar study, often referred to as the Five Labs Study (executive summary), conducted by the DOE's Interlaboratory Work Group, also reported that efficiencies to reduce emissions could be captured at no economic cost. These findings, published in the late 1990s, were used to bolster support for the Kyoto Protocol despite the fact that the authors readily acknowledged that the study had not "analyzed specific policies to achieve the cases, identified the political feasibility of policies, or described a pathway to achieve the cases." According to Stavins' critique:

"Those studies were terribly flawed, which was what led to their faulty conclusions. I had thought that such arguments about massive "free lunches" in the energy efficiency and climate domain had long since been laid to rest. The debates in California (and some of the rhetoric in Washington) prove otherwise."

Specific policies, the feasibility of policies, and the effectiveness of policies, asserts Stavins, all have cost implications that are egregious to ignore. By omitting them in the early Five Labs Study and the later California studies that Stavins analyzes in his report, only the cost of specific actions to reduce emissions are accounted for, not the often considerable costs associated with policy implementation.

Continue reading "Stavins: For Energy Efficiency, No Such Thing As a "Free Lunch"" »

By Jesse Jenkins, Ted Nordhaus and Michael Shellenberger

The large decline in U.S. emissions in 2008 and 2009 due to the economic recession ensures that if the House-passed Waxman-Markey climate legislation becomes law, the bill's emissions reduction cap will require no reduction of carbon emissions over the first two to five years of the program. The resulting oversupply of emissions permits will allow regulated firms to continue business as usual emissions through as late as 2018, according to a new analysis by Breakthrough Institute based on new Energy Information Administration emissions projections that take into account the impacts of the global recession.

The analysis further establishes that very modest utilization of the offset provisions of the Waxman-Markey bill, as little as one-tenth to one-quarter of the levels of offset utilization projected by the Congressional Budget Office and the Environmental Protection Agency respectively, will allow emissions in regulated sectors of the U.S. economy to proceed at business as usual levels through 2020 or beyond. Depending upon how quickly U.S. emissions recover over the next decade, firms would need to purchase on average as few as 124 million tons of offsets annually in order to comply with the emissions reduction caps through 2020, substantially less than the 526 million and 1,223 million tons of average annual offset utilization between 2012 and 2020 projected this summer by CBO and EPA respectively.

In conjunction with the free allocation of a high percentage of emissions allowances under Waxman-Markey, and lower global demand for offsets from recession-hit EU and U.S. firms, substantial over-allocation of emission allowances in the early years of the program will likely lead to a cap and trade program awash in both cheap emissions allowances and offsets during at least the first decade of implementation. Under such conditions, the functional carbon prices for the first decade or more under Waxman-Markey are likely to hover at or even below the $10 per ton floor on allowance auction prices (rising slowly each year) established by the bill.

Continue reading "Climate Bill Analysis Part 20: Over-Allocation of Pollution Permits Would Result in No Emissions Reduction Requirement during Early Years of Climate Program" »

With just ten weeks until the world's nations meet in Copenhagen this December to try to hammer out a global consensus on efforts to reduce greenhouse gas emissions and build a global clean energy economy, Breakthrough's Jesse Jenkins returned to KPFA radio Monday to discuss the coming climate and energy policy debates in the U.S. Senate and on the international stage. Jenkins joined host Mitch Jeserich and Dan Jacobson of Environment California on this week's segment of "Letters to Washington," which aired Monday on KPFA radio in the Bay Area and was syndicated throughout the country this week.

You can listen to the segment below, which begins at 1:25:25...

A quick post this morning...

The global community should be investing $300 billion annually to combat global warming, according to UN climate chief Yvo de Boer (pictured). De Boer, the Executive Secretary of the UN Framework Convention of Climate Change, says the world needs to be spending $100 billion annually to help vulnerable communities adapt to the impacts of climate change, and another $200 billion each year to shift the global energy mix away from fossil fuels.

"The world will need a phenomenal amount of money to change its energy supply from fossil fuels to cleaner sources and to adapt to climate change," de Boer said Friday.

Continue reading "UN Climate Chief: Global Community Needs to Invest $300b Annually in Climate Fight" »

By Juliana Williams, Breakthrough Fellow

Thursday, 10 Senate Democrats sent a letter to the President Obama outlining their position on upcoming climate policy. Senators Sherrod Brown (D-OH), Debbie Stabenow (D-MI), Russell D. Feingold (D-WI), Carl Levin (D-MI), Evan Bayh (D-IN), Robert P. Casey (D-PA), Robert C. Byrd (D-WV), Arlen Specter (D-PA), John D. Rockefeller IV (D-WV), and Al Franken (D-MN) voiced their position to make sure that effective climate policy both reduces emissions and strengthens American manufacturing. The letter's signatories want U.S. climate policy to:

• Include transition assistance as factories become more efficient and as they retool to make clean energy products in a more efficient way;


• Set negotiating objectives around manufacturing that the U.S. can take to the Copenhagen climate negotiations in December;


• Establish mechanisms to verify emissions reductions and hold countries accountable for meeting their goals; and


• Establish a border adjustment (fee) on goods from countries with less rigorous climate provisions.

The New York Times headline editors were quick to ominously label the letter a "threat" to the passage of a climate bill, but that is hardly the case. This letter was not an ultimatum stating opposition to climate legislation, or even to the Waxman-Markey bill in particular. The letter states the Senator's support for climate action and provides a forum for addressing their clearly stated concerns that if anything, should enable the design of an effective and passable bill. If these critical swing Senators remain "a threat" to climate legislation, it is more due to failure of creative policy design than the evil machinations of industry-funded hacks from coal states. So before we vilify these ten Senators - every one of whom is likely necessary to secure passage of any climate or energy legislation - let's take a close look at what they are actually saying...

"short-term transition assistance in the form of rebates provided to energy-intensive and trade-exposed industries"

While it's unclear whether this is calling for additional emissions allowances for energy intensive industries, the simple fact is that energy is a primary input to our entire economy, making energy costs a major political and economic sensitivity. This is most pronounced in states reliant on coal for their electricity mix and/or reliant on energy-intensive industries for their economy (e.g. the states whose senators signed this letter). That's the simple reality of climate politics. It's long past time to internalize that and pursue good policy design that can still succeed in that political environment. Good climate policy should be able to support manufacturing in the clean energy economy. Let's make sure the details of policy design match the "green jobs" messaging.

Continue reading "Senators: Climate Bill Should Support Clean Energy Manufacturing" »

By Leigh Ewbank, Breakthrough Fellow

This week marks the 40th anniversary of Neil Armstrong's moonwalk, the event which made the US the first and only nation to accomplish one of the greatest technological feats in human history. While space-race aficionados will argue that US-Soviet competition continued beyond the 1969 moon landing, for the layperson, Armstrong's 'small step' marked the end of the space race.

In 2009, the United States faces a new global competition, one that will have far greater implications for the future of our nation and the world: the clean energy race

The dual challenges of climate change and increased economic competitiveness are driving nations to develop new energy technologies that harness earth's abundant renewable resources. This technology is increasingly viewed as central to our economic fortunes with renewable energy and other clean technologies poised to be the next big growth sector. On several occasions President Obama has acknowledged that:

'The nation that leads the world in creating new sources of clean energy will be the nation that leads the 21st century global economy.'

We've heard calls for a New Apollo project for renewable energy before, and I will not discuss the merits of such a scheme here. Instead, on this historic anniversary, I will compare the space race of the Cold War era and the clean energy race of today--both similarities and differences are apparent, and both offer insights into America's current standing in today's clean energy race.

Continue reading "40th Anniversary of the Moon Landing - Lessons for the Clean Energy Race" »

By Yael Borofsky, Breakthrough Fellow

As Congress debates the Waxman-Markey climate bill, Asia is moving rapidly to win the clean energy race. So warns a new article in the Washington Post today that should serve as a wake-up call to America's leadership at the highest level.

The new investigative article by Steven Mufson, entitled "Asian Nations Could Outpace U.S. in Developing Clean Energy," confirms increasingly urgent warnings issued by many, including the Breakthrough Institute, that the United States must dramatically increase direct investments in a clean energy technology push, or be quickly left behind by China, South Korea, India, Japan and others.

Despite Obama's intentions to increase America's international competitiveness, the article reports that the amount and scale of investments in renewable energy programs coupled with ambitious renewable energy use targets are putting these Asian nations on pace to surpass programs set forth by both the U.S. economic stimulus package and the American Clean Energy and Security Act, the massive climate and energy bill recently passed by the U.S. House of Representatives.

Citing Breakthrough's Jesse Jenkins, the article warns:

"If the Waxman-Markey climate bill is the United States' entry into the clean energy race, we'll be left in the dust by Asia's clean-tech tigers," said Jesse Jenkins, director of energy and climate policy at the Breakthrough Institute, an Oakland, Calif.-based think tank that favors massive government spending to address global warming.

Much of the G8 climate discussions last week were stymied by China and India's outright refusal to accept an international (or any) ceiling on greenhouse gas emissions. Meanwhile, the Washington Post reports, both countries, as well as South Korea, are forging ahead with dramatic steps to ramp up their renewable industries in ways that will reduce their emissions while flexing their strengthening clean-tech R&D muscles.

The full article can be read below...

Continue reading "Washington Post: Asia's Clean Tech Tigers Surging Ahead in Clean Energy Race" »

In a letter submitted to President Obama today, a group of 34 prominent Nobel Prize recipients decried the lack of clear support in "The American Clean Energy and Security Act" (ACES) for the President's own promise to establish a Clean Energy Technology Fund of $150 billion over the course of ten years. The Nobelists, including many of the world's most prominent physical scientists, are calling on Congress and the President to ensure the climate and energy bill currently being debated by the Senate includes adequate and sustained support for clean energy innovation.

This letter represents the best and the brightest of the American science community, and echoes a call long issued by the Breakthrough Institute for large investment in clean energy (see "Letter to Obama & Congress: $30 billion Annually Needed for Energy Technology" and "Top Energy Scientists Call for $30 Bi Annual Investment in Clean Energy").

Continue reading "34 Nobel Prize Winners Write President Obama Urging Support for Clean Energy R&D" »

I was interviewed on a radio show this morning about our new climate "super lobby" analysis with Burt Cohen, former State Senator from New Hampshire and host of the radio show Port Side:

Download the mp3 file here

Our "super lobby" analysis is available here:
Climate Bill Analysis Part 19: ACES Could Align Economic Interests to Weaken Climate Legislation

Our AlterNet oped on the analysis is here:
The New Energy Bill May Create a 'Super Lobby' of Powerful Opposition

You can follow my updates at www.twitter.com/TerynNorris

By Teryn Norris
Originally published by AlterNet
July 8, 2009

The recent passage of the American Clean Energy & Security Act (ACES) through the U.S. House of Representatives drew different reactions from climate and environmental advocates. But one key perspective shared by most advocates is that, despite its weaknesses, the bill is a good first step. ACES builds a solid foundation for future progress on U.S. climate mitigation, the argument goes, and climate advocates will be well-positioned to strengthen the legislation in years ahead.

But what are the prospects for strengthening ACES in future years? This question is subject to many uncertainties, depending on the vagaries of the political climate. But a closer examination reveals that ACES could create a "super-lobby" of interest groups that will significantly diminish the possibility of achieving future reforms.

The newest climate lobby -- and potentially one of the most powerful in years to come -- is the financial industry. If ACES is signed into law, the global carbon market could become the largest commodity market in the world. According to Bart Chilton, Commissioner of the U.S. Commodities Futures Trading Commission (CFTC), "The potential size and scope of a structured carbon emissions market in the US is unequivocally vast. It is certainly possible that the emissions markets could overtake all other commodity markets."

Continue reading "New Climate Bill Could Create "Super Lobby" Against U.S. Emissions Reductions" »

This analysis was also covered in an op-ed at AlterNet. Breakthrough Institute's full collection of ACES analyses is here.

New analysis by the Breakthrough Institute concludes that the American Clean Energy & Security Act (ACES) could create a vast new carbon derivatives market subject to financial speculation and create a powerful alignment of economic incentives among the financial industry, carbon offset producers, and utilities and fossil fuel companies to weaken or oppose measures to reduce emissions in capped U.S. sectors.

Offset Industry & Utilities

The ACES bill would create new demand for domestic and international carbon offsets by allowing polluters to purchase these relatively cheap offsets in lieu of reducing their emissions. The bill allows for the purchase of 1 billion tons of domestic offsets and 1 billion tons of international offsets each year.

The use of offsets to meet emissions reduction targets has significant implications when evaluating the impacts of ACES. Offset utilization is one of the largest variables in the proposal determining both economy-wide emissions reductions and reductions in capped sectors of the economy, established carbon prices, revenues raised through auctioning allowances and revenues dedicated to clean energy, levels of private investment in clean energy driven by the program, and the revenues transferred from households and other domestic energy end-users to international interests through offset purchases.

How many of these offsets will be utilized is uncertain, however, if all offsets are utilized and purchased at the average allowance price estimated by EPA, the bill would create a domestic offset industry with annual sales of $20 billion per year by 2020. The profit margin on the sale of such offsets is also uncertain, but total profit from domestic offset production is likely to range in the billions of dollars each year. Below is a table estimating total potential sales compared to projections by the EPA (see here) and CBO (see here) on the utilization of offsets through 2020 (value estimates based on EPA price projection of $15/allowance in 2012 and $20/allowance in 2020):

Continue reading "Climate Bill Analysis Part 19: ACES Could Align Economic Interests to Weaken Climate Legislation" »

Flanked by Energy Secretary Steven Chu and Carol Browner, the administration's Energy and Climate 'Czar,' President Obama discussed his thoughts Monday on the House of Representatives' recent passage of the ACES energy and climate bill.

Secretary Chu stuck, for the most part, to his favorite talking point: comparing US energy policy to the hockey playing of Wayne Gretzsky. We need to play policy like the latter played hockey, Chu is fond of saying, by concentrating on where the puck is going to be rather than where it is at the moment.

Browner (joined at one point by Chu) continually, and almost dogmatically, asserted that prior regulation had successfully spurred rapid innovation and transformed industry. According to Browner:

"That story can be told time and time again about environmental rules, that's probably the clearest -- same thing for CFCs. The Senate decided to ban -- the bill banned CFCs, there wasn't a replacement via the guaranteed market -- the investments were made, the replacements came forward, it was cheaper, much more quickly than we thought." (via NYT)

Browner believes it was the Senate that regulated CFCs and, thereafter, industry that responded. Regulation breeds innovation and successful policy goals, Browner clearly maintains.

The truth of the matter is far subtler. The Clean Air Act Amendments of 1977 only banned non-essential use of CFC's, and it was not until the Dupont Corporation had long acknowledged that it had developed a CFC substitute that the international Montreal Protocol banned their use entirely. The real story here was that innovation bred (or at least enabled) regulation, not the other way around.

Continue reading "Regulate to Innovate?" »

By Johanna Peace, Breakthrough Fellow

The American Clean Energy and Security Act passed in the House this Friday by a narrow margin of 219-212, and US lawmakers immediately began patting themselves on the back. Rep. Henry Waxman touted the bill as "decisive and historic action to promote America's energy security and to create millions of clean energy jobs that will drive our economic recovery and long term growth."

Some international observers joined in the praise, expressing levels of support varying from China's cautious endorsement to the EU's enthusiastic approval; some hailed the bill as a sign of commitment by the US, likely to encourage efforts toward a workable international climate treaty in Copenhagen. Coverage in the UK's Guardian introduced ACES favorably as "a milestone," "the first time either house of Congress had acted to reduce the carbon emissions that cause climate change," and quoted environmentalists who called the bill "a signature achievement."

Criticism of Cap and Trade

But not everyone's so excited. Among the critics speaking up against Waxman-Markey, Todd Darling wrote in the LA Times that the newly passed climate bill is full of "smoke and mirrors." We only have to look to Europe to see the "critical weakness" of a cap and trade plan that gives away too many pollution credits, Darling argues; and since ACES gives 85% of credits to polluting industries for free, it won't establish a strong carbon market, won't result in emission reductions, and won't generate money to fund new technology.

Continue reading "Critics Condemn ACES Climate Bill" »

By Johanna Peace, Breakthrough Fellow

The American Clean Energy and Security Act (ACES) that passed by a margin of 219-212 in the House on Friday needs a major makeover in the Senate in order to redress its critically insufficient provisions for funding clean energy R&D, according to Mark Muro, policy director at the Brookings Institution's Metropolitan Policy Program.

In a Brookings article criticizing the climate bill, Muro argues:

"While a $20 to $30 billion a year R&D outlay would be optimal, Waxman-Markey would invest just 1.5 percent of the 40-year revenue stream of the cap-and-trade system in the R&D efforts of ARPA-E and the innovation hubs--which comes to just $1.4 billion a year or so at accepted permit price forecasts... The bottom line: Reps. Waxman and Markey did well to install several crucial innovation provisions in the House bill, but the political trades that were required to pass it have left far too little revenue behind for the most crucial use of cap-trade money--investments to catalyze a radically cleaner energy future."

Muro's points reaffirm Breakthrough Institute's analysis, which has shown how ACES invests far more cap and trade revenue in polluting industries and foreign offsets than it does in building new clean energy industries in the U.S.

Muro mentions that some ACES provisions -- such as the funding it would direct toward ARPA-E and the eight regional "Energy Innovation Hubs" it would establish -- constitute a modest start toward the kind of public investment that will promote the development and commercialization of clean energy technologies. Breakthrough Institute, too, has pointed to some of the same provisions as promising -- but only if they are adequately funded.

Continue reading "Brookings Institution: Senate Must Strengthen Clean Energy Funding in ACES" »

The U.S. Environmental Protection Agency projects renewable energy sources like wind, solar and biomass will generate just 9% of U.S. electricity by 2020 under the Waxman-Markey renewable electricity standard (RES). This contrasts with the bill's nominal 20% combined efficiency and renewable electricity standard due to numerous exemptions in the standard. Total renewable electricity generation under EPA's modeling of Waxman-Markey with the renewable electricity standard is just 41 terawatt-hours (or 7%) higher than the Agency's business as usual projections.

Yesterday, the Breakthrough Institute examined several of the surprising assumptions and projections underlying the EPA's "core scenario," which projects the impacts of the Waxman-Markey bill's efficiency and cap and trade provisions. This core scenario's conclusions about the likely cost impacts of the Waxman-Markey bill have been widely cited, and Breakthrough delved into this scenario in our last post.

As we reported, EPA concludes that the expansion of new wind farms, solar arrays and other renewable energy power plants will actually be somewhat slower under their core scenario for Waxman-Markey than under their BAU projections [p. 27]. Total renewable electricity generation under their core scenario is somewhat higher (3%) in 2025 under Waxman-Markey than in their BAU scenario, but this extra generation comes in the form of biomass co-firing at existing coal-fired power plants, EPA predicts [p. 26].

However, EPA's core scenario does not attempt to model the impacts of the Waxman-Markey bill's RES. EPA apparently decided they were not confident enough in their results to include the effects of the RES in their core scenario and chose to model it instead as a "sensitivity analysis" for the power sector only. Here we look at their projections for the impacts of the bill's RES.

Continue reading "Climate Bill Analysis Part 18: Understanding EPA's Analysis of the ACES Renewable Electricity Standard" »

The Waxman-Markey climate bill (AKA the American Clean Energy and Security Act) would reduce the amount of renewable energy deployed in the United States relative to business-as-usual, increase the amount of coal-fired electricity generation relative to 2005 levels, and provide no incentive for a move to cleaner cars, according to a new analysis by the U.S. Environmental Protection Agency (EPA).

We certainly can't vouch for EPA's methodology or assumptions. However, with EPA's conclusions about the likely cost of the Waxman-Markey bill on U.S. Households and the broader economy being widely cited, the surprising and even counter-intuitive projections that underlie EPA's cost estimates are worth a close look. In this post we dig passed the EPA's executive summary to take a closer look at their modeling and projections.

The climate bill is now poised for a vote on the floor of the U.S. House of Representatives as soon as Friday, following a deal struck late yesterday between the bill's champion and Energy Committee Chairman Henry Waxman (D-CA) and Agriculture Committee Chairman Collin Peterson (D-MN). Waxman agreed to further concessions to secure the support of agricultural interests and their Congressional champions, including agreeing to strip EPA of primary oversight over the domestic carbon offsets market, giving the US Department of Agriculture jurisdiction over these programs instead, provide additional free allowances for rural electric co-operatives, and place a moratorium on new EPA rules to strengthen the environmental integrity of biofuels like corn ethanol.

Continue reading "Climate Bill Analysis Part 16: EPA Projects Fewer Renewables Under Waxman Markey than Business As Usual " »

Jesse Jenkins, Breakthrough's Director of Energy and Climate Policy appeared on KPFA radio's Morning Show today to discuss the current shape of the Waxman-Markey American Clean Energy and Security Act, the 1,201 page climate and energy legislation scheduled for a vote on the floor of the U.S. House of Representatives on Friday.

The segment with Morning Show host Amy Allison begins at 1:10:00 into the show which you can listen to below or click here to download an mp3 of the segment and listen on your computer:

Electricity generation from coal will grow if Waxman-Markey climate legislation becomes law, according to a Los Angeles Times investigation. The Times notes that "coal-fired power plants are the largest source of heat-trapping gases that cause global warming," and yet the EPA projects [pdf] (p. 23) that conventional (not CCS) coal power generation will increase from 2013 TWh in the year 2005 to 2030 TWh in 2020.

Continue reading "Climate Bill Analysis Part 15: EPA Projects Coal Will Expand Under Waxman-Markey" »

According to a new analysis [pdf] by Public Citizen, the Waxman-Markey (W-M) climate legislation would inadequately protect American consumers from electricity price increases, despite claims by the bill's authors that the value of the free pollution allowances allocated to utilities would be returned to consumers. W-M grants 30 percent of all of the emission allowances to local distribution companies (LDCs) -- otherwise known as regulated utilities. The bill's authors suggest that 50 different state utility regulators will ensure that the benefits will be passed onto consumers.

Continue reading "Climate Bill Analysis Part 14: Waxman-Markey Puts Ratepayers at Risk" »

Robert Atkinson, one of the leading experts on technology policy and President of the Information Technology and Innovation Foundation, published an article in BusinessWeek yesterday explaining how conventional economic doctrines led to the Waxman-Markey climate bill and why innovation economics offers a better climate strategy:

While the so-called cap-and-trade mechanism (or some kind of carbon pricing) is needed, it isn't enough. To really avert climate change, the government needs to adopt an explicitly green innovation policy. Unfortunately, green innovation is getting short shrift in this bill and in Washington generally...

Both conservative and liberal neoclassicists oppose any government allocation of scarce goods and services. They prefer a market tool such as emissions trading that would set a price for carbon pollution, believing -- incorrectly -- that companies seeing potential profits would then develop needed technologies. The two camps differ slightly in how to determine a carbon price. In line with their faith in markets, most supply siders who worry about global warming favor carbon taxes, while liberal neoclassicists favor cap and trade...

Innovation economists see efforts to reduce emissions of carbon dioxide and other greenhouse gases as fundamentally an innovation challenge. They are less sanguine than neoclassicists about the power of price signals alone to bring about a solution, believing that the profit motive works only when there are adequate alternatives to shift to. Without viable electric cars, for example, people will still drive gasoline-powered cars, no matter how much fuel costs, although they might switch to more fuel-efficient models.

Moreover, they believe that even if the price signal is "correct," the innovation that's needed is often delayed because of market failures such as externalities -- situations where innovators can't get the full reward from their innovations. Consequently, adherents of innovation economics say that the government must spend more on research and development to develop cost-effective noncarbon or low-carbon energy alternatives.

Continue reading "Innovation Economics Can Fight Global Warming" »

[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.

Continue reading "Climate Bill Analysis, Part 13: EPA Analysis Projects Waxman-Markey Would Not Require Emissions Reductions Through 2020" »

By Michael Shellenberger and Jesse Jenkins

[Updated with correction, 6/18/09: Thanks to John Larson at WRI for alerting us to an error in our data. Our data is now corrected and impacted figures and conclusions have been bolded in the text below so readers can see what has changed. An updated spreadsheet has been uploaded.

In summary: a smaller portion of economy-wide emissions were included in the emissions profile for sectors that fall under the cap starting in 2012 and a larger portion was included in the sectors that are phased into the cap starting in 2014. The result is slightly lower emissions under the ACES target scenario and CBO projected offsets scenario for the years 2012 and 2013 and slightly lower cumulative emissions between 2012-2020.

This effects the post's key result: assuming offsets are utilized at CBO's projected levels, cumulative emissions from 2012-2020 are 2.0% below BAU levels , not 0.5% as originally posted. This change has no effect on other years, on the difference between emissions at the CBO projected offsets scenario and emissions at the ACES target scenario, or on the BAU scenario. As always, we will continue to publish all of our assumptions and calculations and invite readers to look at the data and our analysis themselves. - Jesse Jenkins, Director of Energy and Climate Policy]

The Waxman-Markey climate bill (HR 2454 or the American Clean Energy and Security Act) would reduce cumulative emissions by just 2% between 2012 and 2020 in the sectors of the U.S. economy regulated under the bill's cap and trade program, according to the Congressional Budget Office's analysis of the legislation.

The CBO analysis is significant in that it is the first published predictions from a government agency about the likely actual impact on U.S. emissions resulting from the version of Waxman-Markey legislation passed by the Energy and Commerce Committee and now heading towards debate on the House floor.

CBO's analysis confirms earlier analysis by the Breakthrough Institute that revealed the climate legislation would only establish a non-binding emissions target, not a binding cap on emissions in covered sectors. Whereas Breakthrough's analysis examined the total emissions legally permitted under the legislation (without projecting likely scenarios), CBO's new analysis utilizes economic models to project what the legislation would actually accomplish under a likely set of assumptions.

Continue reading "Climate Bill Analysis, Part 12: CBO Projects Waxman-Markey Would Cut Cumulative Emissions by Just 2% Through 2020" »

By Michael Shellenberger

According to a new, as-yet-unpublished analysis from the Union of Concerned Scientists (UCS), the combined efficiency and renewable electricity standard (CERES -- formerly RES) in the Waxman-Markey climate legislation will not increase renewable electricity generation and might actually reduce it.

UCS concludes:

"Bottom line: The Waxman-Markey RES does not ensure that any new renewable electricity will be developed beyond the renewables that are already projected to occur under the business as usual forecast by the U.S. Energy Information Administration (EIA)."

UCS created a high-deployment and a low-deployment scenario to predict the impact of the CERES provision in Waxman-Markey, as compared to the EIA's business-as-usual (BAU) baseline projections of renewable electricity generation. Under the high-deployment scenario, the Waxman-Markey CERES provision "would lead to slightly more renewable energy to be developed than business as usual" -- but only starting in 2020.

[Download the graphic and scenario descriptions here.]

Continue reading "Climate Bill Analysis, Part 11: New UCS Analysis Finds Waxman-Markey RES Won't Increase Clean Energy Deployment" »

"If China is going to put in $440-660 billion [in clean energy development investments this year], how will $190 billion (actually under $130 billion) over 20 years put us in the leadership position?"

-Get Energy Smart blogger A. Siegel remarking on how far the Waxman-Markey American Clean Energy and Security Act really gets us in the race for clean energy innovation, responding to an op ed by Rep. Ed Markey.

As Breakthrough's analysis of the Waxman-Markey American Clean Energy and Security Act (ACES) has revealed, the climate bill will effectively establish a non-binding "cap" on U.S. emissions while generating a pretty modest price for CO2 pollution. The implication: we can't count on the "cap" and trade provision alone -- nor the now ineffective renewable electricity standard -- to drive deep cuts in U.S. emissions or adequately accelerate clean energy deployment.

To maximize the chances that the emissions reductions aimed for by the bill -- i.e. 17 percent below 2005 levels by 2020 -- are actually achieved, Congress must adopt a proactive set of policies and public investments to accelerate clean energy technology development and deployment and supplement the bill's weakened regulations and price signals.

Several of the bill's provisions aim to do that, but we conclude that most are currently either completely unfunded or critically underfunded. Here we take a look at three smart provisions in the ACES bill that could be key components of a proactive clean energy technology strategy -- but only if they are adequately funded.

1. Clean Energy Deployment Administration: this provision would establish a sort of public clean energy bank charged with creating an attractive investment environment for the widespread deployment of a suite of advanced clean energy technologies. Notable for being a deployment policy explicitly dedicated to advancing technology development goals, this provision also enjoys strong bipartisan support on both the House and Senate. However, ACES provides zero funding for this critical component of a proactive clean energy technology strategy. At least $16 billion in initial seed funding should be provided for CEDA, consistent with the Senate version of this provision.
2. Energy Innovation Institutes: largely consistent with the recommendations of the Brookings Institution, Breakthrough Institute, Third Way and others, ACES establishes new "Clean Energy Innovation Centers" at research universities, national labs and private research facilities, creating new cross-sector and multi-disciplinary hubs for applied research and development on clean energy technologies. However, these energy innovation institutes are critically underfunded, receiving less than $1 billion/year in funding from the bill's cap and trade allowance value. To bring federal energy R&D programs to a scale sufficient to address the urgent energy innovation imperative and address the needs of a $1.5 trillion annual industry, at least $15 billion in new annual funding should be dedicated to energy R&D, with a significant portion of this new funding dedicated to establishing a robust nationwide network of energy innovation institutes.
3. Carbon Capture and Sequestration Demonstration and Early Deployment Program: financed by a micro-carbon fee on all electricity sold in the United States, this program would dedicate $10 billion over the next ten years to promote the commercialization and large-scale demonstration of carbon capture and sequestration technologies for coal plants and other major point-source emitters of CO2. This program is a good example of the kind of direct public investment necessary to bring down capital and technology risk barriers and accelerate clean technology commercialization. But a much better-funded and technology neutral program that would provide competitively awarded funding for the demonstration of a whole suite of first-of-their-kind clean energy technologies is needed, and would be vastly superior to this technology-specific, industry-managed program.

We delve into each of these programs in more detail after the break...

Continue reading "Climate Bill Analysis, Part 10: Smart Provisions Could Spur Clean Technology - If They Are Funded" »

Jeffrey Sachs, in a recent interview with TreeHugger, echoed Breakthrough Institute's call to focus on accelerating the development and deployment of clean energy technology instead of setting emission reduction targets.

As TreeHugger notes: "Sachs's big point: The debate over cap-and-trade, the clamoring for a carbon tax, and the bickering over greenhouse gas targets are distracting from serious efforts at advancing technological and policy solutions."

Sachs states:

"What I want is more plan that says quantatively how do we achieve our targets. ...

If we say 50 percent by 2020, I want people to know what is a realistic way for that to be achieved. What does it mean in terms of the auto sector, what does it mean in terms of housing, what does it mean in terms of the power sector. ...

Simply setting a target will be setting us up for disappointment. And simply believing that cap-and-trade will be sufficient to accomplish these goals I think is a mistake. When you have major technologies that need to be tested, demonstrated, when you have land use that needs to be changed, when you need to develop a new kind of power grid, those will not be solved by cap-and-trade alone."

Sachs isn't alone, the TreeHugger article notes, citing Breakthrough Institute as one of the key proponents of a public investment-led strategy to spur the development and deployment of clean energy technologies:

He's Not Alone
The idea that technological R&D, not a cap-and-trade or carbon tax system, would be the best solution to lowering greenhouse gas emissions is one that environmental contrarians Ted Nordhaus and Michael Shellenberger recently put forward in an article for Yale Environment 360.

Targets mean nothing if we can't get there, and they argue that neither a market nor tax approach to pricing carbon will help us do that. "No government in the world so far has been willing to establish and sustain a high price on carbon," the economists write.

Instead, we need to use public spending to bring down the costs of clean energy technologies, they argue, a tactic that would not only make it easier to achieve lower emissions in the U.S., for instance, but in a developing country like China, where such technologies could be manufactured and tested.

Continue reading "Jeffrey Sachs Calls for Focus on Clean Tech, Not Emission Reduction Targets" »

With most DC-based environmental organizations at least grudgingly supporting the Waxman-Markey American Clean Energy and Security Act, and official government analysis of the latest version of the bill still pending, it has been largely up to independent think tanks, advocates and bloggers to take a critical look at the major provisions in the nearly 1,000-page climate and clean energy bill. Breakthrough has spent most of the past two weeks doing just that, and we have released some of the first analysis of the bill's cap and trade provision, allowance allocations, and renewable electricity standard.

Yesterday, the Southern Alliance for Clean Energy (SACE), a Knoxville, Tennessee-based non-profit organization advocating clean energy solutions throughout the southeastern United States, released their own analysis of the Waxman-Markey renewable electricity standard. SACE's independent analysis confirms Breakthrough's own earlier look at the now severely-weakened renewable electricity standard, concluding as we did, that the impact of the renewable electricity standard on U.S. renewable electricity generation will be "effectively zero."

SACE also looks at the likely impact of the efficiency requirements in the now combined efficiency and renewable electricity standard (which the Alliance refers to using yet another new acronym: "CERES") and concludes it falls far short of President Obama's campaign pledge to reduce U.S. electricity consumption 15% by 2020 (below business as usual projections).

Continue reading "Climate Bill Analysis, Part 9: Southern Alliance for Clean Energy Confirms Breakthrough's Analysis of Renewable Electricity Standard " »

By Michael Shellenberger

Since we released our initial analysis of the Waxman-Markey American Clean Energy and Security Act (ACES), other analysts have confirmed our conclusion that the "cap" in Waxman-Markey would allow carbon emissions in regulated sectors of the U.S. economy to rise at business as usual (BAU) rates through 2030. This includes the Center for American Progress' Joe Romm who, in reversing his long-standing opposition to offsetting wrote, "just because American companies can purchase international offsets to replace their own emissions, that doesn't mean they will."

But whether or not you believe the legislation would result in lower emissions, there appears to be universal acknowledgment that various provisions in Waxman-Markey -- including but not limited to the extensive number of offsets permitted and the strategic reserve pool -- prevent the "cap" from being binding. Given this, Waxman-Markey cannot be accurately referred to as establishing a "cap" on U.S. emissions, much less a "binding cap." Probably the most accurate term is "non-binding cap."

Continue reading "Climate Bill Analysis, Part 8: Waxman-Markey's Non-Binding Emissions "Cap"" »

Importantly [the Waxman-Markey ACES climate bill] falls a long way short of Obama's election promises on most scores: the [renewable electricity standard], CO2 emission reductions and allocations. The expected price of carbon will therefore in all likelihood be too low (USD13-17) to really drive the change that's needed, resulting in no clean energy fund versus the USD150bn fund that we would have expected to have been raised from 100% auctioning of permits. This in our opinion makes the clean energy mandates ever more important. This is an area which, despite some progress, remains weaker than initial expectations. ...

[M]ore importantly, if the best that the US can bring to the negotiating table ahead of the talks on a new post-Kyoto emissions treaty, is a 3% cut in emissions versus 1990 baseline, then this may not be enough to tickle out an agreement from China and India [at the international climate negotiations in Copenhagen, December 2009.]

-Global investment firm HSBC on the Waxman-Markey American Clean Energy and Security Act (via WSJ.com's Environmental Capital blog). We note that HSBC's conclusions about the Waxman-Markey climate bill strongly echo Breakthrough's own (see links in quote above).

See Breakthrough's original analysis of the Waxman-Markey Climate Bill here.

Every climate bill, in the U.S. and abroad, contains provisions limiting how high carbon prices established by the policy can rise. The Waxman-Markey American Clean Energy and Security Act (ACES) is no different. As the Breakthrough Institute previously reported, ACES would allow polluters to purchase up to 2 billion tons per year of relatively cheap carbon "offsets," which could allow emissions in supposedly "capped" U.S. sectors to rise by up to 9% between 2005 and 2030. The EPA predicts that, largely due to the extensive use of offsets, carbon prices will remain less than $20 per ton of CO2 for the next decade.

Many proponents of ACES have argued that U.S. polluters will not utilize the 2 billion tons of authorized carbon offsets each year. The supply of credible offsets is limited, they say, and demand will eventually push their price above the cost of most alternative emission reduction strategies. (For now, let's put aside the fact that those same price pressures -- and the industries and sectors that stand to profit from selling more offsets -- will also be a powerful force for establishing weaker offset certification standards.)

However, even in the case where affordable offsets are unavailable, and emission allowance prices rise, ACES contains an additional cost containment provision that could allow U.S. global warming pollution to exceed the supposed emissions "cap" -- and "make up" for these additional emissions by purchasing several billion more tons of carbon offsets.

If allowance prices rise too much in any given year, this provision, known as the "strategic allowance reserve pool," would allow polluters to delay their emission reductions by purchasing emission allowances from the reserve pool, which would then be "refilled" over time with additional international forestry offsets. Based on our analysis, this provision could allow U.S. emissions to rise 10% above the "cap" in any year after 2016 and introduce up to 9.3 billion additional offset allowances between 2012-2050.

Therein lies a Catch-22 of ACES: if the annual use of up to 2 billion tons of offsets permitted by the bill is limited due to a restricted supply of affordable offsets, the government will pick up the slack by selling reserve allowances, and "refill" the reserve pool with international forestry offset allowances later. Here's how it would work (defined in section 726 of the bill).

Continue reading "Climate Bill Analysis, Part 6: Strategic Reserve May Allow "Cap" to Rise by 10 Percent, Introduce Billions More Offsets " »

Late last Thursday night, the House Energy and Commerce Committee voted 33-25 to pass landmark legislation that promises to address our nation's urgent energy challenges and help avert potentially catastrophic climate change. The legislation, known as the American Clean Energy and Security Act (or ACES), also presents an unprecedented opportunity to renew our economy and position the United States at the forefront of a burgeoning global market for clean and affordable energy technology.

Momentum is now behind a serious effort to address climate change, and that itself is cause for celebration. The bill's champion's - notably Henry Waxman, Ed Markey and Jay Inslee and their dogged staff - deserve praise for bringing the bill through some pretty hostile territory in the Energy and Commerce Committee, and for their tireless efforts during the marathon sessions of the past week.

However, knowing how much is at stake, we must also take a close look at whether or not the bill lives up to its promises.

In my latest exclusive monthly column at the Energy Collective, I explain why, after spending all week digging through the 1,000 page ACES bill, I'm left worried, very worried. Head over to the Energy Collective and find out why...

U.S. Energy Secretary Steven Chu said Tuesday that the long-standing focus of climate policy on setting precise emissions reductions targets and timetables has led to an "over-obsession" with numbers, according to Reuters.

Reuters reports:

The comment came less than a week after a congressional panel approved President Barack Obama's landmark draft bill on climate change [see Breakthrough's analysis of the bill here], bringing it closer to debate in Congress.

"There was a great deal of discussion on the Kyoto targets, and I'm not really sure which fraction of the countries that took part in that actually met their targets," Chu, a Nobel laureate for physics, said at a conference in London. "In terms of the targets, whether it's 17 percent or 20 or 25 percent, I think there's perhaps ... an over-obsession on these percentages."

Continue reading "Secretary Chu: Climate Debate May Have "Over-Obssession" With Emissions Targets" »

"The United States already has a working cap-and-trade system, used since 1995 to cut back the gases blamed for acid rain. The Environmental Protection Agency says the trading system has reduced the overall cost of cutting acid-rain-causing pollutants to one-third of what was projected.

But comparing the two problems is like comparing a horn section and an orchestra.

Acid-rain pollutants can be sucked out of a smokestack by adding "scrubbers." But nothing like that is commercially available for carbon dioxide -- polluters might have to replace the coal they burn with a different fuel, or replace the coal-burning plants with solar "farms" and windmills.

Also, greenhouse gases come from far more sources: power plants, factories, car tailpipes, and both ends of a well-fed dairy cow (though the bill doesn't tackle that one: cows could still burp free of charge)."

-The Washington Post, "Caps, Trades and Offsets: Can Climate Plan Work?" (May 26, 2009).

For more on the huge differences between SO2/Acid Rain and greenhouse gases/climate change, see our recent post: "Cap and Trade Worked for Acid Rain, Why Not for Climate Change?"

Breakthrough Institute spent the past week analyzing the Waxman-Markey climate bill. We released several objective and transparent analyses for the benefit of our readers, exploring the allocation of allowances and the use of offsets in an effort to illuminate some of the weaknesses and strengths of the bill. This analysis was cited by Time Magazine, National Public Radio, Reuters, and the Wall Street Journal.

Joe Romm responded to our analysis on Climate Progress yesterday attacking it as "anti-environmental," "anti-climate-action," and a "disinformation rampage," declaring that Breakthrough Institute should be considered "part of the anti-environmental movement." This follows his recent attacks on Greenpeace, Andrew Revkin, and other reputable environmental and climate advocates, as well as a two-year series of ad-hominem attacks on Michael Shellenberger and Ted Nordhaus.

For the record, Breakthrough Institute has a long history of advocating progressive climate and energy policy (see our history). In 2003, Michael and Ted co-founded the Apollo Alliance, the first-ever public campaign calling for a $300 billion federal investment in clean energy. In 2005, former Senator Obama introduced a proposal co-written by Breakthrough to raise fuel efficiency standards, "Healthcare for Hybrids." In 2007, the Obama campaign adopted a $150 billion clean energy investment platform based on Breakthrough's recommendations. And in April 2009, the Obama administration adopted Breakthrough's proposal for a National Energy Education Act. Throughout this time we have continually advocated (see our writing page) a national approach on climate change and clean energy capable of achieving the broad transformations we need.

Continue reading "Joe Romm Tries to Shut Down Climate Bill Debate by Attacking Breakthrough Institute" »

"If Waxman-Markey can't slow down the coal industry -- the single biggest source of greenhouse gas emissions in the world -- today's green celebrations will be just as unsustainable as the legislation itself."

--Bryan Walsh, Time

[Updated 6/18/09 to more clearly explain and depict the potential banking of offsets.]

At the heart of the nearly thousand page long climate change and clean energy bill being debated in the U.S. House of Representatives this week is a "cap and trade" mechanism aimed at limiting greenhouse gas emissions that contribute to global warming.

However, a provision in the bill, known as the American Clean Energy and Security Act (H.R. 2454 or "ACES"), allows polluting firms in the U.S. to finance emissions reductions overseas in lieu of reducing their own global warming pollution and may allow American emissions to continue to rise for up to twenty years, according to new analysis from the Breakthrough Institute.

The provision allows power plants, oil refiners, and other polluters regulated under the bill's cap and trade program to use up to one billion tons of international emissions reductions, or "offsets," to be used instead of reducing their own emissions each year. The bill also allows up to one billion tons of additional offsets each year, sourced from sectors of the U.S. economy that do not fall under the pollution cap, such as forestry and agriculture. If a suitable supply of domestic emissions offsets are unavailable, the limit on the use of international offsets may be raised to 1.5 billion tons annually at the discretion of the Administrator of the U.S. Environmental Protection Agency (EPA).

The extensive use of these international and domestic offsets would effectively allow U.S. firms in capped sectors to continue emitting global warming pollution at levels well above the reductions supposedly driven by the emissions cap. New analysis from the Breakthrough Institute reveals that if fully utilized, the offset provisions in the ACES bill would allow continued business as usual growth in U.S. greenhouse gas emissions until 2030. Emissions in supposedly sectors of the economy supposedly "capped" by ACES could continue to grow at BAU rates until as late as 2037.

Continue reading "Climate Bill Analysis, Part 4: Emissions "Cap" May Let U.S. Emissions Continue to Rise Through 2030" »

The original discussion draft of Waxman-Markey included a key provision that would have required domestic and international offsets to reduce 1.25 tons of carbon dioxide in order to receive one pollution allowance equivalent to 1 ton of carbon dioxide. In other words, the conversion ratio for offsets to carbon allowances was 1:25 to 1.

However, the full version of Waxman-Markey (introduced on Friday) eliminates this provision for all domestic offsets and for international offsets between 2012-2017. The impact, according to new EPA analysis (download PDF), will be an 11% increase in domestic offset use, an unspecified increase in international offsets use during the first five years of the cap and trade program (2012-2017) and a 7% reduction in the price of all pollution allowances every year. The EPA writes:

The offsets provisions in H.R. 2454 differ from the provisions in the draft bill. Domestic offsets in the introduced bill have a one-to-one turn-in ratio (i.e., only one ton of offsets needs to be turned in for every ton of covered sector emissions being offset). International offsets have a one-to-one turn-in ratio for the first five years of the policy. After the first five years, five international offsets must be turned in for every four tons of covered emissions being offset...

As was shown in EPA's modeling of the draft bill, using a one-to-one turn-in ratio for domestic offsets instead of the five-to-four turn-in ratio that was specified in the draft increases the total purchase and use of domestic offsets by 11%... The effect of that change alone is to lower allowance prices by 7% in each year.

The EPA's initial estimate of allowance prices was $13-17 in 2015 and $17-22 in 2020. The combined impact of allowing additional offsets and the weakening of the 2020 emissions reduction target (now 17% vs. 20% in earlier versions) led the EPA to revise downwards their allowance price estimates by 10% or more (more in the case where up to 1.5 billion tons of international allowances are permitted). That would result in an allowance price estimate of $11.70-$15.30 in 2015 and $15.30 to $19.80 in 2020. In more round terms, call it $12-20 per ton of CO2-equivalent between 2015 and 2020.

Continue reading "Climate Bill Analysis, Part 3: Key offset limit eliminated, increasing domestic offset use, lowering allowance prices" »

A guest post by David Douglas.
Cross-posted from his Near Walden blog.

One of the common arguments for a cap and trade system for GHG is that it establishes a price for carbon which will drive changes in investment and behavior. However, the current draft of the proposed Waxman-Markey bill (W-M) has introduced a wide range of allowances, offsets, and other mechanisms which may alter the actual price of carbon on a case-by-case basis. So even though there may be a market price for allowances that are traded among large emitters, that price will usually have nothing to do with the price for carbon that is actually paid by an energy consumer. As a result, the system has not created a useful price signal for large sectors of our economy, including US households.

Furthermore, once the European cap and trade system was put in place, there were many cases of energy prices actually rising more than the cost of the corresponding emissions allowances. With the lack of consumer price transparency in W-M, it becomes impossible to to determine if energy price increases are a result of fluctuating emission prices or not. To rectify this I would like to propose the following addition to any proposed US cap and trade legislation:

Consumer Energy Price Transparency Amendment: whenever a consumer (individual or organization) is billed for energy, the bill must explicitly identify the portion of the bill which was used to pay for emissions allowances, and the effective price per ton of CO2e that the amount represents. In cases where the exact amount is difficult to allocate, or that the information is not available at the moment of billing (such as at a gas station), then aggregated averages or estimates based on past time periods are allowable, provided that the sum of allowance charges presented to all consumers is within x% of the actual total.

Originally published at Yale Environment 360

In early May, anxiety among climate activists about the fate of cap-and-trade legislation erupted into a full-throated roar with the release of a scathing open letter by Dr. James Hansen. In it, the NASA scientist called a bill by Representatives Henry Waxman and Ed Markey a "temple of doom," savaging it for being complex, corrupt, and "a minor tweak to business-as-usual." Hansen called for a carbon tax in its place, one that would establish a "substantial and rising price on carbon emissions."

Hansen was right about Waxman-Markey. It will do little to reduce U.S. emissions, will transfer billions to incumbent energy interests in the form of free pollution permits, and will send billions more to timber, agriculture, and other interests, here and abroad, in the form of dubious "offsets." But Hansen's analysis of why climate legislation has gone so terribly off the rails is wrong.

Hansen argues that the problem has to do with the mechanism by which Waxman-Markey would establish a carbon price -- a cap-and-trade system. In this, Hansen is joined by many other greens and economists, who argue that cap-and-trade is a cumbersome and economically inefficient means of establishing a carbon price, one that is particularly vulnerable to manipulation by polluters and politicians.

On the other side of this debate stand many business interests, some prominent climate scientists, and green groups like the Environmental Defense Fund and the Natural Resources Defense Council. They argue that cap-and-trade is a superior approach, because it guarantees certainty of actual emissions reductions, and a more pragmatic one, because it does not require politicians to vote for a new tax on pollution. They say taxes are just as prone to manipulation by politicians and polluters and that simple carbon taxes exist only in the ivory tower equations of academic economists, not in the real, rough-and-tumble world of politics and legislating.

The truth is, however, that neither of these approaches will lead to significant reductions in carbon emissions, and for a basic reason: Both Hansen and those he criticizes focus on pollution regulation and pricing to make fossil fuels more expensive, rather than on innovation to make clean energy cheap. This approach ignores the history of technological breakthroughs, which has primarily been driven by public investment. And public investment in clean energy is what is needed today, because no effort to achieve deep reductions in carbon emissions, domestic or international, will succeed as long as low-carbon energy technologies cost vastly more than current fossil fuel-based energy.

Continue reading "The Flawed Logic of The Cap-and-Trade Debate" »

[Updated 5/22/09: the ACES bill now includes a $10/ton price floor for auctioned pollution permits. The analysis below has been updated to reflect that change in the legislation]

Today, the House Energy and Commerce Committee began markup of the American Clean Energy and Security Act of 2009 (ACES). The bill promises to cap and reduce carbon pollution, create clean energy jobs, and spur technology innovation. Unfortunately, as our analysis of the use of carbon pollution allowances in the ACES bill revealed, the bill is on course to invest very little of the hundreds of billions of dollars in value created by the bill's cap-and-trade program over the coming years towards those objectives.

Most of the allowance value (74 percent) created by the ACES cap and trade program is dedicated to blunting the impact of the carbon price established by the program on industries and consumers (and securing the critical swing votes on the committee representing these entrenched energy and industry interests). In contrast, just 12 percent of the allowance value is dedicated to clean energy investments, broadly defined.

At an average allowance price of $10 to $20 dollars per ton of CO2 between 2012-2025, that would amount to clean energy investments of just $6-12 billion per year, and just $490-980 million for clean energy R&D (see our full analysis of the allowance allocations in ACES for more).

President Obama has repeatedly promised to, "Invest $150 billion over ten years in energy research and development to transition to a clean energy economy" (from WhiteHouse.gov). The President's 2010 Budget Outline specifically dedicated $15 billion per year in new revenue generated by a cap and trade program to this purpose. Yet the bill before us, depending on the allowance value it establishes, would invest just one-fifteenth to one-thirtieth of the $15 billion President Obama has pledged -- and specifically requested from Congress. Furthermore, this new energy R&D spending may amount to just a ten percent increase in current federal energy R&D budgets.

Likewise, the total investments in a new clean energy economy, more broadly defined, are an order of magnitude smaller than proposals advanced by the Breakthrough Institute, Apollo Alliance and others have deemed necessary to drive clean energy innovation, create millions of new energy jobs, and jump-start a prosperous, clean energy economy.

Below the fold, you can see how the clean energy investments made by the ACES bill compare with what a range of proposals and current R&D funding levels...

Continue reading "Climate Bill Analysis, Part 2: Clean Energy R&D Investment May Be 30 Times Smaller than President Obama's Budget" »

By Leigh Ewbank, Breakthrough Generation Fellow

Just one week after it bowed to political pressure and delayed the implementation of a national emissions trading scheme, the Australian Government has announced plans to invest billions of dollars in renewable energy. According to Bloomberg News:

Australia's government will invest A$4.5 billion ($3.4 billion) in the development of infrastructure to generate energy from clean sources such as solar and wind power and to reduce carbon emissions. The government will invest A$2.4 billion in low-emission coal technologies, including funding of A$2 billion for industrial- scale carbon capture and storage projects, according to its annual budget released in Canberra today. The government will invest A$1.6 billion over six years in large-scale solar electricity generation projects, the budget said.

While the Rudd Government's 2009-10 budget is by no means groundbreaking in terms of climate change and energy, it still allocates substantial cash for worthy renewable energy projects. To add much needed renewable energy to the national grid, there is $1.5 billion to build up to four large-scale solar thermal power plants. This is supported by $465 million to establish 'Renewables Australia', a new body to spearhead renewable energy research, development, and deployment in Australia.

Those of us familiar with the Breakthrough Institute will notice familiar themes with these renewable energy initiatives. In addition to the proposal reflecting Breakthrough's longstanding policy prescription for direct government investment in renewable energy, the new agency called Renewables Australia closely resembles the 'renewable energy hubs' that featured in the recent proposal by Breakthrough and Brookings (see 'To Make Clean Energy Cheaper, U.S. Needs Bold Research Push').

There are other significant points to make about the Rudd Government's plans:

1. The Australian Government is beginning to throw off years of strict adherence to neoliberal economic policy that barred direct government investment in building clean energy infrastructure. It's too early to tell, but with any luck the misleading notion of governments 'picking winners' will be put to rest.


2. As friends and foes weaken Prime Minister Rudd's cap-and-trade policy, Breakthrough-style investment measures are being put into practice and have--so far--escaped political opposition. In this case it's possible that government support for both carbon-capture and storage (CCS) technology and renewable energy was the reason for this--effectively neutralizing opposition. For those of you seeking to settle the 'cap-and-trade' v. 'investment' debate, you'll have to wait for another day.

The magnitude of investment the Australian Government will commit to renewable energy is much smaller than Breakthrough recommends for the US, but this type of investment-centered policy represents a step in the right direction. Let's hope that the Obama Administration and Congress secure US leadership in renewable energy by implementing a scaled-up strategy in 2009.

For more on Breakthrough's take on Australia's climate change policy, check out 'Australia Shelves Cap and Trade'.

In our first analysis of the Waxman-Markey bill's allowance allocation, we found it would spend about $9 billion annually on a range of things that could generously be classified as technology innovation. Only $735 million of this would go toward clean energy R&D, an order of magnitude less than the $15 billion consistently promised by Obama and the $30 billion called for by several Nobel laureates and many of the world's top energy experts.

However, this funding level assumed an average price of $15 per allowance from 2012-2025. Some analysts, including Joseph Romm of Climate Progress, expect the bill to maintain a low price of $5-10 per allowance for the first several years, due to the major carbon offset provisions and other factors. If the price was $5 from 2012-2025, the average annual investment in all areas generously classified as energy innovation would be $3 billion, roughly equivalent to current federal energy R&D. This table compares clean energy investments for $5 per ton vs. $15 per ton:

Cross-posted from Prometheus: the Science Policy Blog

[UPDATE] Congressman Rick Boucher (D-VA) helpfully sets the stage for this post (emphasis added):

I've been working extensively to fashion a controlled program that Congress can adopt which will preserve coal jobs, create the opportunity for increasing coal production and keep electricity rates in regions like Southwest Virginia affordable. The compromise that I have reached with Chairman Waxman achieves those goals.

First we provide emission allowances under a cap and trade program to electric utilities for free," Boucher said. "That provision will keep electricity rates affordable in regions where most of the electricity is coal fired, and Southwest Virginia is certainly such a region. Secondly, we provide two billion tons of offset each year during the life of the program. Those offsets would enable electric utilities like AEP (American Electric Power) to invest in forestry, agriculture and projects like tropical rain forest preservation in order to meet their CO2 reduction requirements under legislation. Therefore, they can comply with the law while continuing to burn coal.

[END UPDATE]

The Waxman Markey Bill is a massively complex, sprawling, and confusing piece of legislation (here in PDF). Reading through it I observed the large role of offsets in the legislation and decided to quantify that role.

Continue reading "All About Offsets" »

By Teryn Norris & Jesse Jenkins

The landmark Waxman-Markey 2009 American Clean Energy and Security Act was introduced in the House this afternoon (May 15, download PDF here), and the Breakthrough Institute has performed a preliminary analysis of how it would invest over $1 trillion in cap and trade revenue between 2012-2025. Our key findings for this period include (all numbers are approximate -- download spreadsheet here):

• Polluting industries: 57.3% of allowances would be freely distributed to polluting industries, including 36.7% for the electricity sector, 12.3% for energy-intensive industries, 6.5% for local natural gas distribution companies, and 1.8% for oil refiners
• Direct consumer protection: 16.5% of allowances would be used for direct consumer protection , including 15% for low and moderate-income families and 1.5% to benefit users of home heating oil and propane
• Energy efficiency and clean energy technology: 12.2% of allowances would be used to fund energy efficiency and clean energy technology development and deployment
• Adaptation and technology transfer: 4.7% of allowances would be used for domestic and global climate adaptation and technology transfer
• Workforce development: 0.6% of allowances would be used to fund worker assistance and job training
• Deficit reduction and other: 8.6% of allowances would be used to fund deficit reduction and other public purposes

How much money would these allocations translate into? That depends on the average price for each pollution allowance. The EPA's initial price estimate was $13-22 per allowance between 2015 and 2020, and has since revised that downward by at least 10% (to $12-20 per allowance) as the bill was weakened and additional offsets were permitted. We will assume here an average price of $15 per allowance. In that case, the allocation would look like this (click images to magnify):

Continue reading "Climate Bill Analysis, Part 1: Waxman-Markey Gives Nearly 5 Times More to Polluters than Clean Energy" »

As sweeping climate and clean energy legislation is readied for debate in the House Energy and Commerce Committee, details are emerging on the deals and compromises struck between the bill's architects, Congressmen Henry Waxman (D-CA) and Ed Markey (D-MA) and the group of reluctant swing members of the committee who hail largely from states reliant on coal and heavy industry.

The "breakthrough deal" struck between Waxman, Markey and the swing E&C Committee Dems will enable a full subcommittee markup of the American Clean Energy and Security Act (ACES) beginning Thursday and likely proceeding through next week (markup = votes on a series of amendments on the proposed bill followed vote to pass the bill out of (sub)committee). The deal apparently involves a series of concessions that either incrementally weaken the objectives of the bill or give free greenhouse gas pollution permits to utilities and heavy industry in order to blunt the impact of the proposed cap and trade program on these sectors of the economy.

Continue reading "Climate Bill Heading for Markup - Will it Invest in a Clean, Prosperous Energy Economy?" »

One of the most often-repeated assumptions in the climate policy debate is that cap and trade, the preferred mechanism for reducing greenhouse gas emissions, worked for SO2 and acid rain, so it will work for GHGs. Sounds good. Until you take a second to think about the comparison.

Dealing with GHGs is a challenge of an order of magnitude greater scale and complexity. To see why, see the two graphics below:

First, here's a graphical representation of the Acid Rain cap and trade challenge:

Below the fold, you'll see a graphic representation of the global flow of greenhouse gas emissions, the challenge we have to deal with to avert potentially catastrophic climate change...

Continue reading "Cap and Trade Worked for Acid Rain, Why Not for Climate Change?" »

Results of a Rasmussen poll asking voters to identify (between the three options above) what cap and trade policy has to do with (correct answer: a regulation on greenhouse gas emissions causing global warming, aka "The environment"). Graphic via Andrew Sullivan.

Stream it directly from the ABC News Australia site, or download the mp3 here (particularly if you're a Mac/Linux user).

From Peter Mares at ABC Australia National Radio:

"This week, Prime Minister Kevin Rudd announced changes to the Australian federal government's planned emissions trading scheme, postponing the start date, increasing the compensation for big polluters and promising deeper cuts to Australia's greenhouse gases (with the proviso that the rest of the world does the right thing). The result is a scheme that's both greener and browner - if such a thing were possible. But as we examine the pros and the cons of the decision, some argue it's all pointless anyway. Climate change sceptics dispute the need for any reductions at all; then there's the critique from sections of the environmental movement that an emissions trading scheme is like rearranging deckchairs on the Titantic: far too little, far too late. On the program today, we're going to hear the case for state intervention - the idea of a Marshall Plan for alternative energy in which public money is used to solve the global warming problem."

See more on the Breakthrough's take on this issue here: Australia Shelves Cap and Trade Until 2011.

As we predicted back in March, Cap and Trade is going under Down Undah. Several outlets are reporting that Australian Prime Minister Kevin Rudd has promised to shelve the implementation of his proposed cap and trade system until 2011 in an apparent effort to quell concerns that the carbon pricing plan will impact the Aussie economy and shore up support for the controversial proposal in the testy Australian Senate.

To date, Rudd and his center-left Labor Party have already offered numerous industry-friendly concessions, including free allowances for major polluters as part of a so-called "global recession buffer." It wasn't enough to find the necessary votes, so today, Rudd announced even more concessions, including: more polluter giveaways; a delayed start for the program's cap and trade scheme, which won't go into effect until July 2011; and a fixed price for carbon emissions permits of just $10 (AUS) per ton of CO2 for the first full year of the program after that (through July 2012).

Continue reading "Australia Shelves Cap and Trade" »

American climate policy advocates should watch our neighbor to the north closely. With social and political values not too distant from our own and an economic makeup broadly similar, Canada's experiments with climate policy - particularly carbon pricing schemes - offer a real-world laboratory we would be wise not to ignore. While Canadians are broadly supportive of actions to address climate change, proposals at both the federal and provincial levels to establish a price on global warming pollution have met with difficulty. We covered the failure of the national Liberal Party's "Green Shift" carbon tax proposal in the October 2008 elections here, and have watched closely as British Columbia battles over their controversial, first-in-North American carbon tax system. Now, social values research firm Environics (the sister firm to our colleagues at American Environics) has new research findings that shed light on the difficulties facing 'environmental pricing reform' proposals like carbon taxes, cap and trade, and congestion pricing. Environics' Keith Neuman presents their findings in this piece, originally posted at Green Business...

By Keith Neuman, Ph.D.

Environmental pricing reform (or EPR) is the term now used to describe the various types of market mechanisms (e.g. carbon pricing, cap and trade, congestion fees) which are now being given serious attention as the most promising strategy for addressing climate change and other pressing environmental challenges such as water scarcity and traffic congestion. This concept has been around for some time, and is now finally receiving serious attention on the North American policy agenda. Economists have long been making a persuasive case for harnessing market forces to achieve environmental objectives, but only recently has this cause been adopted by major players, such as the Canadian Council of Chief Executives and the National Roundtable on the Environment and Economy. The idea that society puts a monetary price on environmental "goods" and "bads", and then letting market forces do their work (as they do with most other forms of business and consumer behavior) is compelling.

Governments and industry now seem ready to move forward with environmental pricing strategies, but is the Canadian public ready to buy in? The limited experience to date is hardly promising. Over the past year, the B.C. provincial carbon tax has been implemented but remains highly controversial (it has become a major issue in the current provincial election), and the Federal Liberal Party's touted "Green Shift" election platform failed spectacularly with the electorate. These early examples suggest there is sufficient citizen resistance to make EPR a difficult political sell. Why should this be the case, given the clear evidence that EPR can be an effective environmental policy? There are three central reasons.

First, is it axiomatic that consumers prefer not to pay more for goods and services, and will resist at varying levels when asked to do so. This is the most commonly understood basis for resistance to EPR, and many policy makers mistakenly believe it is the overriding obstacle. But in fact this dilemma is by no means limited to environmental policy, and has not prevented other successful economic policy measures that shifted costs to consumption, such as the GST and the Ontario Health Premiums. Such measures do not succeed because they are popular, but when they are deemed acceptable given their purpose by a sufficiently critical mass of relevant constituents.

Second, the public is skeptical about the effectiveness of EPR, in terms of how paying more for gasoline, water or consumer goods will actually benefit the environment. Research has shown that public resistance to B.C.'s carbon tax has as much to do with doubts about its effectiveness in reducing the province's greenhouse gas emissions as it does with paying a few more cents per litre at the pump. Consumers can readily understand how stiffer regulations or new technologies can make a difference in cleaning up pollution, but it requires a greater act of faith to believe that higher prices or trading systems will accomplish the same goals. Such faith requires confidence in both the intentions and efficacy of governments and industry, and neither has been seen to have done much to justify this level of confidence. Moreover, there continues to be a widely-held public sentiment that market-based environmental policies, such as cap and trade systems, favour industry by giving it a "license to pollute."

Third, at a deeper level environmental pricing reform is not currently well-positioned in terms of how it fits within Canadians' social values and broad world views. This conclusion comes from a research study Environics recently completed for Sustainable Prosperity, a multi-stakeholder non-profit initiative dedicated to promoting EPR policy in Canada (www.sustainableprosperity.ca). This research revealed that Canadians generally view environmental pricing mechanisms in narrow economic terms (akin to other conventional financial levers), without much appreciation of the broader principles of "polluter pays" and the positive force of the market to achieve important social goals.

The research identified distinct segments or groups of the Canadian population, based on their orientation to EPR and their broader social values. It found that among supporters of EPR, there is only a very small group (4%) who understand and support EPR in the same way as the economists and policy-makers who promote it. Most of the Canadians who express support for EPR (13% of the population) do so for very different reasons - they put much less priority on environmental solutions but rather are pro-market enthusiasts who accept the inevitability of market forces whatever their effect (e.g. they are very strong on a social value Environics defines as "social darwinism", and weak on one called "primacy of environmental protection"). While this latter group is on-side with environmental pricing, they are hardly the kind of supporters sought by EPR advocates.

On the opposite side of the issue, the strongest opponents of EPR are those Canadians who make up the most vulnerable parts of society, including women, older Canadians, and those with the lowest levels of education. This group (21% of the population) sees EPR more as a threat than as a solution to anything. They may care about the environment, but tend to be more focused on day-to-day concerns. There is little potential for building support for environmental pricing initiatives within this group, but it is hardly one that can be ignored if EPR policy is to succeed in Canada.

In the middle is a sizeable group (33%) which is on the fence about EPR. This group (we call them "responsible citizens") has a high degree of social responsibility and concern about the environment. These Canadians are open to the potential of market mechanisms to offer solutions to issues like climate change because they are truly worried about these issues and feel strongly that progress is essential. But they are also concerned about how EPR might affect those more vulnerable than themselves; they are unlikely to support pricing policies that do not treat everyone fairly and make provisions for those who are disadvantaged. The size and composition of this group makes it a critical constituency for building public support for broad-based environmental pricing initiatives, and attracting its support will require demonstrating how such initiatives address social and economic equity issues.

What does this research tell us about what it will take to build the necessary public support in Canada to move forward with environmental pricing reform? EPR will continue to be a tough sell to consumers until such market mechanisms are framed in ways that are more in tune with Canadians' social values, and in particular address the discomfort many citizens have with using market forces to address environmental objectives. This cannot be accomplished through facts and arguments alone (which rarely sway established public attitudes), but through developing a new narrative that more effectively defines EPR in what it will accomplish, in meeting broadly held environmental, economic and social aspirations.

Keith Neuman (keith.neuman@environics.ca) is Group Vice-President, Public Affairs, for Environics Research Group Ltd.

The 'interwebs' are abuzz today with the surprise announcement that moderate Republican Senator Arlen Specter of Pennsylvania is switching parties and plans to run as a Democrat when he makes his 2010 re-election bid.

The move is clearly a powerful symbol of how far to the right the Republican Party has moved in recent years. What it means for policy is less clear.

Senator Specter's membership in the Democrat ranks would nominally give the party the sixty votes necessary to overcome the near-constant threat of Republican filibuster in the Senate (assuming Democrat Al Franken wins the contested court battle that will decide Minnesota's senate seat). That has prompted a sudden burst of optimism about the prospects of contentious Democratic policy priorities, including health care reform and climate change legislation.

ClimateProgress's Joe Romm blithely asserts, for example, that Senator Specter's new party allegiance will mean he'll change his stance on climate legislation. "One assumes that if he is going to seriously run as a Democrat, he'll support an energy and climate bill," Romm wrote today.

More astute observers, however, quickly recognize that Senator Specter's move changes little in the landscape of climate politics. For serious advocates of urgently needed and effective climate legislation, it's not hard to see why. We simply have to ask ourselves: does the "D" next to this free-thinking Senator's name suddenly change his vote on climate legislation? Of course not.

Continue reading "Senator Specter Changes Parties, Doesn't Change Climate Politics" »

Cross-posted from David Douglas' Near Walden blog

In my role of Chief Sustainability Officer at Sun, I take part in an annual discussion of whether the company should purchase carbon offsets as part of our GHG reduction plan. Since we can buy carbon offsets at a price which is lower than what it costs us to reduce our GHG directly, we have four different approaches available to us:

1. use offsets to report a greater emissions reduction at the same price as if we only did internal projects
2. use offsets to report the same emissions as internal projects, but at a lower price
3. ignore offsets and just do internal projects
4. some mix of offsets and internal projects

So far, each year we have elected to only invest in internal projects. Our rationale is that we can help the company and the environment with that choice -- the company gets more efficient and the we lower our direct GHG emissions. Furthermore we find that this rationale is applicable to each marginal dollar of investment, so that we end up only investing in internal projects as opposed to a mix. This means that the emissions reductions that we report aren't as low as they theoretically could be, but that's a tradeoff that we think makes sense for us, since we keep reducing our own emissions instead of paying others to reduce theirs.

As it thinks about creating a cap and trade system, the US Government faces the same decision: do we allow international offsets in order to keep costs down and/or make the results look better, or do we stick to investing within the country?

Continue reading "International Carbon Offsets: The Next Trillion Dollar Issue" »

House GOP Looking For Friendly Dems To Stop Pollution Legislation

CQ reports that House Republicans are trying to forge alliances with Democrats from industrial states to fight the objectives of the Democratic leadership on pollution. Rep. Marsha Blackburn (R-TN) is looking for Dems to support legislation barring the EPA from regulation carbon dioxide, and Rep. Mike Pence (R-IN) has said that a carbon tax or cap-and-trade "amount to a declaration of economic war on the Midwest by Democrats on Capitol Hill."

-From Talking Points Memo (TPM) morning roundup. Is this how climate advocates are going to let moderate Democrats get their tips on climate policy? Or will a serious effort be launched to find an effective policy that can secure political consensus and the backing of critical moderate swing vote?

For advocates of immediate and strong climate and clean energy legislation, there's one man we should all be paying close attention to: Senator Sherrod Brown (D-OH).

Senator Brown is one of several Democratic Senators from America's 'Heartland' states that form the critical swing block of legislators that will need to support any climate and clean energy bill that hopes to cross the critical 60-vote threshold in the Senate. Along with a small handful of potential Republican swing votes, these Heartland Democrats have to get behind strong climate policy if we want to see it enacted anytime soon.

Senator Brown has spoken eloquently on multiple occasions about the power of clean energy technologies to revitalize the hard-hit industrial communities of Ohio and other Heartland states. Just this week, the Ohio Senator penned an op ed in the Capitol Hill paper Roll Call declaring that the time is now to enact strong climate policy:

"If we care about the world in which we live and the generations that will follow us, then we must no longer dismiss the lethal risks global warming poses to our planet. We must craft an aggressive strategy to combat global warming, and we must do it now. ... Inaction is not an option."

And yet, the Senator has not pledged support for a specific climate policy. He was among 10 Democratic Senators who signed a letter (pdf) last June, saying they couldn't support climate legislation that resembled the Lieberman-Warner Climate Security Act, which had just been defeated on the Senate floor. That group now includes five more Democratic Senators, and other Democrats have joined a group led by Senator Evan Bayh of Indiana to stake their claim on climate policy as well.

Senator Brown is still on the fence, and as the old saying goes, 'the devil is truly in the details:' if the details of climate and clean energy legislation make it something Senator Brown can support and even champion, then there's a decent shot of seeing the remaining swing Senators jump on board, putting 60 votes within reach. On the other hand, if Senator Brown can't support the proposal because he's not convinced it's in the best interests of Ohio or the nation, then kiss hopes of climate action this year good bye.

It's simple: if we want to pass policies that will truly catapult the United States into a clean and prosperous energy economy, slash global warming pollution, and make clean energy cheap and abundant, we need to pass the "Sherrod Brown Test."

Continue reading "The Sherrod Brown Test: Finding Consensus on Climate Policy" »

By Michael Shellenberger and Ted Nordhaus

We have a post up at Salon today that criticizes cap and trade legislation in the House (Waxman-Markey). We argue that it cannot achieve the clean energy revolution we need. Compromises will no doubt be necessary to pass climate legislation in Congress, but as currently drafted, Waxman-Markey looks like it will make all the wrong compromises, allowing firms to buy dubious and sometimes phony carbon offsets rather than invest in clean energy, giving away billions of pollution allocations to incumbent energy interests for free, and committing a fraction of the funds needed for direct public investments in clean energy research, development, and deployment.

We propose an alternative cap and trade, which would explicitly cap the price of carbon dioxide pollution at roughly $10 per ton, rising over time, would auction all pollution allowances with no free giveaways and no offsetting, and would use the vast majority of the revenues, about $60 billion a year, to fund the accelerated development and deployment of clean energy technologies. We believe that such a solution would more rapidly achieve the technological innovations we need at a lower cost. It is also great politics, given strong public support for government investment in clean energy technology. This is the same position we have held since 2007, when we laid out this basic approach in Break Through and other writings.

Continue reading "The Cap and Trade We Need" »

Max Epstein is a sharp young policy thinker at the University of Maryland (UMD) in College Park. You may remember him from a kind of point-counterpoint debate about carbon pricing Max had here on our blog with Breakthrough Generation fellow Zach Arnold last summer. Well, Max continues to follow our writing closely and asks smart questions frequently. Today, his excellent question about the role of clean energy investments spurred a response that I'm turning into a separate blog post here.

Max asks:

Jesse, what exactly is investing public money in deployment of wind farms and PV arrays supposed to accomplish if you do it [along] with a carbon cap/trade? Its one thing to address market failures like a lack of research and transmission, but deploying extra carbon-reduction measures in sectors covered by the cap will not compel emissions reductions beyond what the cap mandates. What am I missing?

Below the fold, you'll find my reply, which articulates three reasons why clean energy investments are critical to climate objectives. We'll leave the part about how investing in a clean and prosperous energy economy is also a politically powerful proposition that strengthens the political appeal of climate policy for another day (check here if you're interested (pdf)).

Continue reading "What are Clean Energy Investments Good For?" »

Congressman Henry Waxman says, "by and large," the revenues from climate and clean energy legislation should be reinvested in clean energy technologies, Bloomberg News reported Friday.

The statement is a marked improvement over Congressman Waxman's appearance on PBS' Tavis Smiley show last Monday, when he seemed to indicate that the primary driver of clean energy technology innovation and deployment would be the higher prices on dirty fuels set by proposed cap and trade legislation and made little mention of the critical role public investments in clean energy can and must play in accelerating the birth of a clean, prosperous energy economy.

Like Speaker of the House Nancy Pelosi's prior statements that cap and trade is designed to "pay for some of these investments in energy independence and renewables," Waxman's latest remarks could indicate a growing consensus among House leadership that carbon revenues should be primarily used to spur clean energy technologies and accelerate the transition to a clean, new energy economy.

Congressman Waxman, who chairs the House Energy and Commerce Committee set to draft climate and clean energy legislation over the coming weeks, was also openly critical of President Obama's proposal to send the bulk of revenues raised from a proposed cap and trade system back to taxpayers in the form of middle class tax cuts. Bloomberg quotes the Congressman as saying:

"I don't think that's the best use of it [carbon revenues]," Waxman said. "By and large" it should be spent on green technologies, he said, and part of it could be used to "help consumers with higher energy costs" and hard-hit industries, "especially coal."

The draft climate and clean energy bill circulated three weeks ago by Congressman Waxman and Congressman Edward Markey (D-MA) (who chairs the subcommittee taking the first crack at the bill beginning this week) made little commitment to the public investments necessary to spur clean energy innovation and accelerate the deployment of clean energy technologies. Waxman's statements last week indicate that commitment may be coming soon, as Markey and Waxman begin the real work of drawing up the climate and energy legislation they hope to send to the House floor by Memorial Day.

Continue reading "Waxman: Carbon revenues should "by and large" be invested in clean technology" »

Cross-posted from Prometheus: The Science Policy Blog

Today's ClimateWire has a story about the debate over the costs of cap and trade:

From the halls of Congress to the Massachusetts Institute of Technology, experts and politicians are hoisting conflicting numbers describing the cost of a cap on greenhouse gases, with amounts from $3,100 to $324 to zero being touted as the annual hit on households. As Congress returns this week, it will find a cloud of numerical discrepancies hovering over climate change legislation.

This is a great example of the consequences of how issues are framed in political debate. If the framing is "costs" of cap and trade legislation, the Republicans will win the political debate, regardless of whose numbers turn out to be right. Of course, the reality is that cap and trade can be designed in any way you'd like with high or low (or zero) costs. But remember that the theoretical basis of cap and trade is that energy prices will increase, so low or zero cost increases will have low or zero effect on emisisons.

The political point is that if the debate hinges on costs, Republicans have the upper hand because if Democrats respond with claims of low or zero costs, and if this turns out to be untrue, then such claims will become a political liability. But if the claims of low costs turn out to be true, they will gut the policy from the standpoint of emissions reductions, and thus become a political liability.

Bottom line: Democrats cannot win the cap and trade debate if the issue is framed as costs to American households.

Is the cap and trade system at the core of the draft Waxman-Markey climate and clean energy bill full of hot air? That's what a new report from two environmental organizations warns.

Rainforest Action Network and International Rivers released an initial analysis (pdf) of the Waxman-Markey climate and energy discussion draft yesterday. The two environmental groups conclude that the cap and trade regulations established by the bill would be "blown to pieces" by the up to two billion metric tons of carbon offsets the bill allows polluters to use in lieu of pollution permits.

Despite all of the talk of establishing hard caps on global warming pollution, the use of so many offsets would stuff the cap full of hot air, making it not much of a cap at all. The report concludes:

Unfortunately the "firm" caps exist only on paper. In reality, the caps will be blown to pieces by allowing polluters to meet their emission reduction responsibilities through buying offset credits rather than reducing their emissions.

If the full amount of offsets allowed by the Waxman-Markey draft legislation were utilized by polluters, the report concludes that any actual emissions reductions in capped sectors of the U.S. economy would be delayed until 2026, allowing a full seventeen years of continued business as usual. (See figure below...)

Continue reading "Is Waxman-Markey's "Cap" and Trade System Full of Hot Air?" »

In his column today, New York Times columnist Tom Friedman criticized cap and trade as politically unworkable and suggested that greens shouldn't be the spokespersons for the climate agenda. This comes on the heels of an interview with Newsweek's Sharon Begley where he attributes the increase in Americans who say news of global warming is being exaggerated to Al Gore.

The mood must be transatlantic, as British environmentalist Stephan Hale has also published an op-ed piece in the Guardian titled "Climate change is too big a problem to be left to the environmentalists," which makes many similar points.

In the Newsweek interview, Friedman claims that polling by the Times shows that while voters oppose taxes, they support them if you target the money for action on global warming and energy independence. But Friedman has mis-remembered the Times poll in ways that support his policy agenda of a high carbon tax. The difference has significant policy implications

I went back and read the 2007 Times/CBS poll Friedman is referring to. Voters told pollsters they would pay more in taxes or for electricity from solar and wind and would pay more for gasoline to reduce oil dependency. But they said they would NOT want to pay higher taxes if it 'combats climate change' or 'relieves us from living under the thumb of petro-dictators,' as Friedman claimed to Begley. The difference is critical.

Here are the questions that Friedman is mis-remembering. Voters told the pollsters that they:

* Would be willing to pay more in taxes on gasoline and other fuels if money went to research for renewables like solar and wind (64-33)

* Would pay more for electricity if it came from solar or wind (75-20)

* Oppose raising gasoline taxes to deal with global warming (58­38)

* Support a gasoline tax to reduce dependence on foreign oil (64-30)

* Oppose a gasoline tax to pay for war on terrorism (49-44)

* Oppose a gasoline tax if it was $2/gallon, or $1/gallon (76-20, 70-27)

Contrary to Friedman's claim, voters in the Times/CBS survey support paying more in taxes or for electricity for solar and wind for reasons that are independent of their concern over global warming. Indeed, what this survey found is that voters oppose paying more in gasoline taxes to deal with global warming or the war on terror.

This is consistent with other polls, and is the reason that we have long encouraged a policy agenda focused on increasing investment in clean energy for economic and energy independence reasons, rather than increasing the price of fossil fuels for global warming reasons. If the money for investment comes from a modest carbon tax, all the better. But the public has clearly and repeatedly stated it would only support a tax or higher fossil fuel prices if it used for clean energy investments.

The following is the introduction to the Breakthrough Institute report, Case Studies in American Innovation: A New Look at Government Involvement in Technological Innovation. You can download the full report here or read more excerpts from the document here.

"It is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply."

-International Energy Agency (World Energy Outlook 2008)

Summary

Technology is a cornerstone of American prosperity, the primary source of our economic competitiveness, and a constant presence in our everyday lives. From the 19th century's advances in manufacturing and transportation to today's cutting-edge developments in biotechnology and computer science, Americans have been world leaders in creating, producing, and deploying innovative technology. Nobel Laureate Robert Solow's classic 1956 economic model of productivity growth demonstrated that technological progress drove at least 80% of economic growth in the United States between 1909 to 19491, and innovation continues to be perhaps the most powerful engine of our prosperity.

Today, America and the world are in energy crisis. Energy prices are escalating, foreign energy dependency is increasing, global warming continues unabated, and all across the world there are billions of people who continue to live without access to energy. The single greatest solution to these crises is to once again harness America's forces of innovation to make clean energy technology both cheap and abundant.

But to harness this solution we must take a new look at the process of innovation and determine the best mechanisms to catalyze and accelerate technology development. This requires looking beyond both the mythos of the lone American inventor and the market fundamentalist ideology that has dominated American politics in recent decades. Instead, we must look closely at several key American technologies and unearth the historic and seemingly ubiquitous government investments that fueled their development.

Continue reading "An Introduction to Case Studies in American Innovation" »

By Teryn Norris & Jesse Jenkins
The Huffington Post
April 7th, 2009

If Democrats want to win on climate policy, they must think fast and move quickly to regain control of the debate. Last week was the opening round of the national climate fight, and the Democratic Congress was nearly knocked out.

It began on Tuesday with the introduction of a major climate bill by Democratic Congressmen Waxman and Markey. The proposal made a fateful choice: it threw out President Obama's "Apollo" plan for investing $150 billion in clean energy and focused instead on meeting the demands of leading environmental organizations, emphasizing cap and trade regulation and a laundry list of electricity and efficiency standards.

Meanwhile, the response to climate legislation in the Senate was swift and harsh, with Republicans deftly maneuvering to secure the political high ground. Senator Thune (R-SD) introduced an amendment to the budget (which as originally proposed had included revenues from carbon cap and trade) declaring that any climate legislation should "not increase electricity or gasoline prices," which quickly passed 89 to 8. Senator Ensign (R-NV) then proposed an amendment stating that climate policy should not result in higher taxes on the middle class, passing unanimously (98-0). These votes effectively put all but a handful of Democratic Senators on the record opposing policies to raise the price of dirty energy -- the central purpose of cap and trade regulation, including the provisions at the heart of the Waxman-Markey bill.

What went wrong? The Democratic Congress made a critical mistake in following the direction of leading green groups like Environmental Defense Fund and the Natural Resources Defense Council. By tossing out Obama's energy investment plan and focusing on carbon pricing and regulation, Democrats allowed Republicans to quickly and easily frame the entire debate around increased energy prices and economic costs. That's a fight Republicans take up with relish -- and one they will surely win.

Continue reading "How Democrats Can Win the Climate Debate" »

"Technology policy lies at the core of the climate change challenge. Even with a cutback in wasteful energy spending, our current technologies cannot support both a decline in carbon dioxide emissions and an expanding global economy. If we try to restrain emissions without a fundamentally new set of technologies, we will end up stifling economic growth, including the development prospects for billions of people.

Economists often talk as though putting a price on carbon emissions--through tradable permits or a carbon tax--will be enough to deliver the needed reductions in those emissions. This is not true. Europe's carbon-trading system has not shown much capacity to generate large-scale research nor to develop, demonstrate and deploy breakthrough technologies. A trading system might marginally influence the choices between coal and gas plants or provoke a bit more adoption of solar and wind power, but it will not lead to the necessary fundamental overhaul of energy systems.

For that, we will need much more than a price on carbon. ...

Economists like to set corrective prices and then be done with it, leaving the rest of household and business decisions to the magic of the market. This hands-off approach will not work in the case of a major overhaul of energy technology. We will need large-scale public funding of research, development and demonstration projects; intellectual property policies to promote rapid dissemination to poor countries; and the promotion of public debate and acceptance of new options. We will need to back winners, at least provisionally, to get new systems moving. "

An oldie but a goody from well-known economist and direct of the Earth Institute at Columbia University, Jeffrey Sachs, April 2008 in Scientific American, "Keys to Climate Protection."

A major new climate bill hit the House of Representatives this week and was met with deft political maneuverings from Senate Republicans that could render cap and trade dead on arrival. The Breakthrough Institute team has the angles covered:

Jesse Jenkins says this new climate bill is proof of misplaced priorities as the leading green groups setting the climate agenda walk away from billions of dollars in critical clean energy investments in favor of regulations, standards and carbon pricing. See also "Climate Bill is All About the Coal Hard Cash" at Huffington Post and listen to Jenkins talk about the Markey-Waxmen bill on KPFA radio.

Meanwhile in the Senate, two Republican amendments may leave cap and trade with no where to go. In reaction to the House climate bill, the Senate this week voted 89-8 to preemptively reject any cap and trade bill that increases consumer energy prices and voted 98-0 to ensure that any climate bill protects middle-income taxpayers from any tax increases.

Roger Pielke jr. thinks the Thune Amendment may have preemptively killed cap and trade and says Republicans have outflanked Democrats on climate already with the Ensign Amendment.

Michael Shellenberger sees these votes as the clearest rejection yet of the pollution pricing paradigm and examines the artful political maneuverings at play.

Ted Nordhaus is left worrying that the climate bill is on a crash course for compromise that will leave us stuck with the worst of both worlds: a climate policy lacking both a price signal sufficient to drive private investment anywhere near the scale we need and NO money for public investments in an RD&D strategy sufficient to make clean energy cheap.

Teryn Norris and Jesse Jenkins outline what Democrats can do to regain the political high ground and win the climate debate in this op ed, featured at Huffington Post. If Democrats want to win, they should quickly follow President Obama's lead by shifting the focus of climate legislation from pollution regulation to bold government investment in the clean energy economy.

As Congressional Democrats and DC greens gear up to fight for cap and trade, yet another another public opinion poll shows voters want investments in clean energy, not new taxes or regulations.

While Congressional Democrats and leading green groups insist that what the public wants is cap and trade to deal with climate change, yet another poll was released today showing voters want investments in clean energy, not new taxes or regulations.

If I were a Republican, I'd be relieved to have climate legislation to attack right about now...

Here's a quick look at the highlights from the new Public Agenda/Yankelovich poll...

Continue reading "Congress Debates Pollution Pricing; Public Wants Clean Energy Investment" »

We are now witnessing the inevitable entailment of putting pollution caps and climate at the center of the political proposition.

Everyone is all for capping carbon until it comes time to pay for it. Then it is a consumption tax and few politicians and voters are prepared to support it. It inevitably leads to a debate centered on the costs and regulations, not the social benefits of the policy.

The Apollo approach, which puts the immediate social and economic benefits - a clean energy economy, energy independence, new industries that can create good jobs - at the center of the debate and uses modest carbon price revenues to pay for it has always been vastly more robust to the kinds of political attacks that we are seeing this week. The debate becomes about whether or not we are going to make these investments in America's future - not whether or not we are willing to take our medicine in order to avoid the end of the world. But making this move requires more than simply swapping out the picture of the polar bear on the front page of your newsletter for a picture of a construction worker. It requires taking the investment agenda seriously and making it the central objective of policy.

The choice that greens and sympathetic policy makers will have in the coming months will be whether to move to this kind of plan B or accept a cap and trade bill that is likely to provide neither a very significant price signal nor any serious money for RD&D.

Continue reading "The Worst of Both Worlds: Climate Bill on Crash Course for Compromise" »

Cross posted from Prometheus: The Science Policy Blog

As I mentioned yesterday, some stark political lines are being drawn in the Senate on cap and trade legislation. The Thune Amendment had 89 members of the Senate going on record opposing any increases to electricity or gasoline prices as a result of cap and trade legislation. In the Senate yesterday another important amendment to the Budget Resolution was approved unanimously, 98-0, sponsored by Senator Ensign (R-NV), chair of the Republican Policy Committee. Here is its text:

To protect middle-income taxpayers from tax increases by providing a point of order against legislation that increase taxes on them, including taxes that arise, directly or indirectly, from Federal revenues derived from climate change or similar legislation.

What does this amendment mean?

It means that money raised from cap and trade (or even a carbon tax) cannot lead to a net increase in the overall tax burden on the "middle class." What is "middle class"? According to Senator Ensign in a press release trumpeting the amendment, it includes those households earning less than $250,000 per year. Senator Ensign cites the President on this point, referring back to his campaign promises not to raise taxes on this group.

Politically and practically, this amendment could then mean that proponents of cap and trade will need to pursue an explicit "cap and dividend" approach with any such policy being tax neutral for those earning less than $250,000 per year. In other words, the costs of cap and trade will have to be fully borne by those earning above $250,000 per year. Some of the challenges of the distributional effects of cap and trade are discussed in recent CBO testimony (PDF). Whether or not legislation can be written that allows supporters to claim to have met the spirit of the Ensign Amendment, it is clear that the Amendment makes the political challenge that much more difficult.

Continue reading "Senate Republicans Outflank Dems on Climate" »

Cross posted from Prometheus: The Science Policy Blog

The ability of Congressional legislation on cap and trade to result in actual emissions reductions was dealt a serious blow yesterday. An Amendment was introduced by Senator John Thune (R-SD) on the Budget Resolution and its text is as follows:

To amend the deficit-neutral reserve fund for climate change legislation to require that such legislation does not increase electricity or gasoline prices.

What is this? Climate change legislation cannot increase electricity or gasoline prices? The entire purpose of cap and trade is in fact to increase the costs of carbon-emitting sources of energy, which dominate US energy consumption. The Thune Amendment thus undercuts the entire purpose of cap and trade.

Continue reading "Did the Senate Just Preemptively Kill Cap and Trade?" »

Breakthrough director of energy and climate policy Jesse Jenkins appeared again today on KPFA radio in the Bay Area, talking on The Morning Show about the newly released Markey-Waxman climate bill "discussion draft."

You can listen to the segment below (apologies for the rapid talking!), which begins about 1:34 into the show:

Marking the starting bell in the long-promised fight over the nation's energy future, Congressmen Henry Waxman (D-CA) and Ed Markey (D-MA) introduced a climate and energy legislation "discussion draft" yesterday.

As Beltway insiders have repeatedly "reminded" me, this is "just a discussion draft," and its final form may be much different. But just looking at what's in this bill so far -- and just as important, what's not -- paints a clear picture of misplaced priorities and a bill in critical need of some "course correction."

Even a cursory read of this "American Clean Energy and Security Act" (ACES) -- and I've read far more of this 648 page bill than I'd like! -- speaks volumes to the priorities of the various parties driving this debate so far - namely the green groups and big industry players already cutting deals as part of the U.S. Climate Action Partnership.  This bill should be proof, once and for all, these leading greens will throw clean energy investments overboard to preserve precious regulations and an increasingly compromised "cap" on carbon.

Continue reading "New Climate Bill Proof of Misplaced Priorities" »

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.

Continue reading "Senate Says No to Pollution Pricing Paradigm" »

Breakthrough's director of energy and climate policy, Jesse Jenkins, speaks about climate policy and politics on a half hour radio segment that aired March 27th on KPFA radio in the Bay Area. Jenkins joins Clear Air Watch's Frank O'Donnell to discuss the hard realities of climate politics and outline a policy strategy to make clean energy cheap that can overcome these realities.

Listen to the archived segment as streaming audio here (only available through April 10, 2009):

Or listen to the segment as archived MP3 here.

There's been a spate of recent public announcements from moderate Democrats and Republicans alike, voicing caution about a proposed cap and trade program to place a price on carbon dioxide and cut global warming pollution. More than one third of the U.S. Senate now joins the fifteen moderate Democratic Senators we've dubbed the "Technology Fifteen" as vocal swing votes in the upcoming debate on climate policy.

Below the fold is an updated tally of where the Senate stands on climate policy by my assessment, based on recent public announcements and past voting histories. With using budget reconciliation to bypass the 60-vote filibuster hurdle off the table, to secure passage of any climate policy in the U.S. Senate, all but seven of the 37 Senators I identify as swing votes must be convinced to support the proposal (joining the 30 Senators I classify as "Assumed Yes" votes).

I provide the vote count below without further comment, and will delve into the implications of this tally in further detail in an upcoming post...

Continue reading "The Challenge Ahead: More than a Third of Senate Now "Swing" Vote on Climate" »

It was with much fanfare and bravado that then-newly-elected Prime Minister Kevin Rudd of Australia announced at the 2007 Bali climate talks that his nation would abandon opposition to climate action and ratify the Kyoto Protocol. Better late than never, Rudd said and bravely declared, "I can unite the world on climate."

To deliver on that bold promise, Rudd directed his ministers to put together a cap and trade program to limit greenhouse gas emissions and put a price on CO2. The outline of an Australian "Emissions Trading Scheme" was rolled out last week with plans to implement a cap and trade program in June 2010 aimed at cutting emissions 5 to 15 percent below 2000 levels by 2020.

Now, the Australian Prime Minister's efforts to put a price on carbon and cap emissions are under fire from both Right and Left, and cap and trade is going under Down Undah.

Continue reading "Cap and Trade Going Under Down Undah" »

Shellenberger interviews with Planet Forward TV and argues that rapidly transitioning away from fossil fuels in the 21st century demands large-scale public investment in technology innovation to make clean energy cheap. See the clip here, and look for this new show which premieres at 8 p.m. April 15, 2009 on PBS.

It appears that there is an effort underway (whether coordinated or just coincident) from the Obama Administration, Intergovernmental Panel on Climate Change (IPCC) and United Nations to place a reality check on expectations for United States climate policy progress in advance of the international climate negotiations in Copenhagen this December.

Yesterday, IPCC chairman Rajendra Pachauri told UK newspapers that Barack Obama would have a "revolution on his hands" if he tried to implement binding cuts in emissions on the scale that the IPCC's scientific consensus recommends.

"He [Obama] is not going to say by 2020 I'm going to reduce emissions by 30 per cent," Pachauri said. "He'll have a revolution on his hands. He has to do it step by step."

Pachauri's word's echo those of U.S. special climate envoy, Todd Stern, who recently stated that the 25-40% emissions cuts called for by the IPCC are "beyond the realm of the feasible" in the U.S. Congress. Stern called for a focus on "the art of the possible," saying "we need to be guided both by science and by common sense."

Now, UN climate czar, Yvo de Boer tells Bryan Walsh in a TIME interview that he doesn't expect cap and trade from the U.S. before Copenhagen either.

Continue reading "Playing the Expectations Game as Copenhagen Looms" »

written by David Douglas and cross-posted from Near Walden

Roger Pielke Jr. has an outstanding post titled US Mitigation Math where he shows the general sources and sinks of US energy and resulting GHG emissions. He also throws out some reduction scenarios and concludes that they cannot come close to meeting an emissions reductions goal of 14% below 2005 levels by 2020.

So he closes with a challenge: "... present a scenario combining decarbonization of the energy supply and efficiency gain that has a realistic chance of succeeding in meeting a 14% emissions reduction (below 2005) by 2020."

It's a busy week for me so I haven't had time to work out some complete solutions, but I took a shortcut and asked myself how much CO2 I could reduce if I took all of the Obama administrations projected $645B in revenue from emissions allowances between 2012 and 2019 and applied it to various solutions.

Since I'm living in a hypothetical world, I'm going to take a couple of liberties. First, I'm going to assume that I've either got access to all of the money on the first day of 2012, or I can get the average amount of $80B/year for a long time to come. Second, I'm going to ignore the physical and temporal realities of implementing my solutions - in my world I've got the full support of the nation and they'll do everything they can to implement these ideas. Finally, I'm going to conveniently ignore the emissions required to implement these solutions.

Solution 1: Buy Lots of Prius's

In this scenario I'm going to buy 25.6M Prius cars at an estimated 45MPG and replace 25.6M gas guzzlers at an average of 15MPG. At 12K miles/year each, we'll save 533 gallons of gas per car per year, and at about 20 pounds of CO2 per gallon, that's about 4.8 metric tons of CO2 per car per year. Grand total savings: 122MMt/year, or a 2% savings from 5991 MMt.

Continue reading "Mitigation Math: Hypothetical Answers" »

cross posted from Prometheus, the Science Policy Blog

The mathematics of United States carbon dioxide emissions are not actually that complicated. The figure below from the U.S. Energy Information Agency shows that the 5,991 million metric tonnes (MMt) of carbon dioxide emitted by the U.S. came from 3 sources: coal, natural gas, and petroleum (see three inputs in the upper left of the graph).

Each of these fossil fuels, plus renewables and nuclear power make up the total energy consumption in the United States. Energy consumption is measured using a unit call a "quad" which means a quadrillion BTUs (British Thermal Units). In 2007 the United States used 101.4 quads of energy (data). This amount of energy can be broken down by source as follows.

The 15.2 quads of energy from nuclear and renewable sources resulted in negligible carbon dioxide emissions. The amount of carbon dioxide emitted due to each quad of fossil fuel energy depends upon the source, as their carbon intensities differ. For the analysis that follows I use the following values, distilled from the EIA information provided here in .xls.

Coal = 94 MMt Carbon Dioxide per Quad
Natural Gas = 53 MMt Carbon Dioxide per Quad
Petroleum = 65 MMt Carbon Dioxide per Quad

Thus, to calculate total U.S. carbon dioxide emissions simply requires multiplying quads of energy by carbon dioxide per quad and summing across the three fuels. This simple math results in the following:

(94 * 22.8 [Coal]) + (53 * 23.6 [Natural Gas]) + (65 * 39.8 [Petroleum]) = 5,981 MMt carbon dioxide

This total compares quite well with the total of 5,991 MMt carbon dioxide reported for 2007 by EIA (see figure above). We can use this information to ask some straightforward questions about how an emissions reduction target of 14% below 2005 levels (5,095 MMt carbon dioxide) might be reached by 2020.

We can do a bit of hypothetical "stress testing" of these numbers, by asking, in theory, what sort of actions might lead to reaching the emissions reductions target. Before we do this, we do need to make a guess as to 2020 US energy consumption. The EIA projects that energy consumption will grow at a rate of 0.5% per year (calculated from information here). Because GDP growth is expected to be higher than this rate, it already builds in an assumption of gains in energy efficiency. But let's use the EIA estimate, which suggests that US energy consumption in 2020 will be 108.6 quads, of which 21 quads will come from renewables plus nuclear energy, representing a growth of about 40% on top of 2007 values. This leaves 87.2 quads to be produced by fossil fuels.

Here are a few examples of the effects of different hypothetical strategies:

1) What would happen if all coal consumption were to be replaced with natural gas?

Answer: In 2020 total emissions would be 5,110 MMt carbon dioxide, very close to the 2020 target.

2) By how much would renewables plus nuclear have to displace coal to reach the target?

Answer: The target could be reached if coal consumption were reduced by about 42%, and the displaced 9.2 quads of energy were replaced by renewables plus nuclear, implying more than doubling of renewable plus nuclear energy supply, to comprise 30% of all energy consumption.

If renewables alone (i.e., non-nuclear) are to carry the weight of displacing coal, then they would have to increase their role in consumption by a factor of 4.7 over 2007 values. If growth in renewable energy supply is restricted to solar and wind only, then these sources would have to increase their role in consumption by a factor of 80 (that is, e-i-g-h-t-y). The reason for this big difference is that biomass and geothermal provided about 6.4 quads of energy in 2007, whereas wind and solar only 0.4 quads. The Obama Administration's goal of doubling wind, solar, and biofuels production within 3 years may indeed be a worthwhile policy, but it is not consistent with a goal of displacing sufficient coal to reach the 14% 2020 target using wind and solar (and while biofuels have their own complexities as a policy issue, they are not really a substitute for coal in any case).

3) By how much would energy consumption have to be reduced to meet the target assuming no changes in the energy consumption mix?

Answer: Energy consumption would have to be about 85.5 quads in 2020, about equal to 1992 values when the US economy was 35% smaller than in 2007.

Some Comments on the Stress Tests

First, number (1) above is really not desirable if the goal of mitigation policy is ultimately a reduction in emission of 80% or more. The reason for this is that while natural gas is less carbon intensive than goal, it is still carbon intensive. Locking in a large natural gas infrastructure is not compatible with large emissions reductions. Consider that in the hypothetical case that all US fossil fuel needs were to be met by natural gas, then 2007 carbon dioxide emission would have been 5,375 MMt, less than observed in 2007, but not consistent with any low stabilization target.

Second, number (2) is theoretically promising but practically daunting. The following is worth repeating -- for wind and solar to displace enough coal to reach the 14% target by 2020 would require that it increase by a factor of 80 in absolute terms from 2007 production. President Obama's policy of a tripling in wind and solar energy supply in the next three years would leave a need for another increase by a factor of about 25 over the next 8 years if wind and solar are to displace sufficent coal to meet the target.

Third, with respect to number (3), while there is a lot of potential to exploit in increasing energy efficiency, to reach the 14% would require a reduction of US energy use by about 2 quads per year for the next decade. Assuming that policy makers and citizens want economic growth to resume, this is a Herculean task. If you factor in that the EIA estimates to 2020 already include a good bit of efficiency gain in the BAU scenario, the task could be even larger if these assumed gains do not occur or if economic growth happens at a faster rate than assumed.

In reality, of course, none of these "stress tests" would be applied alone; there would be a combination of all three approaches discussed above. However, I challenge readers to present a scenario combining decarbonization of the energy supply and efficiency gain that has a realistic chance of succeeding in meeting a 14% emissions reduction (below 2005) by 2020. I am not saying that it can't be done, but I am saying that I don't see how it can be done. The comments are open, have at it.

Setting an emissions target and timetable, allocating emissions permits, and then saying that the magic of the market will efficiently take care of the task is exactly the answer I'd expect if one doesn't have an answer. Markets can't make the impossible possible, and when they are used in such a manner, often have undesirable results.

Breakthrough Institute Senior Fellow Marty Hoffert joined a panel of energy experts from both industry and academia at an American Association for the Advancement of Science panel on energy innovation held in Washington D.C. this week. The panel of experts called for major, direct government investments and targeted public policies designed to spur high-risk, high-reward energy innovation.

Businesses and the private sector are ill-suited to perform the kind of critical, long-term energy research needed to solve national energy challenges, panelists said, calling for targeted public policies and investments designed to drive improvements and lower costs of clean energy technologies.

They also encouraged federal energy R&D initiatives to not overlook some of the more outlandish proposals for new energy and climate technologies, including space-based solar power and geoengineering techniques. With early-stage R&D a low-cost investment, putting money behind these potentially high-payoff technologies has no downside, they say.

Read on for excerpts from Energy and Environment Daily's coverage of the AAAS panel...

Continue reading "Energy Experts Call for High-Risk, High-Reward Energy Innovation" »

Obama has already been compared to FDR. But do his proposals really measure up?

No, says Michael Lind from the New America Foundation in today's Salon. In a fantastic critique of Obama's budget, Lind argues that his proposal reflects the ongoing dominance of market fundamentalism. If Obama is to recreate liberalism and achieve a transformational presidency, Lind argues, he must break with this ideology and embrace the public provision of public goods -- just like Roosevelt and Eisenhower once did -- from energy and infrastructure to education and healthcare.

Lind echoes my recent call in the Huffington Post for Obama to put forth a new economic philosophy, and he cites Breakthrough's Shellenberger and Nordhaus as offering "the Roosevelt approach" on energy:

The problem with alternative energy sources like solar power and wind power is that they are still too expensive, compared to coal, natural gas and nuclear energy. The answer, according to a minority of enviromentalists like Ted Nordhaus and Michael Shellenberger, should be massive, Manhattan-style public sector R&D to discover ways to bring alternative energy prices down -- in absolute, not just relative, terms, to maintain cheap electricity for American industry and American households. That would be the Roosevelt approach. But the Obama approach is to use a cap-and-trade system to artificially raise the prices of conventional energy, in the hope that private capital (with modest help from public capital) will pay for efforts to invent a cheaper solar cell or wind turbine. The fact that most of the left embraces cap-and-trade should not blind us to the fact that cap-and-trade is a classic example of an indirect, overly complicated, "market-friendly" neoliberal approach, touted originally by conservatives and neoliberals as an alternative to the allegedly discredited "top-down, command-and-control" approach that gave us, among other things, the TVA, the Manhattan Project and the Internet.

Here's the full piece:

Continue reading "How Can Obama Really Become the Next FDR?" »

cross posted from Prometheus, the Science Policy Blog

Todd Stern, chief US climate negotiator in the State Department, gave a speech two days ago in which he laid out some of the principles that will guide the Obama Administration's approach to climate policy. In it he recognizes that what is politically possible will be the most important factor guiding the pace of policy implementation. He says the following:

. . . at the same time we are being guided by the science and doing the math, we cannot forget that we are engaged in a political process and that politics, in the classic formulation, is the art of the possible. Of course we cannot afford to be passive in our understanding of that principle - we need always to push the envelope of what is possible. But we ignore the principle at our peril.

Let me apply this principle in a couple of ways. Some assert that the United States can only meet its responsibility if it agrees to reduce emissions 25-40% below 1990 levels by 2020, equivalent to at least a 40% reduction below where we are right now (a much deeper cut than the EU would have to make compared to where they are now). But, first, as a matter of substance, this is not necessary. What counts is getting on a viable path between now and 2050. Reducing 25-40% below 1990 levels would be a good idea if it were doable, since it would allow a less steep reduction path in the 2020-2050 time period. But it is not independently necessary; a somewhat steeper path in the latter period could make up for the slightly slower start.

In addition, a 25-40% requirement for the United States would garner very little support here, because it would appear both unnecessary, for the reasons I just noted, and beyond the realm of the feasible. The most ambitious proposals that have been seriously considered here, both those introduced in Congress last year and the objective that President Obama has endorsed, call for reductions equivalent to 1990 levels by 2020 and 80% below 1990 levels by 2050. These would equate to around 15% below 2005 levels by 2020, and over 80% below those levels by 2050. So insisting on a 25-40% cut below 1990 for the United States is a prescription not for progress but for stalemate. Again, we need to be guided both by science and by common sense.

There are two important points to make about this passage.

First, in rejecting a 25-40% emissions reduction by 2020 target as unnecessary and unachievable Stern is openly departing from the both the conclusions and implications that many have taken from the 2007 IPCC report, including its head, Rajendra Pachauri:

We [in the IPCC] have estimated that to stabilize global temperature increases at just 2° to 2.4° Celsius, we have only about seven years to turn around global emissions of greenhouse gases like carbon dioxide. By 2015 they'll have to peak. By 2020, we'll need to put in place a 25 to 40 percent reduction in greenhouse gas emissions.

While many people have pointed to the fact that the science of climate change has advanced since the 2007 IPCC report, far more importantly, the ongoing discussion of policy options has rendered the IPCC obsolete. Pachauri has criticized the Obama Administration for its climate policies, so it will be interesting to see how the broader IPCC community reacts to the scaling back of expectations being set forth. This will be especially interesting as many IPCC scientists gather in Copenhagen later this month to "influence policy." Will the Obama Administration be criticized by the scientists?

The second important point to take from this passage is a realization that climate policy must be governed by common sense and what is politically "possible" and "feasible." This realpolitik approach is a healthy one for climate policy as it moves debate beyond aspirations and exhortations to what can actually be accomplished. However, at the same time it is also a slippery slope, as what is politically possible at present is, to be honest, not much. What will the Obama Administration do if it learns that a 15% reduction by 2020 is not possible or feasible?

A new, Post-Kyoto international climate treaty needs to take a radical new approach that focuses less on binding emissions targets and more on technology innovation, economic development, and adaptation. That's what the Breakthrough Institute has argued for years (e.g. see "Scrap Kyoto"), and that's the message coming from an increasing number of experts, according to the New York Times:

Continue reading "Post-Kyoto treaty demands radical new approach" »

Ezra Klein reports this morning that Pelosi wants "heavy investment" in clean energy technology and infrastructure as part of a cap and trade policy this year, declaring energy policy the "flagship priority" for Congress. She said she'd like to see this all in one bill -- a sentiment I also heard from Harry Reid in a meeting yesterday with Power Shift delegates. Here's Klein:

Just returned from a small breakfast the Maria Leavey Memorial series put on with House Speaker Nancy Pelosi. This much, I think, was clear: Pelosi is focused on energy legislation. She named energy policy as this Congress's "flagship" priority. Cap and trade, she promised, would come to the floor this year, in a bill that she hoped would include not only carbon pricing but heavy investment in renewables and a reform of the energy grid. "I'd like to see it as one bill," she said. "That would show the integrity of it: How each piece relates to the other."

I have long thought that for many politicians the most compelling reason for cap and trade legislation is not just an effort to reduce carbon dioxide emissions, but to tap a new source of revenue in an era where explicit tax increases are politically dangerous. The economic meltdown coupled with the large deficit spending, along with President Obama's commitment to reduce the deficit make it more likely that cap and trade legislation will in fact be passed as a mechanism of revenue generation. Whether or not it will actually reduce emissions is a separate question. A story in today's E&E Daily discusses this process, asking whether or not expected cap and trade revenues will appear in the Congressional budget resolution. Even though the resolution is non-binding, if the cap and trade revenue appears in it, then the commitment to cap and trade as a source of general government revenue will have been made.

Continue reading "Fiscal Policy and Cap and Trade" »

I know I may be chastised for criticizing Obama so soon after he delivered an unprecedented clean energy investment in the stimulus. But let's be clear: those investments were just the beginning, and Obama needs to articulate a clear and viable plan to make the sustained commitment and ongoing public investments necessary to truly build a new energy economy.

The public is overwhelmingly behind President Obama right now, and if he was elected with a mandate to do anything beyond stem the economic crisis, it was a mandate to build a new, clean energy economy that finally secures America's energy independence and averts potentially catastrophic climate change.

Yet once you start looking at the critical areas for public investment - research, development and demonstration, or RD&D; critical infrastructure, like a modernized electrical grid; deployment incentives to spur emerging technologies; and efficiency incentives, financing and other investments to retrofit American homes, businesses and factories - it's not hard to see why $15 billion per year is simply not up to the task.

Continue reading "Will Obama Put Real Money on the Table for Clean Energy?" »

In his latest piece, Time magazine's energy and climate writer Bryan Walsh takes readers beyond carbon pricing, to look at the more active government engagement in energy innovation necessary in the race against climate change.

"[A] growing chorus of experts is beginning to doubt whether cap-and-trade alone will reduce CO2 enough to curb runaway climate change," Walsh writes, before turning to the need for new energy innovation on an unprecedented scale. As Walsh writes, "If the U.S. is to invent its way out of climate change, which some suggest is our only hope, it will need to spend [a] lot more and a lot more wisely on basic energy research."

Selected excerpts after the jump...

Continue reading "Time's Bryan Walsh Takes Us Beyond Carbon Pricing" »

Not in Europe it doesn't, according to this article in Der Spiegel (thanks RG and BP for the link):

Germany's renewable energy companies are a tremendous success story. Roughly 15 percent of the country's electricity comes from solar, wind or biomass facilities, almost 250,000 jobs have been created and the net worth of the business is €35 billion per year.

But there's a catch: The climate hasn't in fact profited from these developments. As astonishing as it may sound, the new wind turbines and solar cells haven't prohibited the emission of even a single gram of CO2.

Continue reading "Does More Renewable Energy Equal Less Emissions?" »

The political consensus surrounding climate policy is collapsing. If you are not aware of this fact you will be very soon. The collapse is not due to the cold winter in places you may live or see on the news. It is not due to years without an increase in global temperature. It is not due to the overturning of the scientific consensus on the role of human activity in the global climate system.

It is due to the fact that policy makers and their political advisors (some trained as scientists) can no longer avoid the reality that targets for stabilization such as 450 ppm (or even less realistic targets) are simply not achievable with the approach to climate change that has been at the focus of policy for over a decade. Policies that are obviously fictional and fantasy are frequently subject to a rapid collapse.

The current shrillness that has been put on display by many politically-active climate scientists and the feeding-frenzy among their skeptical political opposition can be explained as a result of this looming collapse, though many will confuse the shrillness and feeding-frenzy as a cause of the collapse. Let me explain.

Continue reading "The Collapse of Climate Policy and the Sustainability of Climate Science" »

NPR had a story today about the shifting conceptual paradigms of climate change and climate change solutions. Essentially a conversation with Dan Sarewitz, one of the leading thinkers studying innovation and technology policy, the piece gets at some fundamental truths regarding energy, society and the immense challenge of rebuilding the entire global energy system. The entire segment is about 4 and half minutes, and I would recommend listening to the entire thing. From the story:

Using energy "is really the metabolism of modern industrial society," [Sarewitz] says. "And changing that system is not about replacing a few technologies or advancing our level of efficiency along certain fronts."

It means creating a whole new basis for the global economy. Sarewitz is skeptical that politicians can deliberately manage a transformation of that scale, either through legislation or through climate treaties. He says, for starters, measures that will ultimately force everyone to pay more for energy are doomed both economically and politically.

"Politically, what you're asking people to do is to pay a huge upfront cost for benefits many decades down the road that they can't even anticipate or predict. And that is politically an extremely difficult sort of situation to manage," Sarewitz says.

...
"The economic dislocation that would be created by getting to that sort of level would absolutely be immense," he says. "And it's easy to be casual about that or it's easy to pin that kind of argument on conservative Republicans or on the executives of oil corporations, but nevertheless it is absolutely true you would be talking about something that would be destabilizing to global economies."

Continue reading "Dan Sarewitz is Making Sense" »

Last week, reporting on Hilary Clinton's appointment of Todd Stern as chief envoy on climate change, we raised questions about whether or not Stern, a former Clinton administration negotiator at the Kyoto Protocol climate talks, would be able to offer a fresh, new direction at the Copenhagen negotiations this December.

However, it seems that we missed an important piece that Stern last year published in the Washington Quarterly's Winter 08 edition. A picture in broad strokes of how Stern and his co-author William Antholis would construct an international framework for emissions reductions, the report shows how Stern's views have evolved since the Kyoto negotiations. He writes:

"This is no time to indulge in orthodoxies or in the kind of overextended discussion that marked too much of the six-year Kyoto Protocol negotiation."

Continue reading "Todd Stern: A Renewed Chance for Global Cooperation" »

There's an interesting, if frustrating, piece by David Leonhardt in the New York Times Magazine this week on the need for a strategy for long-term growth, not just short term stimulus. In it he makes a critique of green jobs -- and offers up pollution pricing orthodoxy.

"Green jobs can certainly provide stimulus. Obama's proposal includes subsidies for companies that make wind turbines, solar power and other alternative energy sources, and these subsidies will create some jobs. But the subsidies will not be nearly enough to eliminate the gap between the cost of dirty, carbon-based energy and clean energy. Dirty-energy sources -- oil, gas and coal -- are cheap. That's why we have become so dependent on them.

The only way to create huge numbers of clean-energy jobs would be to raise the cost of dirty-energy sources, as Obama's proposed cap-and-trade carbon-reduction program would do, to make them more expensive than clean energy. This is where the green-jobs dream gets complicated."

It seems that this analysis is only half-right.

Continue reading "Carbon Pricing is No Engine for Sustained Growth" »

Some folks are surprised to learn that market mechanisms for carbon trading allow both the buying and selling of emissions permits. Clearly this sort of capitalistic behavior must be stopped if carbon markets are to work. The Guardian has the details:

Britain's biggest polluting companies are abusing a European emissions trading scheme (ETS) designed to tackle global warming by cashing in their carbon credits in order to bolster ailing balance sheets.

The sell-off has helped trigger a collapse in the price of carbon, making it cheaper to burn high-carbon fossil fuels and leading to a fall in the number of clean energy projects. The moves were seized on by environmentalists and other critics who have previously criticised the European Union's ETS for delivering more windfall profits for business than climate change.

Continue reading "Apparently Markets Allow Buying and Selling" »

When it comes to the geography of climate politics, it doesn't break down along the much-ballyhooed "red state/blue state" divide. It's really more about coal states vs. clean states, as John Broder reports in yesterday's New York Times. That's a rift that risks dividing Senate Democrats as climate policies move forward in the 111th Congress.

Continue reading "The Geography of Climate Politics" »

Todd Stern will be named by Secretary of State Hillary Clinton as the U.S. State Department's special "Climate Envoy," news outlets reported today. Stern's climate credentials include a stint as a senior negotiator representing Bill Clinton's White House at the Kyoto Protocol talks, a role he'll likely reprise at the upcoming Copenhagen climate talks this December.

As a high level negotiator at Kyoto in 1997, Stern helped forge an international climate reduction framework that has been largely ineffective (see Michael and Ted's essay, "Scrap Kyoto", here [pdf]). Stern's appointment thus makes one wonder: has the Clinton-era negotiator learned the lessons of the past 12 years and is now prepared to offer a new direction at the Copenhagen talks? Or does Stern's appointment signal that the Obama administration's official thinking on international climate policy is still stuck in the winter of 1997?

Continue reading "Will New "Climate Envoy" Bring More of the Same for the US in Copenhagen?" »

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.

Continue reading "Nancy Pelosi: "You Cap so you can Invest"" »

Yesterday I commented with a slightly raised eyebrow at comments made by Steven Chu, President-elect Obama's choice to head DOE, on the future of coal. Dr. Chu's comments seemed to reflect a much more conciliatory tone toward coal as a key part of America's energy future. Today's raised eyebrow comes after reading some comments by Henery Waxman, (D-CA), new chairman of the House Energy and Commerce Committee, as reported in the E&E ClimateWire:

As the coal industry awaits the first global warming hearing of the House Energy and Commerce Committee today, many of its members are asking, "Which Henry Waxman will show up?"

Continue reading "Coal's Newest Friend" »

The Council on Foreign Relations ran a top story on their homepage today, "Climate Policy in the Age of Obama," that mentioned a recent op-ed by Jesse Jenkins and me in the opening paragraph:

The global economic decline has tempered hopes of swift international action on climate change, yet many climate advocates do expect the Obama administration to help boost long-stalled international climate talks (PDF). The announcement of the president-elect's energy and environment team (WSJ) last month reinforced this belief. Among the nominees is Energy Secretary-designate Steven Chu, a Nobel-winning physicist and advocate for alternative energy. Chu underscored his concern about climate change and the need for energy efficiency in Senate testimony on January 13. Yet some advocates are worried. "All is well on the climate front, it seems. Except that it's not," write Teryn Norris and Jesse Jenkins of the Breakthrough Institute, a progressive think tank. They warn that President-elect Barack Obama could take the "politically expedient route of short-term green stimulus while ignoring serious climate policy." During the campaign, Obama pledged to use green technologies and renewable energy as a jobs engine, but he also has pledged to mandate a cap-and-trade program.

Continue reading "Climate Policy in the Age of Obama" »

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.

Continue reading "Greens Divided by USCAP Proposal: Will They Find Their Way Past the Price Gap?" »

The Huffington Post has featured an op-ed by me and Jesse Jenkins, "The Danger of Green Stimulus," which issues a cautionary note about losing sight of climate objectives amidst all the fervor about green jobs and green stimulus:

The Danger of Green Stimulus
By Teryn Norris and Jesse Jenkins
The Huffington Post
January 5th, 2009

Barack Obama's final appointments in December indicate a strong commitment to action on climate change. Steven Chu as Energy Secretary, Carol Browner as Energy & Climate Czar, John Holdren as Assistant for Science and Technology -- just to name a few recent selections -- are all proponents of vigorous action to cut U.S. global warming pollution and take leadership on a new international climate treaty. And Hilda Solis, Obama's new Labor Secretary, is a champion of "green jobs."

All is well on the climate front, it seems. Except that it's not.

Carbon cap and trade regulation remains the top federal policy priority for the majority of environmental groups. But in June, cap and trade legislation failed in the Senate, and sixteen Democratic Senators from coal and manufacturing-heavy states voiced their opposition to high carbon pricing. The policy faces even greater obstacles in today's economic climate, since it would increase the energy bills of the American public.

Continue reading "The Danger of Green Stimulus" »

By Sunil Paul
Founder, Spring Ventures

Experience is a wonderful thing, but sometimes it leads to the wrong conclusion. We've all heard the chestnut about generals fighting the last war. Today in the cleantech world, the rules of government engagement that we learned from our proving grounds in information technology and biotech are hurting us. We have to reform our strategy if we're to build the clean-energy Googles, the green-business Amgens, and green-job Dells of the future.

When many of us built successful internet and computer companies we we avoided active government engagement. We didn't particularly want government as a partner or customer and certainly not as a regulatory agent. We thought government support was the kiss of death. When we did engage it was usually after our companies were large and profitable and then only after we perceived assaults like regulation, internet sales tax, export controls, intellectual property, and stock option accounting. Even today, if you are a software, computer, or internet startup, you can largely ignore the government other than obeying the law.

Continue reading "Forget What You Know: Why Cleantech Entrepreneurs Need to Forget the Lessons from the IT Revolution" »

The New York Times editorial board, including respected environmental writer Bob Semple, broke from its past focus on carbon pricing as the primary solution to climate change in an editorial about Obama's newly announced energy and climate team. The piece praised Energy Secretary-designate Dr. Steven Chu for his views on the climate challenge:

"What sets [Chu] apart is his fierce conviction that innovation is just as important as regulation, and that big energy problems, like climate change and the world's dependency on fossil fuels, will not be solved without major private and public investment in the development and deployment of nonpolluting technologies."

Continue reading "The Times, it is a-Changin'" »

The New York Times ran a landmark article today, "Money and Lobbyists Hurt European Efforts to Curb Gases," about the failure of cap and trade in Europe. It should be required reading for anyone concerned about climate change policy in the United States and abroad.  It opens with this:

The European Union started with a high-minded ecological goal: encouraging companies to cut their greenhouse gases by making them pay for each ton of carbon dioxide they emitted into the atmosphere.

But that plan unleashed a lobbying free-for-all that led politicians to dole out favors to various industries, undermining the environmental goals. Four years later, it is becoming clear that system has so far produced little noticeable benefit to the climate -- but generated a multibillion-dollar windfall for some of the Continent's biggest polluters.

As President-elect Barack Obama considers how to curb the gases that contribute to global warming, Europe's struggle with the problem illustrates the momentous task ahead for the United States.

The piece comes after the GAO just released a highly critical study of the use of offsets in Europe's Emissions Trading Scheme and amidst the chaotic climate negotiations at Poznan, where several European nations are balking at strict emissions caps.  It also comes only a few weeks after President-elect Barack Obama pledged his support for cap and trade at a major climate conference in California.

Continue reading "NY Times Reports Failure of Cap & Trade" »

"The framework of the European system put governments in the position of behaving like 'a grandfather with a large family deciding what to give his favorite grandchildren for Christmas,' Mr. Trittin said in an interview."

-From this New York Times article about the pitfalls and failures of cap and trade in Europe.

By Jesse Jenkins and Adam Zemel

Barack Obama made public today his intentions to appoint Steven Chu, director of the Lawrence Berkeley National Laboratory, as Secretary of Energy and Carol Browner, former EPA Administrator and current transition team advisor for energy and environment, as the administration's new "Energy and Climate Czar."

Breakthrough gives Obama's selection of Dr. Steven Chu a preliminary thumbs up, while the selection of Browner - who seems to see regulations as the primary driver of innovation - raises concerns about the kind of counsel Obama will receive from his new point person on energy and climate change.

Continue reading "Will the Academic and the Regulator Invest?" »

Last week in response to Michael and Ted's piece in The American Prospect, Bradford Plumer at The New Republic's "The Vine" wrote a piece called "Should We Forget About Carbon Pricing? (No.)" The post, which mischaracterizes the stances Michael and Ted take in the Prospect piece, also propagates the myth of successful emissions reductions in Europe.

Plumer writes:

"Ted Nordhaus and Michael Shellenberger have yet another essay arguing that environmentalists should abandon all hope of trying to cap or tax carbon emissions, and instead focus solely on subsidizing clean-energy sources if they want to avert drastic global warming.

...Simply having the Energy Department dole out $50 billion per year to clean-energy producers (as Nordhaus and Shellenberger suggest) will pale beside the amount of private-sector money that will flow to alternative energy and efficiency improvements if carbon is priced properly."

This characterization of S&N's positions in The American Prospect and the Breakthrough Institute in general is a strawman.

Continue reading "In "Vine" Veritas? (No.)" »

Dominic Lawson, columnist for the British newspaper "The Independent," issued a scathing condemnation of the Poznan Climate Talks aimed at renewing the Kyoto Protocol after 2012:

The truth, however, is that Kyoto, as a means to reduce carbon emissions, has been like Monty Python's parrot, long dead, despite all the protestations to the contrary by its salesmen.

You don't have to be a "climate change sceptic" to assert this unwelcome fact. Professor Gwyn Prins, Director of the LSE's Mackinder Centre for the Study of Long Wave Events, has been advocating measures to reduce what he sees as man-made climate change since 1986. He was a lead author on the Third and Fourth Assessment Reports of the Intergovernmental Panel on Climate Change, and on the Advisory Board of Friends of the Earth UK. For some years now, Prof Prins has been warning that the Kyoto approach is hopelessly flawed - and his unpopularity in the environment ministries of Europe has grown, precisely as his criticisms of their approach have been vindicated.

Continue reading "Kyoto: Like A Parrot Long Dead" »

Last week the United States Government Accountability Office released its evaluation of Europe's Emissions Trading Scheme, the European Union's cap and trade program designed to control greenhouse gas emissions. The GAO was asked to investigate the effectiveness and outcomes of the ETS in order to inform the ongoing debate on emissions reduction strategies in the United States.

A carbon pricing scheme has two basic purposes: to reduce carbon emissions and to drive private investment in low carbon technologies. However, according to the GAO, the ETS has failed to accomplish either objective in any measurable way:

Continue reading "GAO Report Skeptical of ETS, Critical of CDM" »

Gwin Pryns, author of "The Wrong Trousers: Radically Rethinking Climate Policy (pdf)," recently published "Time to Ditch Kyoto: the Sequel." The short pamphlet was handed out at the United Nations Climate Change Conference in Poznan, Poland.

Towards the end (pdf), Prins summarizes his point about a new direction for an international agreement on climate change:

"Poznan has an opportunity to... put in place the foundations and essential architecture for a radically re-engineered climate policy for adoption at the Copenhagen meeting next...That architecture will not depend upon carbon trading in the present form; it will not lead with emissions targets tied to specific dates (although benchmarks are part of the sectoral strategy for reducing energy intensity); it will not focus upon international legal agreements that are dubiously enforceable, if at all."

Continue reading "Prins to Poznan: Seriously, Time to Ditch Kyoto" »

Last week a coalition of the big green groups released a 400 page report recommending the actions that President Obama should take in regard to climate change. It is the first time that greens have all truly embraced investing in a clean energy economy, which is a positive step; but there is also a lot in the report that gives reason for pause.

Although the report's first recommendation is for a carbon cap and auction, it states that the revenue from this system should be used for investment and not for rebates. At the same time, the report names cutting pollution as a higher priority than the two other goals of the President's economic recovery strategy: "repowering America with clean energy" and "ending our dependence on oil ."

Continue reading "Green Group Report Mixed Bag On Climate and Energy" »

The UK Government auctioned the first four million allowances to emit greenhouse gases under their portion of the European Union's Emissions Trading System this week, raising 54m British pounds ($80.9m). However, the government is drawing fire for failing to earmark the auction revenues to investments in clean energy and energy efficiency that could further cut emissions and help reduce the costs of compliance with the cap and trade program. Instead of reinvesting the revenues in clean energy ventures, the government is reportedly planning to add revenues to the general budget.

Continue reading "UK Auctions First Carbon Permits; Government Hoarding Revenue" »

Representative Henry Waxman of California defeated Representative John Dingell of Michigan in the battle for the gavel of the influential House Energy and Commerce Committee today.

Over the past two weeks, the two senior Democrats waged one of the most hotly contested challenges for committee chairmanship in recent Congressional history. Waxman was announced the victor today after a 137-122 vote of the full House Democratic Caucus, ending Dingell's nearly 28 year reign as Chair of the committee, which has jurisdiction over several key issues, including energy, interstate commerce and health care.

Continue reading "Waxman Bests Dingell in Contest Over Influential House Committee" »

President-elect Barack Obama's incoming Chief of Staff, Rahm Emanuel, called for major reforms to our nation's health care, financial, and energy systems at the Wall Street Journal's CEO Council today, challenging CEOs to embrace an ambitious reform agenda.

"When it gets rough out there, a lot of business leaders get out of the car and say, 'We're OK with minor reform.' I'm challenging you today, we're going to have to do big, serious things," Rahm Emanuel said, speaking at a forum convened to elicit corporate opinion on the challenges facing the new president.

The soon-to-be White House Chief of Staff said the Obama Administration sees the economic crisis as an opportunity to advance a suite of bold solutions that would put America back on track. "You never want a crisis to go to waste," Mr Emanuel said, before continuing, "and what I mean by that is it's an opportunity to do things you couldn't do before."

Mr Emanuel said the incoming administration would "throw long and deep," taking advantage of the economic crisis to advance wholesale changes in health care, taxes, financial re-regulation and energy. "The American people in two successive elections have voted for change, and change cannot be allowed to die on the doorsteps of Washington," he said.

Continue reading "Obama's Chief of Staff Says to Prepare for Major Reforms in Energy, Health Care, Economy" »

From Greenwire yesterday (subscription):

On the campaign trail, Obama pledged to reduce U.S. emissions down to 1990 levels by 2020, with a midcentury 80 percent cut. Yet Obama has not stated a timetable for actually moving global warming legislation to implement those goals, and congressional leaders are likely to hold off in pushing the issue until all of the complex details have been worked out.

"It's not a first 100 days priority," Drew Hammill, a spokesman for House Speaker Nancy Pelosi (D-Calif.), said today of cap-and-trade legislation. "It'll take longer to come together."

Continue reading "Cap and Trade, Not in the First 100 Days" »

Over at CAP, Matthew Yglesias has coined the term neo-Hooverite to describe politicians like incumbent Senators Saxby Chambliss and Norm Coleman, or GOP candidate John McCain, who are proponents of reducing the deficit and cutting spending in a time of economic downturn. I completely agree with Yglesias' argument that focusing on a balanced budget in this economic climate is almost completely wrong headed. He captures the argument here:

"But if consumers cut spending at the same time businesses are reducing investment and state and local government are cutting spending and then the federal government also reduces spending well, then, everyone is going to be spending less and less. Which means everyone is going to be earning less and less. And things are just going to get worse and worse."

Continue reading "Cognitive Dissonance Among Progressives and Greens" »

The Breakthrough Institutes' position on carbon pricing and cap and trade is frequently mischaracterized. As sometimes vocal critics of cap and trade and regulation-centric approaches to climate solutions, we're all too often thrown together with real opponents of serious action that misuse similar arguments to sow confusion and inaction.

In stark contrast, the Breakthrough Institutes' criticism and concerns about cap and trade are motivated by the desire to see advocates and policymakers adopt successful strategies and policies that can truly put our nation and our planet on a path to climate stability and sustained prosperity. With the climate crisis increasingly urgent, our economy heading south, and a new president and congress soon to be elected, climate and clean energy advocates face a critical moment to re-evaluate our strategies and policies and ensure that we can successfully advance climate solutions in the coming year. In that context in particular, we remain steadfast in the position that our efforts are ill-served by continuing forward with a blinding focus on cap and trade that frequently obscures the critical technology innovation challenge at the true heart of our quest for climate stability (and continued and expanded global prosperity).

In a recent discussion with Eric Pooley, I tried to set the record straight and articulate as clearly as possible where the Breakthrough Institute stands on emissions caps and carbon prices and why. Since that piece was long and covered several subjects, I've reposted and reprised the section on cap and trade and carbon pricing here. So, let the record stand...

Continue reading "Let the Record Stand" »

By Roger Pielke, Jr.  Cross-posted from Prometheus

In the coming weeks a monumental decision will be made that will influence the future evolution of global climate policies. A single country has in its power the ability to alter the course of global negotiations and change the dynamics of a political debate characterized by gridlock. That country is . . .

Poland. Yes, Poland. (It is not the U.S. presidential election.) Over the next 6 weeks, the EU, with France taking the lead, must convince Poland (plus other Eastern European countries and Italy) to fall in line with (i.e., not veto) its ambitious climate policies or else see them utterly fall apart. The following graph helps to explain the political dynamics...

Continue reading "The Future of Climate Policy Depends Upon A Single Country . . ." »

Eric Pooley's recent piece in Slate, "Save the Economy, Save the Planet," sparked a lot of discussion and thought here at Breakthrough. Pooley is right that climate advocates would be best served finding a "Trojan horse" to advance climate solutions within an economic recovery framework. But his recommendations that the next president advance a cap and trade program sparked both my response, "Can Cap and Dividend Really Save the Economy or the Planet?" and a round table discussion with several climate and policy experts on the opportunities and challenges for new U.S. administration.

I invited Pooley to respond to my post, which was highly critical of the political chances of a Cap and Dividend scheme in today's political and economic climate. Below the fold you'll find our continued dialog on the political challenges and opportunities facing climate advocates in the coming year.

Continue reading "Cap and Trade Isn't the Only Game In Town - Continued Dialog with Eric Pooley" »

In yet another sign of the political challenges carbon pricing faces in times of economic insecurity, AP reports that leaders from eight Eastern European countries are calling on the European Union to ease up on greenhouse gas reduction targets under the EU's cap and trade program, arguing that it would be too much of a burden on their nation's already stressed economies.

Since all 27 EU member nations must approve a proposal for it to become law, the eight European nations could derail efforts to enact the next phase of the EU's Emissions Trading System. If the EU can't bring these eight nations back to the table, forcing the Europeans to back off on their emissions reduction program, it could be a major blow to the United Nations climate talks scheduled to continue in December in Poland.

More from AP below the fold...

Continue reading "Eastern European Leaders Say EU Must Ease Climate Targets Due to Economic Crisis" »

In response to Michael and Ted's op-ed in the LA Times, the New Republic's environment and energy blog, The Vine published a post entitled, "The Green Bubble Hasn't Burst," by Dayo Olopade. This piece misses the thrust of Ted and Michael's argument, and, in an effort to counter it, proves them right.

Working backwards, my first objections with this post come at the end:

"I've argued that the derided June bill [the Lieberman-Warner Climate Security Act], which won 48 votes in the Senate, was clearly a two steps forward, one step back situation, and a good step forward at that."

Continue reading "Two Steps Forward, Twelve Steps Back" »

The economy is all that matters now, and climate advocates - and the next President - would be wise to develop a strategic "Trojan horse" to advance their ecological goals within the framework of economic recovery. That's the thesis of "Save the Economy, Save the Planet," an article appearing in Slate last week by Eric Pooley. 

Pooley gets the political analysis right, accurately diagnosing the potentially incurable political malady that dooms the chances of expansive carbon regulation in today's economic climate.  But when it comes time to prescribe the remedy, Pooley is off-the-mark, arguing that a Cap and Dividend proposal is just what the doctor ordered. 

Sorry, but that's the wrong answer.  Unfortunately, Pooley is not alone in his prescribed solution, and it's time we took a close look at the obstacles to climate action and see just how far Cap and Dividend gets us (hint: it's not very far...)

Continue reading "Can Cap and Dividend Really Save the Economy or the Planet?" »

By Breakthrough Senior Fellow Roger Pielke, jr., cross posted from Prometheus

Yesterday's E&E News PM (subscription) has an interesting article about a new poll out on U.S. view of climate change, sponsored by a set of environmental groups and consultants. It supports many arguments that we have made here at Prometheus, such as the fact that support for action on climate change is broad but shallow, the public generally accepts a significant human role in climate change, and Al Gore has played a big role in making the issue partisan (an even more interesting finding because Gore's Alliance for Climate Protection is a sponsor of the poll). I don't have the poll yet, but have requested it. Meantime, here is an excerpt from the E&E News PM story:

Continue reading "New Poll Finds Shallow Support for Climate Action, Partisan Split" »

Next January there will be a new President and Congress, and the American public will have at least a somewhat better idea of the success or failure of the bailout that passed last week. A multiplicity of variables, from the state of our economy, to the outcome of the election, to the nuclear program of Iran will affect the American political landscape heading into 2009. Over the next few months, tons of organizations and movements will begin to take stock of how these shifting variables might affect their missions and objectives. Few could benefit from this self-evaluation more than groups demanding federal action on climate change. The long time standard of these organizations, cap-and-trade, is becoming increasingly less relevant to today's political world.

The quest for a carbon price by these green groups met abject failure back in June with the failure of Lieberman Warner. As energy prices rise, our economy stumbles and credit shrinks, it seems less and less likely that hard caps on carbon will be a viable political vehicle. Carbon pricing orthodoxy has run headlong into political and economic realities in at least three major ways.

Continue reading "What Killed Carbon-Pricing?" »

Joe,

Your strategy, as usual, is to shoot the messenger rather than confront the facts. This is what you did when you attacked Nature for publishing Roger Pielke, Chris Greene, and Tom Wigley’s “Dangerous Assumptions” about faster-than-expected emissions increases. This is what you did when the International Energy Agency came out and said that stabilization requires technology “breakthroughs” (their word). This is what you did when you attacked those of us who support adaptation as “delayers.” And this is what you are doing in response to the accumulating evidence that governments won’t raise the price of dirty energy to deal with global warming.

Continue reading "An Open Letter to Joseph Romm" »

Financial meltdown is nearing the end of its first week and Congress is poised to consider $700 billion in emergency legislation. What are the implications for clean energy and climate? Here's my best guess.

1. Automakers will get their bail-out. The automakers want $25 billion, which looks like chump change against the $1 trillion bailout. It looks very much like they'll get it. The question is, what will we get for our $25 billion?

Continue reading "A Breakthrough Crisis? Risks and Opportunities from the Coming Financial Bailout" »

By Breakthrough Senior Fellow Roger Pielke Jr., cross posted from Prometheus

Yesterday's New York Times had an article on the upcoming carbon dioxide auction of the Regional Greenhouse Gas Initiative (RGGI) of 10 northeastern U.S. states participating in this new cap and trade program (h/t Adam Zemel at the BT blog). The evolving performance of RGGI should add weight to the argument that cap and trade is simply not up to the challenge of reducing greenhouse gas emissions. Here is an excerpt from the NYT article:

The program is due to get off the ground in nine days, but already there are worries that it may fail to reduce pollution substantially in the Northeast, undermining a concept that is being watched carefully by the rest of the country, by Congress and by European regulators. . .

The concept has been praised by environmentalists and state officials. But the emissions cap was based on overestimates of carbon dioxide output, which has dropped sharply from 2005 to 2006 and is on a lower trajectory than anticipated.

Continue reading "Tax-and-Charade" »

On September 25th, power companies with carbon emitting plants in ten states up the northeast (Maryland, Delaware, New Jersey, New York, Connecticut, New Hampshire, Massachusetts, Rhode Island, Vermont and Maine), along with financial institutions, environmental and other groups will participate in the first Regional Greenhouse Gas Initiative auction for carbon credits. This regional cap-and-trade program will go into effect on January 1st of next year, holding carbon emissions to 188 million tons annually until 2014, and then scaling emissions back 2.5 percent every year until 2018.

However, it seems that the forces behind RGGI have learned little from Europe's three year old Emission Trading Scheme. Unlike the ETS, RGGI will be auctioning almost all permits, instead of issuing the vast majority, as the ETS did. However, RGGI has its own pitfalls. The cap of 188 million tons was set in 2004, based on projections by energy experts and political pressure from utilities to keep the cap at or above current emissions levels. However, the projected 188 million tons was based on assumptions that carbon emissions would increase, but after 2006 they actually began to decrease due to more mild weather and a slowing economy.

Continue reading "RGGI DOA " »