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."

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 " »