Midsummer Update

To: Climate Solutions Allies

From:  Ross Macfarlane, KC Golden, Gregg Small, Beth Doglio

The pace is finally picking up for national climate policy solutions!  For the first time ever, a comprehensive climate and energy bill – the American Clean Energy and Security Act (“ACES” – HR 2454) – has passed the U.S. House of Representatives.  The Senate will take up the bill in September, and international negotiations for a new global climate agreement will conclude in Copenhagen in December.  Before the action heats up in the Senate, we wanted to take this opportunity to briefly share our views on the state of play and strategy going forward.

You have probably heard divergent views on the merits and flaws of the House bill. Many argue that it is not strong enough in critical respects and needs to be improved. Others believe that it is the strongest piece of energy and climate legislation ever passed by either house of the United States Congress. We believe that both of these statements are true.  While this year’s policy initiative won’t do it all, it is our first real opportunity to turn the corner toward a genuine national policy commitment to climate solutions at scale.  We are devoting the bulk of our policy efforts to seize this opportunity by passing the strongest possible national legislation this year.  Below, we discuss:

•  International context

• Congressional action
• Key Provisions of the House Bill (HR 2454)
• Emission Reductions
• Complementary Clean Energy and Efficiency Provisions
• Economic costs and benefits
• Concluding thoughts:  Getting our YES on

International context

 Negotiations are proceeding under the UN Framework Convention on Climate Change toward a new global agreement, to be completed in December in Copenhagen.  Success depends on at least 3 factors: 1)  aggressive emission reduction commitments in the relatively near term (2020) by developed nations, consistent with the objective of preventing dangerous climate change and the historical responsibility for emissions, 2) commitment by developing nations to long-term emission reductions, and 3) investment and assistance for the developing world to achieve low-carbon economic development, reduce tropical deforestation, and adapt to unavoidable climate impacts.  The Obama Administration has re-engaged the U.S. in a constructive role.  News reports on preliminary negotiations have overemphasized the inevitable posturing, and overlooked signs of progress. (See “A Slow Thaw in Climate Talks”.)  Prospects for success in Copenhagen depend critically on timely U.S. action – particularly on the strength of the U.S. commitment to near-term (2020) emission reductions and the level of U.S. support for low-carbon development, protection of rainforests, and adaptation in the global South.

Congressional action

ACES passed by a slim margin (219-212) in the House on June 26 – the first time a comprehensive commitment to real climate solutions and an ambitious clean energy transition has passed in either chamber of Congress.  While there are many flaws reflecting intense lobbying from vested interests and the harsh political realities in Congress, we believe it represents a crucial step on the road to real solutions.

The bill now moves to the Senate.  Senator Boxer intends to introduce a bill in the Environment and Public Works Committee immediately following the August recess.  The bill is likely to be based on the original House committee mark-up from Chairmen Waxman and Markey, rather than the bill that passed the House. Majority Leader Reid has set a deadline for consideration by all committees with jurisdiction (including Energy, Agriculture and Finance) by the end of September.  The recently announced delay in consideration of the health care reform package may affect this timing. 

The politics in the Senate for climate and clean energy legislation are challenging, both because of the 60 vote requirement for cloture and because of the greater proportional representation from rural heartland states.  (25% of the votes for ACES in the House came from the representatives of just two states — California and New York — but those states only represent 4% of the Senate.) Nevertheless, the Administration and Senate leadership appear committed to passing meaningful climate and energy legislation in time to build momentum for the negotiations in Copenhagen. 

Key Provisions of House bill

Weighing in at 1428 pages, the House bill is very complex.  Two of the best summaries available are the official section-by-section analysis from the House Energy and Commerce Committee and a good summary from Environment Northeast. 

 Alan Durning of Sightline Institute provides a useful review of the pros and cons at “Things I Love – And Hate – About Waxman-Markey”  (for a basic primer on climate policy tools, check out Sightline’s Cap-and-Trade 101)

Emissions Reductions in House bill

Perhaps the most important element of ACES is the commitment to a declining trajectory for global warming pollution – an 83% reduction from 2005 levels by 2050 for covered emissions sources.  (WRI offers useful detail on the proposed emission trajectories.)  Achieving these reductions reliably will require more aggressive near-term targets and stronger safeguards against dubious emission “offsets”.  Nevertheless, as the chart below shows, this emission path signals a revolutionary change in U.S. climate policy. (To view a larger version of this chart, see page two of the WRI analysis, linked above.)

Our biggest concerns are the relatively weak short-term (2020) targets and the two billion tons of offsets allowed.  We strongly support efforts to increase the short-term targets to be consistent with developed nations’ commitments in international negotiations and more rigorous standards for offset quality.  Late amendments to the House bill stripped EPA of jurisdiction over the offset program and introduced considerable confusion in the critically important technical provisions.  With other groups, we are focusing on tightening these provisions in the Senate.  Strong safeguards for offset quality are essential to the integrity of the entire policy.

Complementary Measures for Clean Energy and Energy Efficiency in ACES. 

The House bill is a comprehensive package, including the emission cap and a wide range of policies to promote energy efficiency and renewable energy.  Reducing emissions goes hand in hand with building the clean energy economy.  (In the Senate, an energy bill has already moved through the key committee, and it remains unclear whether energy and climate legislation will be packaged.)

 Just a few of the key elements in House bill include:

• A combined Renewable Electricity Standard (RES) for renewables and energy efficiency. (20% by 2020 of which at least 15% must be renewables – Governors can petition to increase the percentage of efficiency up to 8%). This is a weak RES, but it is stronger than the Senate Energy bill and would not pre-empt stronger state RESs.  ACES also requires federal purchase of renewable energy.
• Very strong building codes to save energy in new construction (projected to save 6 times as much energy as 100 nuclear power plants would produce.)
• Tough efficiency standards for appliances, lighting, and industrial units.
• Clean transportation provisions, creating incentives for electric vehicle manufacture, infrastructure for plug-in vehicles, and other elements.
• Incentives for carbon capture and storage.
• Provisions for smart grid and transmission improvements.
• State Renewable Energy and Efficiency Development Funds – funded by 10% of the available permits under the cap-and-trade provisions.
• A Clean Development Bank and other financing provisions.
• Emissions standards for large stationary sources (However, the bill exempts sources from other provisions for GHGs under the Clean Air Act.  We favor retaining some of that authority as a backstop to ensure emission reductions). 

Impacts on the Economy and Jobs

Given the state of the economy, the debate is very focused on costs and jobs.  The most credible official estimates show that near term costs will be very modest, and will be offset by savings from energy efficiency.  The Congressional Budget Office estimates that compliance costs would be less than a postage stamp a day for the average family, without accounting for savings from energy efficiency. EPA’s analysis estimated that average utility bills would be 7% lower by 2020 due to increased efficiency.  (Opponents of the bill commonly cited an estimate of $3100 in increased costs for average families.  Although this figure was supposedly derived from an MIT study, the author of that study has called this figure “inappropriate,”  “silly” and “just wrong”.)

The impact of the legislation and the transition to clean energy on jobs is likely to be strongly positive.  A leading study on from the Public Economy Research Institute at the University of Massachusetts concludes that ACES, combined with the clean energy provisions of the American Recovery and Reinvestment Act, will likely result in $150 billion a year in new investment in the clean economy, producing a net 1.7 million new jobs. Studies from the Pew Center and the White House Council of Economic Advisors show that clean energy jobs are the fastest growing segment in our national economy. 

Concluding thoughts:  Getting our YES on

A large, complex policy initiative like this requires close attention to detail and determined advocacy to ensure that we emerge with an effective national climate and energy policy.  Yet, underneath all of the complex policy debates, there is a relatively simple and urgent policy choice:  Will Congress stand up to the pressure to prolong fossil fuel dependence and deliver a clear commitment to clean energy and climate solutions? 

Opponents of this commitment are in the minority, but they are unified, determined, and their message is crystal clear.  Proponents enjoy overwhelming public support, but tend to be divided by policy design preferences and by the adverse impacts of political compromises on the effectiveness of the policy.   Climate blogger Joe Romm aptly quotes the poet William Butler Yeats: “The best lack all conviction, while the worst are full of passionate intensity.”  As a result, calls to Congressional offices are running heavily against climate action.  “No” may be the minority position, but it is simple and focused, and may prevail if we fail to mount a comparably passionate “Yes” campaign.

We need Congress to deliver the strongest national climate and energy policy commitment it can produce, and we need it this year.  The diplomatic, physical, and moral timelines demand action now.   Two arguments for deferring action have been offered by those who feel that Congress is not capable of producing a strong enough bill this year:  1) The failure of the compromised legislation moving through Congress will force stronger action later; and 2) The Administration can move forward with enforcement actions triggered by the Massachusetts V. EPA decision under the Clean Air Act to limit GHG emissions now.  We favor both stronger legislation in the future and vigorous enforcement of existing authorities, but we view neither as a reason or excuse to delay Congressional action now.  Future action is always speculative, and existing authority is simply not sufficient for a problem of this scope and scale.  

So we at Climate Solutions are all in to pass the strongest possible national climate and energy policy. We are pushing for strong leadership from our Northwest Senators.  You’ll be hearing from us about strategy calls and action opportunities in the coming weeks as we plan for an all-out effort in the Fall.  It’s all hands on deck for national climate solutions!