By Leigh Ewbank, Breakthrough Fellow

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

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

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

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

Continue reading "Australia Unveils Carbon Price Policy" »

by Ted Nordhaus and Michael Shellenberger

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

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

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

Continue reading "The Long Death of Environmentalism" »

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

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

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

Continue reading "Economists Moving Beyond Carbon Pricing" »

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

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

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

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

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

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

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

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

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

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

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

We welcome thoughts from our readers...

This should come as no surprise...

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

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

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

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

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

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

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

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

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

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

The transcription of the talk is below:

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

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

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

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

Graham added:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Continue reading "Technology-First Consensus Grows" »

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

Here's an excerpt from Pielke's essay:

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

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

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

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

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

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

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

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

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

By Michael Shellenberger and Ted Nordhaus

Cover for the Oct. 28, 2010 issue

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

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

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

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

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

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

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

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

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

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

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

Myths About the Death of Cap and Trade

"Time to Bury Cap and Trade and Plan Anew"

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Yael Borofsky and Jesse Jenkins

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

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

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

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

Originally posted at Roger Pielke Jr's Blog

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

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

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

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

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

By Jesse Jenkins and Devon Swezey

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

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

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

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

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

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

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

Continue reading "Jenkins 'Empanelated' At Grist" »

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

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

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

By Ted Nordhaus and Michael Shellenberger

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

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

Continue reading "The Emerging Climate Technology Consensus" »

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

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

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

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

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

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

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

Wasted opportunity

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

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

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

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

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

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

As Politico reported:

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

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

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

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

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

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

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

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

...

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

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

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

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

As Breakthrough Senior Advisor Teryn Norris noted:

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

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

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

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

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

Published analysis in chronological order (most recent first):

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

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

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

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

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

"It's fake," Nissim said.

CDM officials say they are investigating the allegations...

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

Continue reading "Carbon Offsets Fraud Continues" »

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

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

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

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

Download Full Briefing (PDF, 2.3 MB)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Continue reading "Clearing the Clean Energy Innovation Threshold" »

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

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

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

By Breakthrough Fellow, Leigh Ewbank

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

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

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

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

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

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

Continue reading "Cap and Trade De Ja Vu " »

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

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

Continue reading "In Pursuit of Plan B" »

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

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

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

Continue reading "Climate Paradigm in Collapse" »

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Senate:

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


• Kerry-Graham-Lieberman (Discussion Drafts)


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


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

House:

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

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

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

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

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

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

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

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

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

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

Full series of posts:

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

Summary of analysis:

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

By Ted Nordhaus and Michael Shellenberger

Summary

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

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

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

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

Originally posted at The Real Ewbank

By Leigh Ewbank

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Leigh Ewbank, Breakthrough Fellow

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

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

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

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

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

Cross-posted from Roger Pielke Jr.'s Blog

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

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

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

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

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

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

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

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

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

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

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

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

According to Laurie Williams and Allan Zabel:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Friday Factoids time again...

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

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

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

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


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


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

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" »