Climate, Congress, and USCAP

Joe Romm posted a pretty scathing comment about the USCAP Blueprint on his Climate Progress blog a couple of days ago.  Here is my response. 



You are and will remain a respected friend.  As an author and blogger, you call it as you see it on what needs to happen to emissions and our energy system if we are to avoid a climate catastrophe.  And you do a great job at it.

We at NRDC have another job. We must do what has to be done to move this Congress to enact climate protection legislation that will change overnight the kinds of energy and other investments that are made, start the innovation engine spinning, bend our emissions down without further delay, and show the world that the U.S. has emerged from its cave of inaction.

We are buoyed by President-elect Obama's commitment to act but we will need action from Congress as well.  The new Congress contains a growing number of climate protection champions but it also contains a core of obstructionists bent on using every tactic to block any action, other members who think global warming is not enough of a problem to warrant any real change, and members who are inclined to be helpful but not if it involves spending much political capital as they see it.  We don't have time to change who the members of Congress are; we need to change the way current members think about this issue.

There are a number of ways to move Congress to act and NRDC is pursuing all that we believe will help.  One important way is to engage deeper and broader support for action from the U.S. business community-a community that until recently was dominated by outspoken opponents of any action to cut global warming pollution.  The USCAP Blueprint you attack is an effort to get major American business leaders, joined with a number of U.S. NGOs, firmly committed to working to get this Congress to pass climate protection legislation.  It is part of a process designed to make good legislation possible. 

This past Thursday the business members of USCAP testified to Congress that action by Congress is urgent, not only to protect the climate but to provide a foundation for economic recovery.  Their testimony powerfully challenged those members of Congress whose mindset is still that we cannot afford to act now because they think climate protection means economic sacrifice.  The business leaders' testimony was "yes we can" take action to protect the climate and it will help the economy, not hurt it.  The members of USCAP will be a strong force and voice for action in the weeks and months ahead.  Without those voices NRDC believes action in Congress would be slower and less effective than it has to be to protect the climate.

Your comment that the Blueprint amounts to "unilateral disarmament" by the NGO members is telling.  The political equivalent of mutual assured destruction threats will not protect the climate; it will protect only the status quo.  To make change happen we need to realign the players, not just attack them.  You seem to think that in the political process only the position of the NGOs matter and the positions of the "bunch of companies" in USCAP don't matter.  If that were true we would have enacted strong climate protection laws in the Clinton Administration.

Your critique of the substance of the Blueprint focuses on emission targets, offsets and allowance distribution (I have already responded -- here and here -- to your incorrect description of the coal provisions), so let me say a few words on those topics.

Emission Targets

On emission targets, you point out that the science justifies a target tighter than a 20% reduction from today's levels by 2020.  Of course it does.  The science justifies having kept emissions well below today's levels starting 20 years ago! 

But just saying what the science justifies does not ignite the engine of policy change unless it is coupled with a serious political strategy for overcoming the claims and anxieties about the costs of doing what the science justifies.  The targets during the first decade of a climate protection program are among the most important and most challenging of a bill's design features. Since the U.S. is late in cutting emissions, we need to make up for lost time and that argues for faster, not slower, reduction schedules.  But too many actors in the political debate are still concerned about the cost and feasibility of meeting deep emission reduction targets, particularly in the early years.  Changing these views is the challenge we face.

As a blogger you have the responsibility of stating what the science justifies without needing to be concerned about formulating a strategy to overcome the political obstacles to effecting change.  Keep at it but don't ignore the fact that we will need more than the truth as you see it to make change happen.

You know that since the election President-elect Obama talked of returning emissions to 1990 levels by 2020 and was silent about targets for the crucial years between then and the long-term 2050 target.  The Blueprint targets that NRDC supports will require reducing emissions to 7% below 1990 levels by 2020 and all of the USCAP members, including the 26 major business members, support reductions at least as strong as those mentioned by President-elect Obama for 2020 and all support reductions of 42% by 2030 as well as 80% reductions by 2050.  Yet you say that the Blueprint, which commits these business leaders to support nothing weaker in the near-term than what the President-elect mentioned and contains a call for even stronger reductions supported by NRDC and others, will move "the center to the right and vitiate the results of the election."  That is a strange interpretation!

And focusing only on the near-term targets for the cap component of the climate protection program, while ignoring the power of additional policies to drive reductions further, is a mistake.  The Blueprint contains a sweeping set of additional polices that I'll say more about in a moment.


On offsets, you argue that today's offsets markets are rife with fraud and if compliance with the cap were achieved only with the offsets potentially allowed under the Blueprint's maximum limits, that we would not see the reductions in industrial and energy sector emissions we must have if we are to protect the climate.  NRDC has no argument with you that if fraud is not prevented and if offsets are the dominant means for compliance, the outcome would be unacceptable.

But the Blueprint calls for sweeping complementary measures in addition to the cap to drive emission reductions and those measures operate independently of whatever offsets are authorized.  The Blueprint calls for specific programs that will drive emission reductions in all of the major sources of industrial, transportation, commercial, and residential sources of global warming pollution:

  • CO2 emission standards for new coal-fired powerplants and financial incentives to speed commercial use of carbon capture and storage;
  • GHG performance standards for the entire transportation fuel pool, replacing the piecemeal renewable fuels standard of current law that ignores emissions from fossil-based transportation fuels;
  • A structured process to improve GHG performance standards for vehicles;
  • A suite of requirements and financial incentives to improve transportation system efficiency that will reduce VMT growth, reward smart growth policies, and provide more and lower-polluting alternatives to meet transportation needs for people and goods;
  • Codes, standards and financial incentives to reduce global warming pollution resulting from running our buildings and appliances-the source of about half of America's CO2 emissions.

Since the recommended emission targets in the Blueprint are for both capped sectors and the U.S. economy as a whole, a combination of the cap, the complementary measures mentioned above, and other policies designed to achieve additional reductions outside the cap will be needed to achieve both of those objectives.  The Blueprint also calls for a reserve price for the auction of allowances "set at a level that helps to avoid prices that are too low to encourage long-term capital investments in low- and no-carbon technologies."  These provisions are designed to prevent a scenario of an "offsets-only" pathway that you and we agree is not acceptable.

It's also important to reflect on why offsets are included in many climate protection proposals, often in amounts that concern many of us.  The most powerful driver of this appetite for access to large amounts of offsets is, in NRDC's opinion, the continuing anxiety among many policymakers that the transition to a low-GHG economy will be "too costly" unless such offsets are available.  Many of us believe these anxieties are unwarranted and that deployment of cleaner energy alternatives can be achieved at much lower overall costs (indeed with net cost savings when all impacts are considered) than conventional economic models suggest.  But we need to be honest with ourselves and acknowledge that we have not yet persuaded enough actors in the policy process that our assessment is correct. 

It is not sufficient as a political strategy to simply point out the perils of an excessive reliance on offsets.  To create a comfort level that lower levels of authorized offsets will provide an effective cost-containment mechanism requires doing a better job of persuasion that the conventional estimates of costs are not correct and that there are superior approaches to hedging against the possibility that costs could be higher than estimated. 

Fortunately, persuasion is a renewable resource and it has not been tapped out with the release of the Blueprint.  I would urge you to devote more of your considerable analytic and communications skills to making the case in a persuasive fashion that not only are excessive offsets bad for the health of a climate protection program but that there are reliable and robust alternative approaches to address the anxieties of those who believe large offset supplies are needed.

Distributing Allowance Value

Finally, a few words on distribution of allowance value.  Note the term "allowance value." It is the term used throughout the Blueprint's discussion of this issue and it does not specify whether the method of distributing such value is by auction or statutory allocation of allowances.  While much public discourse has employed the shorthand of "auction" versus "free" distribution of allowances, the real policy debate is over the purposes of allowance value distribution rather than the method of distributing that value.  

The Blueprint recommends these priority purposes for allocating allowances in the first decades of the program:

  • transform our economy;
  • modernize our nation's energy infrastructure;
  • smooth the transition for consumers to a low-carbon economy; and
  • adapt to the impacts of global warming.

If you think these purposes are off-base or missing something major, share your views. If you think the Blueprint does a flawed job in implementing these purposes, point out the flaws. 

You quote another group's claim that the Blueprint "would reward corporate polluters with hundreds of billions of dollars of giveaways."  That's wrong.  The entire emphasis of the Blueprint is on distributing allowance value to protect consumers and achieve the other purposes listed above.  The largest and most specific recommendation for use of allowance value calls for distribution, not to pollution sources, but to local electric and gas distribution companies with the explicit requirement that all of the value be passed through to end-use consumers both directly and through energy efficiency programs.  Other recommendations call for distribution of allowance value to protect low-income consumers, for worker transition and training, to drive the technologies we need to operate a low-carbon economy, and to provide resources to assist managers of vulnerable resources and vulnerable communities here and abroad to respond to and reduce the damage resulting from climate change that is unavoidable. 

The Blueprint's recommendations for allowance value distribution to pollution sources are the exception, not the rule, and are temporary.  Thus, there is a recommendation for some allowance value to be directed for transitional purposes to energy-intensive industries with trade-exposed commodity products.  If U.S. firms that make trade-exposed commodity products shift that production overseas we will not achieve the emission reductions we need.  Providing some allowance value to prevent this is not "rewarding polluters;" it is aimed at protecting the emission reduction objectives of the program.  The Blueprint explicitly calls for eliminating this distribution as the competitive imbalance disappears.  Another exception is the recommendation for a temporary distribution of some allowance value to competitive power generating sources for the portion of compliance costs that cannot readily be passed through to customers.  This recommendation calls for phasing out this distribution in a manner that will provide strong incentives for timely investment in low carbon alternatives.

There is room for debate on the specifics of these exceptions but it is important to recognize that the Blueprint represents support by 26 major U.S. businesses for principles and specifics on allowance value distribution that are miles away from those who are calling for allowances to be given primarily to emission sources.  Bank that progress, don't ignore it.

The business members of USCAP have come a long way in just a bit over two years and the positions they have committed to advocate have evolved strongly in the right direction.  The Blueprint represents the state of that evolutionary process as of the start of the new Administration and Congress.  The Blueprint's signers say "we want to be clear that this is not the only possible path forward and we stand ready to work with the Administration, Congress, and other stakeholders to develop environmentally protective, economically sustainable, and fair climate change legislation."

Joe, you are a brilliant analyst of what has to happen in the real world to protect the climate.  But you need a new yardstick to evaluate policy proposals--not just how they match up to what you and I would like to happen but what they do to increase the chances of enacting serious legislation by this Congress this year.  I and NRDC's leadership believe that engaging a large number of major firms in a committed effort to enact climate legislation now poses far fewer risks for the planet than demanding an outcome that is not supported by a serious strategy to overcome the real obstacles that we still face in Congress.