Outlining a Progressive Future

US Climate Bill An Okay Start

As US legislators debate the content of the biggest climate bill ever introduced into the US congress, debate is raging as to whether this bill will deliver the action required to curb US Greenhouse emissions. Whilst we are not going to know exactly what the bill will look like if and when it passes the US House or Representatives and Senate, probably by the end of this year, we can make some major guesses based on the drafts that are now being discussed in the committees of Congress. These drafts give a picture of something that although may not be perfect is quite dramatic and will see a real shift in the energy policies of the United States. The question still remains however; will this bill provide what is needed for the US to take real action on climate change?

The Bill

There are really three key issues regarding the effectiveness of such a climate bill; the reduction target, the renewable energy target and how much the bill forces polluters to pay for their pollution. Here is how the bill looks regarding these three issues:

Reduction Target: The bill proposes the introduction of a massive cap and trade scheme in the United States, which has the current aim of cutting Greenhouse emissions by 17% by 2020 (based on 2005 levels) and 83% by 2050. The target for 2020 was originally a 20% cut, but this has been watered down due to concerns from some Democrats in the House.

Renewable Energy Target: The bill would also require energy companies to source 15% of their power from renewable sources by 2020, a cut from the original proposal of 25% by 2025.

The price polluters must pay: Whilst the original bill proposed the sale/auction of all pollution permits it looks almost certain that changes intended to gain the support of key Democratic Senators from the greenhouse intensive rustbelt states (i.e. Michigan, Ohio, Pennsylvania) will see at least some of the permits given out for free to greenhouse polluters. For example, Business Green reports that drafts available would see 35% of permits given to the energy industry, 15% to heavy industrial firms and 3% to auto makers, leaving the other 47% to be sold.  At the moment I cannot find any sort of discussion regarding how much these permits would originally be priced at, which is another key point regarding the bill.

The Reaction

There is no doubt that there are people who are disappointed with how the bill is going at the moment. The watering down of the original targets related to emissions reductions and renewable energy targets as well as the fact that many of the permits will be given out for free has many people complaining, some who argue that the bill is now worthless. For example, Greenpeace claims:

“A piece of legislation that started out as a real opportunity for the US to combat climate change has been co-opted by special interests and now threatens to do more harm than good.”

Whilst I believe Greenpeace has succumbed to using a little too much hyperbole, their arguments are fair. Whilst the cuttings of the targets could be considered to be minor (given that the reduction target has only dropped 3%) the fact that permits are now going to be given out for free is a serious concern. Giving out free permits not only takes money away from possible investment to create a ‘green economy’ but also has been proven to be a policy disaster in a range of ways (see the European experience, where the existence of free permits dramatically dropped the price of carbon, making greenhouse reductions extremely difficult).

However, on the other side of the coin one needs to ask whether these sorts of compromises were ones that we should have expected from the US climate deal and if so, can we deal with them? I think there is no doubt that this bill was going to be watered down. In its original form this bill was extremely ambitious, which is great. However, even with the control of the Democrats in both houses of Congress there was always going to be problems, especially from those Democratic Senators from the ‘rustbelt’ area. It seems like these changes will allay the fears of these Senators and will probably ensure the passage of the bill.

So, do these changes compromise the bill and will they stop the it having any effect? Whilst the cuts in the bills targets are extremely disappointing, I don’t believe they create the biggest problem for these bills. Cuts of 17% by 2020 and 83% by 2050 are quite impressive coming from a US Congress that has historically been dominated by climate sceptics and even though 17% by 2020 is not enough, the bill importantly improves on this by 2050, which is a key date. However, the bigger problem lies in the giving out of free permits. It is very likely that this will cause problems for the bill in the future and it does divert a large amount of money (at current estimates $40 billion) from possible investment in green industries.

I am not sure if I am convinced, however, that this will make the climate bill as useless as Greenpeace claims. It is an unfortunate reality of the US political system (unlike Australia, the EU and other industrialised countries) that having a climate bill with such targets and with such a large amount of money being poured into it is a huge achievement and whilst this bill is definitely not perfect, has been compromised to some extent and should be better we must be happy that it is most likely going to be passed. The US environment movement should and will need to continue to fight for changes in the bill once it is passed (as has occurred in the EU) but it must also be happy with the fact that the country that used to lag behind the rest of the world is now probably going to leapfrog a number of countries (i.e. Australia) when it comes to climate action. This is not the perfect start but it is probably better than I would have expected, which is nice for a change.

June 6, 2009 Posted by | Climate Change and the Environment, Options for a Progressive Future | , , , | 4 Comments