The flaw in the Waxman-Markey bill is not the too-many offsets that domestic polluters are (potentially) allowed to purchase in lieu of actually reducing their own emissions. The flaw in Waxman-Markey is the too-mild 2020 target — a 17% reduction from 2005 levels — which will be so easy to achieve with various low-cost clean energy strategies that it’s hard to see why polluters would avail themselves of the higher-cost offsets option.
Yes, my thinking on rip-offsets has evolved, primarily because I have spent the last few months talking to leading experts, domestic and international, including the chief climate negotiator for a major European country. Also, I’ve actually started to look closely at the international offsets market — and at how Waxman-Markey would dramatically change the domestic rip-offset market — something that the journalists and think tanks who have written critiques of the offset provisions do not appear to have done. And I’ve looked closely at the lowest cost clean energy strategies — again, something the critics don’t appear to have done.
Since Waxman-Markey is the vehicle by which President Obama and Congressional Democrats have decided to pursue action on clean energy and global warming — and since it will take all of our efforts just to ensure it is not substantially weakened by the time it reaches the president’s desk — I think progressives need to understand exactly what they are getting here. More importantly, we need to understand what is worth fighting hardest to preserve or change in the bill, and what is not worth expending significant political capital on.
As I think will become clear, trying to curtail the quantity of offsets allowed in the bill is simply not a high priority (or even medium priority) activity. Keeping the 2020 target as strong as possible is.
As I wrote back in January, a U.S. climate bill should set a target of reducing U.S. greenhouse gas emissions 20% to 30% below 1990 levels by 2020 (see “Is 450 ppm politically possible? Part 8: The U.S. needs a tougher 2020 GHG emissions target“). I won’t repeat that science-based analysis here, since, if anything, the science has only gotten more urgent (see recent posts in “Uncharacteristically Blunt Scientists“). One point I will elaborate on is the assertion from that earlier post that the United States has the technology and resources to reduce its emissions levels substantially below 1990 levels by 2020.
After all, if a much tougher target was straightforward to achieve, then the relatively mild target of Waxman-Markey, which takes us just a tad below 1990 levels by 2020, must be pretty damn easy. And when you throw in the huge clean energy push in the stimulus, Obama’s aggressive fuel economy standards decision, peak oil, the provisions of Waxman-Markey that accelerate clean energy into the marketplace, and the apparently much greater domestic supply of natural gas than anyone thought even a few years ago — suddenly the target because very easy to meet indeed.
The analysis that I am going to present is not something that any major economic/energy model can reproduce because none of them — including EPA’s — model clean energy well nor are they designed to look at things like the full impact of peak oil or how the electric grid’s dispatch order will change with even a modest carbon price. These models have historically overestimated the cost of reducing pollution and are doing so again. Because there is no reliable model, my analysis is necessarily approximate, and it will take a number of posts to spell out exactly how the U.S. energy and economic systems will respond to Waxman-Markey. This post will serve primarily as an overview of the key issues of how we will meet the 2020 target. Later posts will explore individual issues — such as fuel switching from coal to natural gas — as well as what I think will happen in the 2020s and beyond.