Waxman-Markey deal-making update: 14% cut by 2020, about half the allowances given away at first, phased out to full auction in 10 to 15 years

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"Waxman-Markey deal-making update: 14% cut by 2020, about half the allowances given away at first, phased out to full auction in 10 to 15 years"

“We’re moving well, making a lot of progress on these issues,” Waxman said. “We’re getting very, very close.”

We’re starting to here details of the sausage-making led by chief climate chef House Energy and Commerce Chair Henry Waxman (D-CA). Needless to say, it ain’t pretty.

E&E Daily (subs. req’d) reports this morning:

Rep. Henry Waxman (D-Calif.) bought himself a little bit more time yesterday to produce a consensus on global warming and energy legislation….  Waxman pledged to produce a new version of draft legislation next week while again promising to pass the bill out of the full committee before the Memorial Day recess….

Negotiations on the climate bill continue to focus on four key issues: the stringency and timetable of the cap-and-trade program’s emission limits, the use of offsets to ease industrial compliance costs, allocation of valuable allowances and the structure of a nationwide renewable electricity standard.

Waxman met with a cross-section of regional Democratic interests yesterday to work through those areas, including Rep. Charles Gonzalez of Texas; Reps. Brian Baird and Jay Inslee of Washington; and Reps. Zach Space, Marcy Kaptur and Betty Sutton of Ohio.

So what are the compromises?  No big surprise — they are straight out of the (lame) USCAP deal, starting with a bunch of free credits to industry:

Sponsors of the legislation appear to be inching closer to a deal on the distribution of emission allowances that begins by giving away as much as 55 percent of the credits for free: 40 percent for the local distribution companies that service the electric utility industry, and 15 percent for heavy industries deemed especially vulnerable to international trade.

After about 10 to 15 years of the cap-and-trade program, the free credits would phase out in favor of an auction, said Rep. Mike Doyle (D-Pa.).

While the final details remain to be worked out, Waxman acknowledged that he is comfortable with distributing credits for free as a way to help industries transition into a low-carbon economy and during the period when an international climate agreement takes shape. “We’re not using allocations just because people would like some revenue,” Waxman said. “We’re doing it for very legitimate purposes within the integrity of the bill.”

And free allowances may be exactly what some fencesitters need. “I want to vote for a bill, but I’m not going to vote for a bill that’s going to hurt my ratepayers extremely,” Hill said.

As for free allocations, Hill said they could be a stepping stone to his support. “That would be a good thing, if that happens,” he said.

Several lawmakers supportive of a larger auction also sound willing to appease their coal-state colleagues. “You can’t just flip the switch,” said Rep. Peter Welch (D-Vt.). “They’ve got legitimate concerns.”

“There’s an inevitability to that,” Senate Foreign Relations Chairman John Kerry (D-Mass.) said of Congress including free credits in the climate legislation. “I would prefer to have a 100 percent auction, but I’m also a realist and I understand that legislatively we’re just not going to be able to do that. The key is to minimize the allowances in a way that’s transparent, accountable and we go from there.”

I don’t lose as much sleep over the free allocations issue as some, since

  • They were inevitable (as the Waxman and Kerry comments make clear)
  • This addresses the regional fairness issue that even Obama raised concerns about
  • This shouldn’t directly affect the permit price (to first order — more on that in a future post), and
  • They will be sunset.

If you want to know the “logic” behind this, here is USCAP’s justification:

Electricity and Natural Gas Consumers: Because cost-of-service Local Distribution Companies (LDCs) are regulated, unlike other impacted sectors they will be required to pass through the entire value of allocated allowances to their end-use consumers.

This will directly facilitate the key objective articulated earlier for any allocation””facilitating the transition for consumers and businesses as consumers of electricity. Consequently, USCAP recommends allocating a significant portion (e.g., 40%) of emission allowance value directly to these entities specifically to dampen the price impact of climate policy on electricity and small natural gas customers, particularly in the early years of the emission constraint.

The magnitude of allowance value allocated to LDCs should reflect, but not exceed, the share of capped emissions attributed to the consumers served by the
LDCs, and then be phased-out. Consumers would realize this value through some combination of rate adjustment and demand reduction through programs designed to improve energy efficiency and  promote zero- or low-emitting energy technologies.

Also, no surprise, the 2020 target moved back toward the USCAP figure:

Lawmakers are also narrowing in on a 2020 emissions limit, another central piece of a final agreement. Obama’s budget request suggested a 14 percent cut below 2005 levels by 2020, while Waxman had pressed for a 20 percent cut. Several of the Democratic moderates had initially suggested a 6 percent target for 2020, but Waxman balked at that proposal.

Butterfield said yesterday that he would be willing to accept Obama’s targets. “Let’s shoot for 14 percent,” he said. “I can live with 14 percent.”

I will discuss in a later post why this is a mistake, albeit another inevitable one (see, for instance, “Is 450 ppm politically possible? Part 8: The U.S. needs a tougher 2020 GHG emissions target“).

I am, of course, especially interested in whatever deal they come up with on rip-offsets.  With the lower 2020 target — and with the massive reallocation as yet primary cost-containment measure — we shouldn’t increase the number of rip-offsets, nor weaken there oversight.  We should sunset them, just as the free allocations will be the sunsetted (see “The one simple change that could vastly improve Waxman-Markey: Sunset the rip-offsets“).

I will post more details as they leak out.  Fire away!

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31 Responses to Waxman-Markey deal-making update: 14% cut by 2020, about half the allowances given away at first, phased out to full auction in 10 to 15 years

  1. Rockfish says:

    Uh…”Obama’s budget request suggested a 14 percent cut below 2005 levels by 2020..” Sorry, 2005 levels?!!!

    I thought we had been talking about 1990 levels. 14 pct below 2005 is merely equal to (if not a bit above) 1990 levels.

    Talk about your compromises….

  2. Steve H says:

    “I can live with 14 percent.” I’m sure that Rep. Butterfield can. However, I’d reckon that many of his constituents along the coast cannot.

  3. Modesty says:

    How much of the power supply ends up going through LDCs?

  4. Brendan says:

    If they are going to be giving out free credits to power companies, they should give the credits based on amount of power generated, and not amount of coal power generated or amount of CO2 generated. That way power companies which have high amounts of renewable energies will make out by being able to resell the credits. Same thing goes for the other industries receiving benefits. Credits go out on a per production basis, not a per energy basis or per carbon basis.

  5. Craig says:

    A 55% give away of the allowances seems like a huge compromise. Is this the best the Dems can do in the current political climate? If so, then I’m all in favor. But could a stronger piece of legislation be passed in 2010? Would the mid-term elections complicate the matter? Will there be any provisions in the bill to tighten the emissions limits based on emerging scientific findings? How about to sunset the free allowances on a quicker timescale?

    I don’t want to see the nation get locked into an unsound piece of policy. Especially because the science is becoming more unsettling on a daily basis and the public is only in the initial stages of understanding the dire implications of climate change.

  6. NFJM says:

    We moved away from your “B+”

    What would now be your grade? C or D+?

  7. paulm says:

    Toast – we’re all going to be toast with a bill like this.

  8. Rick Covert says:

    Joe,

    This whole idea of giving up to 55% of the credits away is bogus! When the 1972 Clean Air Act was passed it grandfathered the pre 1972 coal plants and refineries particularly here in Texas. Our air quality in Texas has not improved since the act was passed and yet in the last 8 years the offending plants, which cause 80% of the air pollution here in Texas are still granfathered 35 years later. I have ZERO confidence that these free credits will be phased out in 10 to 15 years barring all of those Climate Pearl Harbors you mention every now and then in your posts.

    BTW, the sausage metaphor is noted!

    [JR: Allocating permits to LDCs is NOT the same as grandfathering coal plants. In the latter case, both plants were exempt from regulations. Allocations are indeed a giveaway to polluters, which in turn will be required to give most of them back to consumers and businesses. But fundamentally, the economic incentive to reduce emissions and the shrinking cap drive overall emissions cuts.]

  9. Wes Rolley says:

    When does the realistic compromise start to sound like Neville Chamberlain? We understand that he thought his agreement was the ‘best he could do.”

    So, our cap and trade is beginning to look like a weak version of the EU process… which has not been a resounding success.

    Wes Rolley
    CoChair, EcoAction Committee, Green Party US

  10. Sasparilla says:

    This is really bad. We need to get the ship turned alright, but this gives alot of political cover for not doing much.

    [JR: It does not give political cover to anybody. How could it?]

    While the Republicans are destroying their future by hitching themselves to denying/delaying action on climate change, the Democrats (by their own ineptitude) are setting up a void for another political party, the Greens or someone, who actually get how serious the situation is and what needs to be done – figure in 10-15 years when the situation is starting to get seriously bad.

    At what point does a climate bill become so bad (provides a decade of political cover so that we can’t save ourselves) that we’d be better off without it (so its obvious we haven’t dealt with this yet and everyone knows it) and look for a political solution when things get obviously worse?

    [JR: The answer is — we ain’t even close to that point. Guess I’ll have to do a bunch of posts on this next week.]

  11. Aaron says:

    In the past, I always thought something was better than nothing regarding a climate bill. However, once the bill is passed I see it drawing attention away from making deep emissions cuts.

    10-15 years to phase out free credits!!! Seriously? The companies that need to make the deepest cuts most likely have the capital to do so quickly. 5 years…ok. However, 10-15 years puts a huge delay some significant emissions cuts. I’m not sure the rest of the world will see us as being a leader in climate legislation if we pass a bill similar to whats being proposed.

    And like others have stated, is this really the best we can come up with in the current political stage?

    Also, a quick question. What’s the likelihood that this bill will be ammended to increase emissions cuts within the first 5-10 years of its being passed? And/or shorten the time to sunset these free credits?

  12. hapa says:

    1) distributing allowances based on vulnerability to international competition will be interpreted as blackmail in copenhagen. which is good, i think, because there’s extortion going on here.

    2) the economic recovery, such as it is, will flop if a lot of people take their investment cues from these particular federal minimums over the next 4 years. it didn’t take a genius to predict that carbon prices were coming (especially since for RGGI and WCI, they’re here now) but it does take a genius to — um — how do i put this. ok.

    we all agree that, come 2020, the targets are likely to be VERY different, right? sure. but what will they be? what equipment and methods will be involved? there’s no way to say, exactly. there are things you can eliminate, let’s call those “greenish-brown,” and those are exactly what a shallow-cut proposal like this would encourage people to buy — totally ruining the reputation of the transition?

    can you hear all the people out there who only pay attention to price signals, can you hear their outrage and helplessness as they learn they blew their recession-constrained budgets on inadequate equipment? what about the banks and the insurers, won’t they have to eat a lot of “false start” transitional equipment? oh that’s right, the lenders and insurers can just turn the federal spigot for themselves again if they bet wrong. sweet!

    regardless of politics, there need to be clearer guidelines. state governments in particular need to know this is only the first round, and what future rounds may bring, so they don’t end up blocking new cuts on the grounds that “we already did a lot of work on that!”

    IMO dishonest policy slants the results toward the well-connected and the rich. this is the real republican and slow-democrat climate policy. it isn’t about denial or delay, it’s about putting the risk squarely on the little guy because they aren’t “too big to fail.”

    what better can we expect? obama’s people really do seem to be laying track in the right direction — but if they’re not careful, the whole damn country will be buying trains that run on different gauge rail.

    not just guidelines. a public sense of what would be the steep 20-year goals. what standards wouldn’t work in that scenario. “just in case.”

    3) i support passing whatever bill is possible, and i “hope” it isn’t only circumstances that “change” north america’s (and the hemisphere’s and the world’s) plans to give us a fighting chance.

    4) the oil vulnerability shouldn’t be handled like a climate problem. in the short term we need MUCH-HIGHER-EFFICIENCY BUSES so we can expand transit systems sustainably. other equipment and methods are needed but they involve more complicated buying and selling and retrofits and so on.

    the bus designs should also have easily-upgraded powertrains with an eye toward meeting varied needs. for instance it should be easy to alter the design for mountain roads, texas schoolkids, intercity cruising, etc.

    when i think of all the parties that would have to have a brain transplant to make this work it makes me cry. even around these parts the focus is on saving the auto industry “in the long term.”

    5) congress is afraid to let go. getting thrashed by the bad economy isn’t helping.

  13. MikeB says:

    I think passing a bill with weak limits is actually acceptable, at least right now. The trick is that congress can modify the limits on a yearly basis, and modifying the limits will be far easier than setting up the system in the first place.

    So as the damage from ongoing warming becomes more obvious, we’ll have more opportunities (and political will) to ratchet down the limits.

    Of course, we also run the risk that a few years of improvement will create a push to relax the limits, rather than keeping them intact.

  14. I would amend to focus on power generation, particularly coal. That’s where the big CO2 cuts can come. Adding all the other stuff for a comprehensive bill, based on cap-and-trade with liberal grandfathering, makes for an unwieldy mess that angers everybody.

    Exploiting the sincere concern over global climate change to fund health care with auction revenues is a bait-and-switch scam that is sure to backfire. http://thehill.com/leading-the-news/conrad-open-to-energy-taxes-for-healthcare-reform-2009-03-29.html

  15. Jim Beacon says:

    14% in 10 years (as a “goal” only)? With half the pollution licenses given away for free as a reward to the biggest polluters for the great job they’ve done so far? We could have got this kind of legislation if we’d elected John McCain and Sarah Palin.

    This bill is now officially useless. Public pressure against new and old coal plants and rising gasoline prices alone probably would have got us close to a 14% reduction in the next 11 years without any legislation. They might just as well have not bothered to pass anything.

    All this bill does is create legal licenses to continue to pollute. Licenses which can be bought and sold.

    And please don’t talk to me about “making a beach head” — this ain’t the political equivalent of Normandy, this is Dunkirk. If this is the best that the Obama administration can achieve — with its total control of congress and the polls showing 59% of the American people are actually *willing to pay more* to quickly reduce CO2 emissions — then we are done for.

    Well, folks, like our distinguished colleague, the honorable Representative Joe Barton, Republican from the Great State of Texas so sagely advised: You’ll just have to learn to adapt. Y’all go and find some yourself some shade — it will do more for you than the politicians and their bosses among the corporate elite ever will.

    [JR: Well, it’s not a goal — it is the law. And it is a reduction from current levels. I’ll ignore the absurd rhetoric about McCain and Palin. The bill is what it is — the strongest piece of clean energy and climate legislation probably in the world. The provisions will no doubt get ratcheted up over time like every other major national and international environmental agreement has.]

  16. Brett Jason says:

    Jim Beacon has the right idea about public pressure. According to an article in The Economist:

    “The number of planned coal plants across America has plummeted from 150 to 60 in the past five years. Last year 5,465 megawatts (MW) of new electricity were announced, but more than twice that capacity, 12,572mw, was subtracted because of cancellations or delays.”

    Full article at:
    http://www.economist.com/world/unitedstates/displaystory.cfm?story_id=13611471

    So, it seems that public pressure has already done more to reduce planned new CO2 emissions since 2005 levels than this kind of political sell-out (excuse me, I mean compromise) will achieve.

    As always, it is going to be to up to each of us as individual people, engaging in activist participation, to step onto the front line and use the power of our pocketbooks and the media spotlight to force meaningful CO2 reduction at the corporate source. Washington DC is not where the pollution is being generated, and it is not where we are going to stop it.

    We must stop waiting for the politicians, even those like Barak Obama, to do this job for us.

  17. MarkB says:

    Sasparilla writes:

    “At what point does a climate bill become so bad (provides a decade of political cover so that we can’t save ourselves) that we’d be better off without it ”

    to which JR replies:

    [JR: The answer is — we ain’t even close to that point. Guess I’ll have to do a bunch of posts on this next week.]

    I understand we’re not close to that, but if Waxman is already watering the bill down in hopes of appeasing some House Dems, it seems it could get much worse when the Senate tackles it, unless all Senate Dems can get in line with whatever is sent to them.

    One question: If no legislation at all is passed vs very weak legislation, how might this impact EPA regulation of greenhouse gases, if at all?

    ecostew’s link states:

    “It will now build just one, which will use new clean technology, offset carbon dioxide emissions and develop wind energy on the side. In return, the Kansas Department of Health and Environment cannot impose any greenhouse-gas regulations that are tougher than those emerging from Washington. Suddenly, that seems a pretty high bar.”

    I’m not sure I understand this. How does this deal “offset carbon dioxide emissions”?

  18. Jim Beacon says:

    Joe,

    My rhetoric was a result of sheer frustration. I probably should have phrased it better, like, “This is the kind of legislation we would have expected to see from a Republican-controlled Congress and White House”. I know that you believe that any bill is better than nothing and I used to feel that way, but this has become so pitiful that I now agree with Sasparilla’s comment that “we’d be better off without it (so its obvious we haven’t dealt with this yet and everyone knows it).” Yes, there are other aspects to the legislation which are important and need to be enacted. So, let’s strip out the now useless Cap and Trade provisions and pass the rest of it. Then come back to CO2 reduction mechanisms with significant real limits and non-giveaway Cap and Trade in a separate bill (hopefully after Al Franken has taken his seat in the Senate and there’s 60 votes). I’m afraid I don’t have your faith that these initial laws will be strengthened and improved going forward. You seem to be assuming that the conservatives will never get back in power again. History, as recently as 1994, tells us different. I think we have to pass strong laws that will do what must be done right now, within 18 months before the next election cycle starts controlling everything.

  19. Karl says:

    Ugh. Rebating that 40 percent would be much more equitable and do more to protect ratepayers as the CBO has clearly shown. If we are giving away 40 percent to utilities we must insist upon the strong RES and if anything tougher oversight and less of the offsets. The E and C is very hard in terms of getting the votes. I think if we can get a bill through E and C with all Democrats in favor or only one or two voting no then we can get a simular bill through the Senate. If we can get both sides to pass some kind of bill by the time this congressional session ends (Oct 30th) then Obama will have a idea of what kind of deal he can get out of Congress and can negotiate something in December and then bring it back to fit into the final bill that can get passed in January or Febuary of 2010.

  20. I think it’s time to start some horse trading of our own.

    ACES eliminates the EPA’s ability to regulate CO2 and other greenhouse gases on the basis of global warming. A weak Waxman-Markey may actually turn out to be worse for greenhouse gas levels than strict action by the EPA to target coal.

    [JR: No. EPA was never going to regulate existing emissions sources.]

    So how about this for an idea? Build annual performance targets into Waxman-Markey that measure the actual impact upon CO2 levels in the U.S. (not offsets). If they are insufficient, EPA gets pulled back into the game to regulate greenhouse gases on the basis of global warming.

    Right now, all players have an incentive to maximize their individual economic benefit. The danger we face is that the sum of those individual efforts, reflected in the combination of offsets, reduced targets and free permits, will drastically undermine the effectiveness of the approach.

    Businesses HATE the kind of unpredictability that comes with EPA regulation. Performance monitoring with the threat of renewed EPA regulation of greenhouse gases would give businesses a strong incentive to support provisions that ensure the performance targets will be met.

  21. Robert says:

    Very disappointing, particularly as the US has ample renewables if it cared to use them. By contrast Europe could not power itself renewably even if it used every available scrap of wind, solar and other (at least, not without borrowing a chunk of the Sahara).

    High GDP – high CO2 – tradition of selfish independence – car based culture – spread out land use requiring aviation to get anywhere … what do you expect? I would rather they scrapped the bill, saved the paper and gave all the politicians a day off.

  22. hapa says:

    the strongest piece of clean energy and climate legislation probably in the world

    considering where we rank among similar countries for resource use efficiency, the narrowness of this statement is almost insulting. are we really about to pat ourselves on the back for promising to maybe go from 2x to 1.7x modern european per-capita carbon, in ten years?

    i’ve always liked it when people say europhiles in the US have no pride in their own country. if people here really had pride, we’d be embarrassed at how bad we’re being spanked by our competitors and aim to beat foreign performance with something other than lawyers and bank fraud.

  23. MarkB wonders what impact W-M will have on EPA regulation, and that’s a very good question. Who’s in favor of free “get-out-of-jail” cards (grandfathered pollution allowances) so big polluters can flip off the EPA? Maybe it would be better to leave CO2 emission mitigation to the EPA, and not let Congress mess it up.

  24. Ken says:

    Rather than giving industry free allowances, why not give them the cash equivalent from auction revenue? That could lead to a more liquid trading market, and an auction could accommodate a floor price, which might be a good compromise between a stringent or lax cap.

  25. Ben Lieberman says:

    Why not a bill that gives transitional subsidies directly to the most affected congressional districts such as districts with coal mining. The subsidy would decrease over time and would sunset. In some respects this would provide retraining and education and investment for areas that would lose employment.

  26. Peter Wood says:

    I strongly agree with Ken that their should be a price floor, this would allow emissions to go lower than caps set by policy makers. The price floor should increase by something like 4% above inflation each year. A price floor mechanism would provide the certainty required to drive the investment in low-emissions technology that we need.

    I am very disappointed that the 20% reduction has been reduced to a 14% reduction. At Kyoto, the US agreed to reduce its emissions in 2008-12 to 7% below 1990 levels — and then failed to ratify. The W-M 20% reduction would reduce emissions to 7% below 1990 levels by 2020; the 14% reduction reduces emissions to 1990 levels by 2020. This sends the wrong signal internationally. To make up for this, the US should be willing to reduce its net emissions by purchasing more emission allowances on top of the 14% reduction. The US legislation must also allow flexibility to tighten the target later.

    The free permits are unsurprising, but have is a significant opportunity cost. The money spent could be used much better if it went to RD&D, or went directly to households.

  27. Leland Palmer says:

    Well it gets us off the mark, but 14 percent reduction from 2005 by 2020 just doesn’t seem big enough to turn the corner on this problem. Investors not willing to invest in coal plants have made more drastic cuts than this, I think, in just the last few years.

    The way to stop something with accelerating growth would be to “nip it in the bud”, of course. The longer we wait, the harder this will be, and the greater the potential for runaway positive feedback effects:

    Chris Field, one of the IPCC group leaders, from Democracy Now!, February 26, 2009:

    And what we increasingly see is that with temperatures at the upper end of this warming range, we begin to get a large series of very dangerous feedbacks from the earth’s system. In particular, we see tropical forest transitioning from taking up large amounts of carbon to taking up very little or even releasing carbon. And it looks like there’s an increasing risk that high latitude ecosystems that are characterized by these frozen soils called permafrost may release some of the organic matter that’s stored in this permafrost to the atmosphere. So you end up in a situation where, instead of having ecosystems storing large amounts of carbon, their storing very little or releasing large amounts.

    The calculations to date are that tropical forests—and this is something that is explored in the IPCC—could, at the higher ranges of temperature forcing, release anywhere from a hundred billion to 500 billion extra tons of carbon to the atmosphere by 2100. And that should be put in the context of understanding that during the entire period from the beginning of the Industrial Revolution until now, all of the world societies have only released a little over 300 billion tons of carbon to the atmosphere.

    AMY GOODMAN: I wanted to ask not only about what’s happening in the Southwest, but a vicious cycle you talked about that could do everything from ignite tropical forests to melt the Arctic tundra.

    CHRISTOPHER FIELD: The idea of these vicious cycle feedbacks is that once warming reaches a certain point, the amount of assistance that we’re getting in terms of carbon storage from the land and oceans tends to go down. And this is quite clear from the IPCC models, and it’s clear from a number of other more recent lines of work.

    One of the new numbers that’s a great concern to me is that we’ve been doing studies of how much organic matter is stored in these frozen soils in northern latitudes, permafrost soils, and the new numbers are that approximately a billion tons of carbon [he meant more than a trillion tons – some estimates put it at 1.6 trillion tons – LP] is stored in the organic matter in these high latitude soils. Climate model projections indicate that at high amounts of warming large fractions of the permafrost could melt, and some of the projections have that at from 60 to 90 percent of the permafrost melting.

    And the surprising thing about these permafrost soils is that the organic matter that’s contained within them is not this incredibly stabilized, difficult-to-decompose stuff; it’s basically frozen plants that have been sitting there for, in some cases, tens of thousands of years. And when the permafrost is thawed, these plants decompose quite quickly, releasing their carbon as CO2 to the atmosphere or as methane to the atmosphere, which is a greenhouse gas that, on a molecule per molecule basis, is about twenty-five times as powerful as CO2.

    The basic risk is that if we reach a certain point in the warming, what we’ll end up with is a vicious cycle, where the warming causes additional permafrost melt, which causes additional CO2 to be released to the atmosphere, which causes additional warming, which creates this vicious cycle.

    All of us on this blog already know things like this, I think.

    I don’t think we have any conception just how violently the climate can react to the huge, unprecedented rates of change of carbon concentration in the atmosphere we have imposed on it.

    Truly uncontrollable global heating, which cannot be stopped, no matter what we do, and which may not stop short of the complete destruction of the biosphere may result.

    It’s a solvable problem – we’re just not solving it.

  28. Joe wrote: The bill is what it is — the strongest piece of clean energy and climate legislation probably in the world.

    Do you really believe that?

    To give but one example: As Waxman-Markey is debated in Congress, the Scottish Parliament is also working on climate-change legislation.

    The Scottish Climate Change Bill was unveiled late last year, and it was hailed then as a landmark document. It includes plans to boost renewable energy and cut GHG emissions by 80% by 2050. It sets out measures to tackle aviation and shipping emissions, improve energy efficiency, and will include provisions for a 34% cut in CO2 emissions by 2020, and a 50% cut by 2030. If backed by the Scottish Parliament — which appears likely, as it now has all-party support — it would also allow ministers to establish a Scottish Committee on Climate Change to exercise advisory functions.

    During the current debate, parliamentarians are already talking about increasing the interim 2020 CO2 reduction target to 42% over 1990 emission levels — if an agreement is reached in Copenhagen. They are also talking about dramatically limiting the use of offsets to reach CO2 reduction goals, so that emissions in Scotland really are reduced dramatically.

    In decarbonising the Scottish economy, the government will work particularly hard on several key energy-intensive industries, and require increasing use of either carbon capture and sequestration for fossil fuel plants, as well as hard renewable energy targets. The bill would also boost the biomass sector by creating woodlands, and opening up Scottish forests to wood fuel production. It also requires government ministers to produce a National Action Plan on energy efficiency within 12 months, and review it every three years. The government is also launching an innovative carbon assessment project to drive future budget and spending decisions, and monitor progress.

    The plans are expected to cost the Scottish economy in the neighborhood of $1.49 to $2.97 billion annually. A Scottish coalition of 40 groups, including many international environmental organizations, have given the proposals a warm welcome, although they are pressing for quicker action and stronger targets, and it appears that the government is listening.

    I can provide other examples, but I think you get my point. Many places in the world are taking dramatic steps to cut emissions, and I don’t see the point in conflating American efforts, or denying international progress.

    I think Waxman-Markey is a beginning, and I’m glad for it. The huge American carbon behemoth will not be able to do an about face in four or five years. You need more time. I get that.

    I would describe Waxman-Markey as a fresh start. And I hope that you can do better as the real effects of climate change become apparent.

  29. Ken says:

    Peter Wood says “… the US should be willing to reduce its net emissions by purchasing more emission allowances on top of the 14% reduction.”

    I think he means “… reduce its net emissions by selling fewer emission allowances (if they don’t sell at the floor price) …”

  30. Peter Wood says:

    Thanks for pointing that out Ken.

    What I meant to say was that “the US should be willing to reduce its net emissions by purchasing more international emission allowances on top of the 14% reduction.” In other words, if the US doesn’t make more domestic emissions reductions, it should pay other countries to reduce theirs.