How I learned to stop worrying and love Waxman-Markey, Part 1: WRI calculates it will lead to a 31%* or higher cut in U.S. GHGs by 2020

The Waxman-Markey energy and climate bill is certainly not “da bomb.”  At best, it’s a B+.

Then again, it is not a total bomb, as some think.  So you don’t have to be Dr. Strangelove — or the bill’s mother — to love it.  You just have to compare it to the alternative (i.e. utter failure and business as usual emissions).

Few people, I think, realize everything that is in it or what it might accomplish.  The most thorough analysis that I’ve seen is by the World Resources Institute (see their bill summary here, quantitative analysis here).

WRI has an interesting projection of what would be achieved by the Waxman-Markey discussion Draft (WM-DD) released on March 31, 2009 [click to enlarge]:

I hadn’t blogged on this sooner because WRI’s explanation of the methods and assumptions (here) are a tad opaque, but here are the (fairly credible) Key Findings:

  1. The pollution caps proposed in the WM-DD would reduce total GHG emissions 17 percent below 2005 levels by 2020 and 73 percent below 2005 levels by 2050.
  2. When all complementary requirements of the WM-DD are considered in addition to the caps, GHG emissions would be reduced 31 percent below 2005 levels by 2020 and 76 percent below 2005 levels by 2050.
  3. When additional potential emission reductions are considered, the WM-DD could achieve maximum reductions of up to 38 percent below 2005 levels by 2020 and up to 83 percent below 2005 levels by 2050. The actual amount of reductions will depend on the quantity of offsets used for compliance.

If I’m reading this right, what gets WRI from #1 to #2, from a 17% cut in 2020 (which is the 20% WM-DD target applied to the 85% of covered emissions in 2020) to a 31% cut in 2020 is:

  • partly WRI assumptions that EPA’s standards for the non-covered emissions will reduce them by 50%
  • mostly WM-DD requiring “the program administrator to use allowances from the cap to fund international forestry projects to achieve 720 million tons of additional emission reductions in 2020”

Personally, I think WRI is mixing apples and oranges here just a bit — hence the asterisk (*) in the headline.  But it is a tough problem to resolve:  How do you quantitatively credit realistic emissions reductions achieved in other countries funded directly by WM-DD?  Most every other country in the world would, I believe, simply take direct credit for such reductions, as WRI does.  While I’m not sure I’d plot such savings on the same graph as domestic emissions reductions, I don’t have an obvious alternative at this point, though, so I’m not criticizing them.  Their methodology is pretty transparent — if you read it a few times.

Certainly, among the highest priority actions for the rich countries is to develop and fund a national-accounting-based method for enacting and verifying efforts to slow, stop, and reverse deforestation.  That’s why forestry actions comprise 2 of the 12 to 14 wedges in the core strategy for stabilizing at 350 to 450 ppm: The full global warming solution (updated).  The UN is working on Reducing Emissions from Deforestation in Developing countries (REDD).  If REDD or something like it is successful, then the United States must put in serious dollars — and that emission reduction needs to be credited to us.

And it bears noting that stopping deforestation is a (slightly) more time urgent activity than almost anything else in the climate arena, since it is all but irreversible.

Now what gets WRI from #2 to #3, from a 31% cut in 2020 to as much as a 38% cut — the light blue area under the purple line — is WRI assuming that some offsets are in fact used to meet the emissions targets:

The discussion draft requires 1.25 offsets to be submitted for compliance for every ton of regulated emissions. This requirement would yield additional reductions contingent on the number offsets used….  The range starts at zero and increases to 250 million tonnes per year each for both domestic and international uncovered emissions.

Of course, the possibility that the offsets’ provisions actually result in more emissions reduction, rather than say, less, requires a key assumption:

Offsets will be real, permanent and additional. As a result, we depict offsets as a real reduction in total global GHG emissions.

In short, WRI assumes the offsets — both international and domestic — are not fraudulent, are not rip-offsets.

I am well known for not being a big fan of rip-offsets — well, I’m a big fan of “rip-offsets” since I coined the term (see “Question from WSJ blog: Are Bogus Carbon Offsets Really That Bad?“) but I’m not a fan of offsets as they are currently being sold to consumers and businesses.  So you might think that I would dismiss WRI’s whole approach here.  But I don’t.

As I will discuss in Part 2, domestic offsets under a climate bill like Waxman-Markey are completely different than the current array of mostly dubious and fraudulent offsets you might buy.  International offsets are more problematic, but the Obama administration could — and I expect will — address most of the problem surrounding them in the implementation of W-M, as I’ll discuss in Part 3.

And yes, WRI will have to redo their numbers whenever the final, presumably weaker version makes it out of committee (see “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“).  And yes, WRI signed on to the USCAP proposal on which much of what Waxman-Markey was based — which to some extent makes WRI a “mother” of WM-DD [and yes that’s the best I could do for today’s holiday].

But WRI has a great deal of analytical credibility, and their analysis should be taken seriously.

And setting aside one’s dreams of a superior but hypothetical (i.e. politically untenable as of today) energy and climate bill, if Waxman-Markey crashes and burns (which I very much doubt will happen), I would not hold my breath waiting for a stronger bill to pass for a long time.

Still worried?  Stay tuned for Part 2.

33 Responses to How I learned to stop worrying and love Waxman-Markey, Part 1: WRI calculates it will lead to a 31%* or higher cut in U.S. GHGs by 2020

  1. hapa says:

    this is polluter-friendly bookkeeping. afforestation and land management are primary tools in taking carbon out of the air and ocean. using them like indulgences to forgive the sins of pampered, hidebound industry is a kind gesture but a little dangerous.

    [JR: Can’t quite agree since 1) this is transparent and 2) stopping deforestation is a top priority. Anyone who thought a cap that starts in 2012 would lead to deep cuts in CO2 emissions by 2020 was … not paying attention to what everyone else in the world was doing or U.S. politics, for that matter.]

  2. Will Greene says:

    Everyone contact your representative in support of this bill. Then encourage your friends to do the same. (Or join Greenpeace like me, get on the street, and get hundreds of people to do it!)

  3. Dorothy says:

    Still very worried here. WRI shows us a very nice graph, but I’m amazed that its BAU red line ascends at such an even 20 degrees. Let’s see, the Polar Ice Cap will disappear in the summer months pretty soon, right? Don’t you think all the trends shown on this graph will be affected? There are scientists who believe the loss of the summer Arctic Sea Ice will have a catastrophic effect on the world’s climate.

    If the WRI graph were a tad bit science-based, it wouldn’t be so simplistic.

  4. Steve Bloom says:

    Dorothy, the plus side of that coin is that any such “climate Pearl Harbor” will create the political room for ramping up action.

  5. Carol says:

    WM-DD! Hilarious acronym in light of the discussion.

  6. Thanks for posting this. Everyone should know about these things. I enjoy learning new things so I subscribe to blogs like yours. Evelyn

  7. hapa says:

    no one talking about deep cuts thinks a cap alone will do it, or cap-plus-equipment-standards. not even jim hansen. coordinated root-and-branch equipment replacement is all we’ve got in the time available. caps now are largely a “compromise” between shameful legislative buck-passing and the need to move from “brown trunk, green growth” to the full overhaul.

    so as it looks to me, what’s transparent is the desire to make the compromise(d) effort look like it can take the place of blood-sweat-tears. i’m not sure it’s useful to say this; if the situation doesn’t put such insider back-slapping behind us, we’re nothing special; more dust for the bin.

    if we get into the higher gear though i think it will be because of “US politics.” ordinary people are more ready to repower america than the beltway millionaire turf warriors. as the real economy continues to gasp for air, year after year, putting the federal credit line to work on a brighter tomorrow looks to me to become a dominating public desire, because other avenues have failed spectacularly and people are really in trouble now.

  8. RunawayRose says:

    OK, I just sent off an email to Representative Bruce Braley, from IA-01, asking him to support the bill.

  9. Phil Eisner says:

    All I see happening in CO2 reduction is a mpg regulation for autos and trucks, subsidies for wind and solar by states anxious to reduce their CO2 emissions from electricity production by 20%, a reduction in energy use by household appliances as Energy Star efforts and improved lighting take hold, and a few utilities willing to try new nuclear plants. These efforts will not do any CO2 reduction since as this recession eases, over 20 years we will increase our energy use by more than 20%.

    Regardless of cap and trade (which does not produce clean energy) It looks like the only clean sources of energy available in quantity by 2020 are conservation, limited wind power turbines, solar thermal plants with energy storage, and limited solar voltaic on some roofs. I doubt this adds to 20%.

    Can anyone show me my error?

    Can any one explain to me how more reduction in CO2 emissions can occur by 2020.

    [JR: Replacing some coal with natural gas is quite likely, since the CCGTs are already built. Then you have your biomass cofiring. And your hydro, of course. Plus the wind and CSP. And some geothermal. I’ll blog more on this in the next week or two.]

  10. Ken says:

    Joe – Can you confirm that the “complementary requirements of the WM-DD” are additional to the capped reductions, and are not creditable toward the cap?

  11. Steve H says:


    The way I like to put it is that the 2020 goals are those that can be met through pushing renewables and increasing building efficiencies. C and T works to make coal less favorable than renewables, eventually, as well as giving major efficiency upgrades a better ROI. California has done nearly all of this already. Its not terribly difficult, but C and T will help get the ball rolling, hopefully. The 2050 goals, those are the ones that will require the hard, hard work. I’d suggest you look up our host’s posts on wedges.

  12. djrabbit says:

    The current US market for offsets is nascent, voluntary, and unregulated. Most of the abuses of the current market are due to those facts.

    Waxman-Markey (and the EPA rules to follow) will essentially create a new, regulated market: offsets credits will have to meet EPA guidelines, EPA will audit offsets, companies would have to “certify” their offsets (making it much easier to prove any fraud), etc.

    [JR: Precisely!]

  13. Michael d says:

    Can anyone explain the difference between the non-binding economy wide target and the cap on covered gases?

    Is this just saying that there will be a target for all GHGs (incl. ag, forest emissions etc), essentially equivalent to a UNFCCC allocation?
    and then a cap of ‘covered sectors’ with permits issued under that cap tradeable?

    If so then wondering whether those targets will always stay in-sync, because if ag say went through the roof, then you won’t get the overall economy wide benefits of the cuts.

    As a comparison, with Australia’s proposed system, an economy wide target will be set, in line with international obligations.

    The expected contribution from ag and non-covered sectors is subtracted from that target, leaving you with the cap on the market based system.

    In this way, if the non-covered sector is projected to be rather high, it correspondingly reduces the allocations for the covered part of the economy.

    Does anyone also know if ag is scheduled to be included at all? (it’s not clear from the WRI summary)

    How realistic is the 2012 start date, given political realities, recession, etc etc.

    (Australia’s scheme has just been pushed back by one year, with a fixed price in the first year of $US 7 per tonne. )

    And finally, any studies out yet on what carbon price this scheme would have in the early years out to 2020?


  14. Leland Palmer says:

    It’s a start, maybe, if the market does not find a way to innovate around the regulation, as markets known to do. Will this bill assure investors of lower risks, and allow increased investment in coal fired power plants, for example?

    Stay tuned.

    I believe it is insufficient to make any significant dent in runaway global warming. The earth system is switching rapidly from one stable state into unknown territory, and to keep it in its present state would take massive artificially supplied negative feedback, IMO.

    One way to supply such negative feedback would be to seize the coal fired power plants and convert them into carbon negative biocarbon/CCS plants.

    CO2 emission reductions are not enough, at this point. Ten years ago, maybe, but not now.

    Now we actually need negative emissions, not reductions in the rate of growth of positive emissions, to turn the corner on this problem, I think.

    WM-DD is a bunt, when we actually need a home run, IMO.

    WM-DD is better than nothing, but in this game, it may be that a good try doesn’t count.

    What matters is that we as a species have the technological capability to stop runaway global warming by seizing the coal fired power plants and converting them entirely to carbon negative power plants, but because of political considerations we are not using that capability. A billion tons of carbon put back into the ground each year in the U.S., and six billion tons of carbon per year put back into the ground worldwide, plus displacement or avoidance of maybe another 12 billion tons of carbon per year, might be enough to stop this thing.

    We need the maximum effort our technology is capable of mustering, and we need it now. WM-DD does not represent this sort of maximum effort.

    It’s just not enough, Joe. Hansen and Lovelock are right about this, I think.

  15. paulm says:

    I agree with Leland. We have to start going negative within the next 2yrs. to avoid the worst of the worst.

    My bet would be to go with Hansen – he has been right, right up till now. And the plain facts indicate that the system has very likely tipped.

  16. paulm says:

    Scary stuff…this just makes the whole thing look, well I don’t want to say it.

    Government climate change report calls for new institutions to curb global warming

    …the Centre on International Co-operation at New York University, recommends the creation of powerful surveillance and enforcement mechanisms similar to those of the UN’s nuclear watchdog, the International Atomic Energy Agency. The new institutions would ensure countries honour their commitments to cut carbon emissions.

    There would also have to be a new institution with an enforcement role and the capacity to make intrusive inspections, measuring emissions, in the same way that inspectors from the IAEA now oversee nuclear facilities.

    The role of the World Trade Organisation would also have to be rethought, the report says, to take account of the carbon implications of international trade.

    Such reform of international institutions is likely to be hugely controversial and bitterly fought out, but the authors say there is very little time left to get it right.

  17. jorleh says:

    What a dream! And this idiotic species is going to fulfil this process just in a couple of decades! Just doing nothing for the point ever, and now beginning a struggle of twenty WWII straightforward?

  18. cce says:

    If you adhere to the goal of reducing CO2 to 350 ppm, then aforestation cannot be used as a way of masking emissions.

    We need to think of the problem as two separate bank accounts. The first is an account that began with a certain amount of carbon from which we can only withdraw. This would represent the amount of carbon that, once emitted, brings the atmospheric concentration to 450 ppm CO2. Once this account is exhausted, that is it. We can emit no more.

    The second is an account into which we can only make deposits. This account will have to grow to a certain amount of carbon by a certain time in order to bring atmospheric CO2 down to 350 ppm. Aforestation and soil improvements would go into this account.

    We can’t borrow from the second account to give us a larger balance in the first account. The carbon sinks aren’t large enough to do this AND draw CO2 back down to 350 ppm.

  19. The two questions I would ask are these… Will Waxman-Markey prevent new coal plants from being built?

    Is WM superior to the EU’s cap-and-trade policy?

  20. Cameron Coates says:

    A carbon tax could achieve much of the same reductions without the delay in setting up a trading system. It would be more transparent and therefore easier to plan for and better for business. Lets call a spade a spade, this WW-DD approach will take TOO long to put into place. A carbon tax needs to be implemented in the mean time.

  21. Adam Hardy says:

    Will somebody say what the problem is with C&C? It’s not a tax, it’s a ration. You get given carbon credits, personally, by the government, every year. The government can tax those credits to get the carbon credits it needs to operate, but 2 things only are needed for it to operate successfully:

    (1) you pay carbon credits for everything – absolutely everything. Every service, every product, every item you pay money for. That automatically creates a huge carbon market where the ultimate decision-maker is us, the consumers. No government to get it wrong.

    (2) the government, in agreement with all other governments, agrees how many carbon credits to give each citizen each year, and reduces that amount every year by a little.

    OK, (3) is almost as necessary – if you have credits, you can sell them. On ebay, or to your power company, or your bank, or back to the government.

    Why is that difficult? It’s easier than tax.

  22. max says:

    Does WM include anything on feed in tariffs? Interesting article in the latest Washington Monthly on this subject.

  23. Davian says:

    WRI has been correctly observed as already signed-on to WM: which is a problematic draft complete with gaping holes and serious omissions of compromise. WRI’s ties to industry are irrefutable. Cap and Trade failures to date are legion.

    Hansen regards this approach as a “Temple of Doom”. Anybody listening?

    We already possess the power to increase efficiencies yet we’re sitting around while the last few grains of sand run out, AND while compromising with the largest corporate emitters.

    Jeeze, get real and put down the pom-poms– such a sanguine appraisal of a failed legislative approach to what is really needed makes me wonder if the precautionary principle means anything on this site.

    [JR: Please explain cap and trades failures to date. Please distinguish those imagined failures from the actual failures of target setting and political leadership.]

  24. Evidently we are preparing to launch another junk market, this time in traded offsets. I am not confident that we will be guaranteed that the rating agencies will be very strict in their scrutiny and there can be no Wall Street shenanigans as there were for mortgage-backed securities and credit default swaps.

    Offsets, indulgences, and a cheap fine for CO2 emissions are not good features. Waxman-Markey may not be da bomb, but it is certainly da dud.

    I wonder about the assumptions behind this happy prediction, which are said to be “a tad opaque.” A little more looking under the hood might be in order.

  25. Sasparilla says:

    I’d feel a heck of alot better with some realistic reduction and target numbers. This thing will get us going, but as it is I wouldn’t call it a B+ at all.

    A “C” normally means passing, however WM-DD isn’t going to get us down to where we need to be in time (i.e. keep us below runaway feedback points where we loose control), not even close. That doesn’t sound like a passing grade to me.

    I’d say, as it is, this is a D+ at best and we can only hope it can be strengthened into something that will do what we need as time marches by and we fall further into crisis territory (we have to count on our great political leaders to do this strengthening as we march into the ramifications of peak oil and associated impacts on natural gas prices since natural gas prices track oil price trends quite closely) – this isn’t a very good bet either.

    All that said, a D+ bad bet is alot better than a F no bet at all. Bring on WM-DD and lets gets moving – we are out of time.

  26. salemguy says:

    Noting the focus on deforestation, there’s a bit of a silver lining here:

    As suggested, if I recall correctly, this does not replace lost biodiversity – flora and fauna that grow only over long periods, but it’s some good news.

  27. Pat Richards says:

    It bothers me a little that the chart shows an immediate drop in 2012 from the 7500 level to the 7000 level. What happens to those 500 million metric tons in 2012? They just magically disappear? Seems the green line should start at the 2012 real-world level 7500 and go down from there. That’s the real situation… in 2012 we will not be starting at a level of 7000, we will be starting at a level of 7500 and reducing from there.

    But, OK… fine… it’s not enough, but it’s better than nothing. Let’s move it on to the Senate. Waxman-Markey started out looking for a 20% to 30% reduction… maybe the Senate can get that measly 14% it calls for now back up to at least 20% before it goes to the President’s desk. The EU is going for a 30% reduction by 2020… surely we can do as well? Are the French and the Germans better than us? Is America willing to pat itself on the back for a crummy 14% reduction when they are going for 30%?

    How about we put the political dialog on *that* basis and see how the conservatives look wearing that egg on their faces? They are going to allow the USA to be beaten by the French and the Germans?

  28. Peter Black says:

    This interactive map shows the WM scenario and gives us an idea, proportionally, where the emissions are, and where the reductions will come from.

    Our timeframe to do something about forests is evidently very small…that and the reasons Joe elucidated are why they need to be a focus.

  29. Is the best thing we can say about W-M is that it is better than nothing? As if any action at all, no matter how misguided and ineffective, will be better than inaction? Remember the Iraq War? Remember the Bush Bailout?

    Sounds like we are being stampeded, folks. To what end? To start a junk market in traded carbon offsets. This should be entitled The Wall Street Swindlers Bailout Act.

    Here’s a counter-argument: a grand fiasco will make it harder to muster the gumption for an effective, focused effort next year. Something that will really curb CO2 emissions significantly. When the subject comes up again, the disgust with W-M and its hidden agendas will make people suspect that they are being played for fools again.

    [JR: The best thing you can say about Waxman-Markey is that it is the most important and substantial piece of energy and climate legislation ever put before Congress, and that it would put the United States on the necessary path to avert catastrophic global warming while jumpstarting the transition to a clean energy economy.]

  30. Payal Parekh says:

    Offsets and Waxman-Markey

    Download an analysis of the offsets provisions proposed in the Waxman-Markey draft bill at The analysis was done by International Rivers and Rainforest Action Network.

    The WRI analysis assumes that 100% of the offsets are additional. Yet, there is ample evidence showing that this is not the case. 3/4 of CDM projects were up and running at the time of registration, making it difficult to argue that they were additional. The Government Accountability Office has also acknowledged that it is difficult to ensure “that every credit represents real, measureable, and long-term reductions in emissions,” in a report published in November 2008.

    Even if the offsets were 100% additional, it would still stand that US domestic emissions haven’t been reduced, Communities living in the vicinity of polluting industries continue to suffer. The use of offsets also delays the US transition to a carbon-free economy. Starting the transition sooner, allows us to make a smoother and more gradual transition and will cost less. Using offsets is a delay tactic. It is akin to putting off studying and then cramming for the exam the night before.

    The domestic offsets would come mainly from changing management practices on forests, farms and ranches. But land-use offsets not only replicate the additionality problems of the CDM but have a whole set of added complications due to scientists’ inability to accurately predict the climate impacts of land use changes (the European Union does not allow the use of forest offsets mainly for this reason). Also, these sinks are often temporary.

    [JR: I hate to say it but the analysis is flawed for reasons I will lay out in a few forthcoming posts. Fundamentally, though, the report makes the case for why there never will be 2 billion offsets purchased in any year. Maybe one tenth that.]

  31. Davian says:

    [JR: Please explain cap and trades failures to date. Please distinguish those imagined failures from the actual failures of target setting and political leadership.]

    Emissions Trading Scheme
    (hardly “imagined”– the carbon price plunged with the simultaneous corporate scramble to offset widespread economic downturn by dumping their carbon shares), this somehow, coming as a complete surprise to economists! (to which free marketeers habitually and predictably respond: “we weren’t able to do what we REALLY wanted to do” (in other words, we need to impose more of our ideas with less regulatory hindrances)

    [JR: Uhh, where are the failures. Prices for commodities collapse in a big downturn. Has Europe failed to meet its Kyoto target?]

    Beyond “leadership” and their applied failures of market “logic”, there’s:

    Market Failure
    The quintessential failsafe for all apologists and cheerleaders of free market ideologies — blame it on “market failure”– and…

    Alan Greenspan’s admission to the world that there are structural flaws in free market theory, essentially, that practitioners cannot be counted upon to look after their own self-interests: they eat their own young, and the young of others. Additionally, the not-so-small detail that what is good for the investor is also not necessarily good for the planet.

    [JR: Try again!]

  32. J4zonian says:

    Hey, Dorothy!

    Way back up there at the beginning: Just an answer and a correction…the graph is of CO2, not temperature. The melting of the polar ice will not increase CO2 levels much directly, although in raising the temp it might trigger other tipping points which will directly increase CO2, like forest fires, tree diebacks and permafrost melting (which will release large amounts of methane, also not on the chart but should be, maybe). I see it says CO2e; maybe that means equivalent and does include other GHGs…I’ll check on that. Maybe you should too.