Dingell’s Climate Plan Is A Good Start, but Not Good Enough

Our guest blogger is Robert M. Sussman, a Senior Fellow at the Center for American Progress Action Fund and former Deputy Administrator of the Environmental Protection Agency. Sussman is now overseeing EPA transition planning for President-elect Barack Obama.

Coal power plantHouse Energy and Commerce Committee Chairmen John Dingell (D-MI) and Subcommittee on Energy and Air Quality Chairman Rick Boucher (D-VA) unveiled their long-awaited draft of climate change legislation early last month. Longtime allies of the auto and coal industries, Dingell and Boucher have nevertheless produced a thoughtful and serious effort to grapple with the complexities of creating a cap-and-trade system. As they say in their memo to the full Energy and Commerce Committee, “politically, scientifically, legally and morally, the question has been settled: regulation of greenhouse gases in the U.S. is coming.”

The draft bill has a number of strengths for which Dingell and Boucher deserve credit. It is economy-wide, covering 87 percent of U.S. greenhouse gas emissions. It sets a long-term target of reducing emissions by 80 percent of 2005 levels by 2050 that corresponds with prevailing scientific consensus. It contains strong energy efficiency programs. It uses the allowance allocation process both to stimulate low-carbon energy technologies and provide consumers relief from high energy prices. It provides for strict oversight of the carbon markets to prevent manipulation and assure transparency. And it creates a “strategic reserve” of allowances that would be auctioned if allowance prices are too high, but avoids a “safety valve” that would suspend the emission cap if allowance prices exceed a predetermined level.

Despite these positive features, two aspects of the bill—the absence of allowance auctioning in the cap-and-trade program and weak emission reduction targets for 2020—raise serious concerns and should not be the starting point for legislative action in the new Congress.

In a departure from nearly all recent climate bills, Dingell and Boucher would not auction allowances to power plants and other covered emitters before 2026, when an auction would be triggered in the absence of congressional reauthorization. Instead, they propose four allocation mechanisms, three of which would make large distributions of free allowances to industry.

Even more troubling is that the draft bill calls for reducing emissions from covered sources by only 6 percent below 2005 levels by 2020. This is well below the 15 to 20 percent by 2020 target supported by 152 House members in an October 2 letter to Speaker Nancy Pelosi. If the draft bill’s targets are followed, U.S. emissions in 2020 would remain nearly 15 percent above 1990 levels. Thus, 23 years after the Kyoto Protocol, we would lag dramatically behind other developed countries. As a result, it would undermine the incentives for significant commitments by China and other developing countries who are watching closely to see whether the United States shows real leadership before softening their opposition to climate mitigation measures.

Dingell and Boucher are concerned that an abrupt transition to a cap-and-trade program will be disruptive and costly. But 2020 is twelve years from now, states such as California are already making substantial strides on efficiency and renewables, and the tools for reducing emissions cost-effectively are already in place. A bigger danger than short-term economic disruption is the risk that an overly modest emission target will encourage business-as-usual thinking, and we will lose an opportunity to gain a competitive edge in low-carbon technologies that can support economic growth and job creation.

If we are serious about reducing emissions by 80 percent by 2050, postponing the heavy lifting until 2030 sends precisely the wrong signal. Unless we are prepared to roll up our sleeves and create a low-carbon economy now, the job will be that much tougher when deep reduction targets loom two decades from now and the time to save the planet is running out.

Click here for an extended version of this post which discusses CCS, carbon offsets, and economic impacts in further detail.

UPDATE 11/13: In an interview with E&E News’s Darren Samuelsohn, Dingell spokeswoman Jodi Seth “pushed back” and pointed out that “the draft bill proposes four different options for distributing credits. One approach wouldn’t give any of the credits away to companies for free.” Seth told E&E News:

Mr. Sussman apparently did not actually read the draft legislation or he would know that it presented a series of policy options, including an auction proposal. We hope that he is more careful and thorough in his work on the Obama transition team.

When Mr. Sussman’s source article was edited for length, the sentence about the multiple allocation mechanisms was initially omitted from this Wonk Room post. See this earlier analysis of the Dingell-Boucher draft bill for further details.