Energy Bill Passes House: Dow Chemical Happy, Green Peace Sad.

There is a simple solution to our energy problems: a ‘carbon tax.’  The federal government determines a tax on carbon emitting fuels such as oil, natural gas and coal.  The higher the tax, the less carbon is output.  This scheme is overwhelmingly supported by economists and environmentalist.
Of course, a solution that simple doesn’t provide enough complexity for special interests to leverage their political capital and distort the market to their benefit.  Thus, The American Clean Energy and Security Act of 2009 proposes a much more complex system of cap and trade that provides pork to all the necessary players.
The ‘Energy Bill’ creates a ‘cap and trade’ market.  The government determines how many emission allowances are issued every year (cap) and then organizations purchase allowances (trade) so they can legally emit carbon.  In a traditional cap and trade system, allowances are sold in a free, open market, but in the system Congress voted to pass, 85% of allowances in the first year will be allocated by the government, leaving just 15% of the allowances to be auctioned off in the free market.  This  means the government will determine which businesses can emit carbon freely and which have to pay.  By 2020, 10% of allowances will be allocated, [1.] giving politicians ample time to profit.

Scary image for environmentalists... and humans.
Scary image for environmentalists... and humans.

An inherent problem with any cap and trade system is that it’s only as effective as the level of the cap.  If a cap is set high, the cost of emitting is negligible, and no progress is made.  The current cap is set too high so reductions in carbon will be modest.  The size of the bill’s incentives for green technology development is also modest.  This disappoints environmentalists and scientists most.

This bill is over 1000 pages, and I’ve probably read about the same amount as your local congressman (zero) so it’s clear that we’ll all be learning much more about this legislation in the future.  What’s clear so far is that corporate America loves this bill.  (Ford and Dow Chemical are strong advocates.) Many environmental organizations do not.  (Green Peace opposes it.) [2.] Gore says it’s the best we can do and ‘there is no back-up plan.” [3.] Classic.

This bill isn’t all bad.  In fact, it does do one tremendously significant thing: it creates a structure that allows the US to regulate greenhouse gas emissions.  This is a huge victory that has come 30 years too late – delayed by the same forces that pushed this bill through.  If this bill becomes law, we’ll have the structure necessary to ratify a global treaty on climate change at the Climate Conference in Copenhagen this December.  A global framework to reduce greenhouse gas emissions is a noble objective and the first milestone in the struggle to stabilize our planet’s environment.

On Goal: The QS Approach to an Energy Bill
Our objective is to reduce the emission of greenhouse gases in America to a level that will prevent climate collapse.  Our solution is to make the emission of greenhouse gases increasingly expensive.  Our mechanism is a nation-wide tax on the consumption of fuels that emit greenhouse gases.

Scientists estimate the amount of greenhouse gases America can omit and still achieve our objective.  Economists determine the amount each fuel source must cost to achieve the necessary reduction.  The legislature enacts a law taxing fuels proportional to the amount of greenhouse gases they emit.  This means coal and oil would be taxed more heavily than natural gas.  Beef would also be taxed because the methane cattle produce is a substantial greenhouse gas.

One portion of the revenue from this tax is used to finance a rebate for low income individuals so they’re not disproportionally burdened by this tax.   Another portion of the tax is spent creating solutions to the energy problem: improving our transportation infrastructure, updating our electric grid and subsidizing the consumption of low emission energy like solar and wind.

The tax does not have loopholes special interests can use to avoid paying their fair share and can be collected by existing government institutions, so there is no need to increase the size of government.  The bill is as simple as the dreams of a sleepy puppy.

One thought on “Energy Bill Passes House: Dow Chemical Happy, Green Peace Sad.”

  1. Kucinich: “Passing a weak bill today gives us weak environmental policy tomorrow”-

    “I oppose H.R. 2454, the American Clean Energy and Security Act
    of 2009. The reason is simple. It won’t address the problem. In fact,
    it might make the problem worse.”It sets targets that are too weak, especially in the short term, and sets about meeting those targets through Enron-style accounting methods.
    It gives new life to one of the primary sources of the problem that should be
    on its way out”” coal “” by giving it record subsidies. And it is
    rounded out with massive corporate giveaways at taxpayer expense. There is $60
    billion for a single technology which may or may not work, but which enables
    coal power plants to keep warming the planet at least another 20 years.

    “Worse, the bill locks us into a framework that will fail.
    Science tells us that immediately is not soon enough to begin repairing the
    planet. Waiting another decade or more will virtually guarantee catastrophic
    levels of warming. But the bill does not require any greenhouse gas reductions
    beyond current levels until 2030.

    “Today’s bill is a fragile compromise, which leads some to
    claim that we cannot do better. I respectfully submit that not only can
    we do better; we have no choice but to do better. Indeed, if we pass a
    bill that only creates the illusion of addressing the problem, we walk away
    with only an illusion. The price for that illusion is the opportunity to take
    substantive action.

    “There are several aspects of the bill that are problematic.

    1. Overall targets are too weak. The bill is
    predicated on a target atmospheric concentration of 450 parts per million, a
    target that is arguably justified in the latest report from the Intergovernmental
    Panel on Climate Change, but which is already out of date. Recent science
    suggests 350 parts per million is necessary to help us avoid the worst effects
    of global warming.

    2. The offsets undercut the emission reductions.
    Offsets allow polluters to keep polluting; they are rife with fraudulent claims
    of emissions reduction; they create environmental, social, and economic unintended
    adverse consequences; and they codify and endorse the idea that polluters do
    not have to make sacrifices to solve the problem.

    3. It kicks the can down the road. By
    requiring the bulk of the emissions to be carried out in the long term and
    requiring few reductions in the short term, we are not only failing to take the
    action when it is needed to address rapid global warming, but we are assuming
    the long term targets will remain intact.

    4. EPA’s authority to help reduce
    greenhouse gas emissions in the short- to medium-term is rescinded. It is our
    best defense against a new generation of coal power plants. There is no room
    for coal as a major energy source in a future with a stable climate.

    5. Nuclear power is given a lifeline instead
    of phasing it out. Nuclear power
    is far more expensive, has major safety issues including a near release in my
    own home state in 2002, and there is still no resolution to the waste problem.
    A recent study by Dr. Mark Cooper showed that it would cost $1.9 trillion to
    $4.1 trillion more over the life of 100 new nuclear reactors than to generate
    the same amount of electricity from energy efficiency and renewables.

    6. Dirty Coal
    is given a lifeline instead of phasing it out. Coal-based energy
    destroys entire mountains, kills and injures workers at higher rates than most
    other occupations, decimates ecologically sensitive wetlands and streams,
    creates ponds of ash that are so toxic the Department of Homeland Security will
    not disclose their locations for fear of their potential to become a terrorist
    weapon, and fouls the air and water with sulfur oxides, nitrogen oxides, particulates,
    mercury, polycyclic aromatic hydrocarbons, and thousands of other toxic
    compounds that cause asthma, birth defects, learning disabilities, and
    pulmonary and cardiac problems for starters. In contrast, several times more
    jobs are yielded by renewable energy investments than comparable coal

    7. The $60 billion allocated for Carbon Capture and
    Sequestration (CCS) is triple the amount of money for basic research
    and development in the bill. We should be pressuring China,
    India and Russia to slow and stop their power
    plants now instead of enabling their perpetuation. We cannot create that
    pressure while spending unprecedented amounts on a single technology that may
    or may not work. If it does not work on the necessary scale, we have then spent
    10-20 years emitting more CO2, which we cannot afford to do. In addition, those
    who will profit from the technology will not be viable or able to stem any
    leaks from CCS facilities that may occur 50, 100, or 1000 years from now.

    8. Carbon markets can and will be manipulated
    using the same Wall Street sleights of hand that brought us the financial

    9. It is regressive. Free allocations doled
    out with the intent of blunting the effects on those of modest means will pale
    in comparison to the allocations that go to polluters and special interests. The
    financial benefits of offsets and unlimited banking also tend to accrue to
    large corporations. And of course, the trillion dollar carbon derivatives
    market will help Wall Street investors. Much of the benefits designed to
    assist consumers are passed through coal companies and other large corporations,
    on whom we will rely to pass on the savings.

    10. The Renewable
    Electricity Standard (RES) is not an improvement. The 15% RES
    standard would be achieved even if we failed to act.

    11. Dirty energy options qualify as “renewable”-:
    The bill allows polluting industries to qualify as “renewable energy.”-
    Trash incinerators not only emit greenhouse gases, but also emit highly toxic
    substances. These plants disproportionately expose communities of color and
    low-income to the toxics. Biomass burners that allow the use of trees as a
    fuel source are also defined as “renewable.”- Under the bill,
    neither source of greenhouse gas emissions is counted as contributing to global

    12. It undermines our bargaining position in international
    negotiations in Copenhagen
    and beyond. As the biggest per capita polluter, we have a responsibility to
    take action that is disproportionately stronger than the actions of other
    countries. It is, in fact, the best way to preserve credibility in the
    international context.

    13. International assistance is much less than demanded by
    developing countries. Given the level of climate change that is already in the
    pipeline, we are going to need to devote major resources toward adaptation. Developing
    countries will need it the most, which is why they are calling for much more resources
    for adaptation and technology transfer than is allocated in this bill. This
    will also undercut our position in Copenhagen.

    “I offered eight amendments and cosponsored two more that
    collectively would have turned the bill into an acceptable starting point. All
    amendments were not allowed to be offered to the full House. Three amendments
    endeavored to minimize the damage that will be done by offsets, a method of
    achieving greenhouse gas reductions that has already racked up a history of
    failure to reduce emissions “” increasing emissions in some cases “”
    while displacing people in developing countries who rely on the land for their
    well being.

    “Three other amendments would have made the federal government a
    force for change by requiring all federal energy to eventually come from
    renewable resources, by requiring the federal government to transition to
    electric and plug-in hybrid cars, and by requiring the installation of solar
    panels on government rooftops and parking lots. These provisions would
    accelerate the transition to a green economy.

    “Another amendment would have moved up the year by which
    reductions of greenhouse gas emissions were required from 2030 to 2025. It
    would have encouraged the efficient use of allowances and would have reduced
    opportunities for speculation by reducing the emission value of an allowance by
    a third each year.

    “The last
    amendment would have removed trash incineration from the definition of
    renewable energy. Trash incineration is one of the primary sources of
    environmental injustice in the country. It a primary source of compounds in
    the air known to cause cancer, asthma, and other chronic diseases. These
    facilities are disproportionately sited in communities of color and communities
    of low income. Furthermore, incinerators emit more carbon dioxide per unit of
    electricity produced than coal-fired power plants.

    “Passing a weak bill today gives us weak environmental policy
    tomorrow,”- said Kucinich.

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