With so many challenges facing our country and the U.S. government, many people have doubted whether we would see significant action on climate change this year. They may still prove correct, but with the passage of the Waxman-Markey Bill (the American Clean Energy and Security Act of 2009, or ACES) by the U.S. House of Representatives the wheels are moving. It was no sure thing that the bill would pass the House, and it’s even less sure that it will pass in the Senate. There are more than a few who would rather it doesn’t. I’m going out on a limb though – I think we should do something about climate change. And to go even further out on the limb, I’m going to say that the ACES bill is a step in the right direction.
While it still has to make it through the Senate this fall, getting approved by the House of Representatives is a historic achievement for a climate bill. The last major attempt, with the Lieberman-Warner Act, died quietly after a brief flurry of excitement in 2008.
The Waxman-Markey effort targets a 17% reduction in greenhouse gas emissions below 2005 levels by 2020 and an 83% reduction by 2050, primarily by using a cap and trade system. One of the difficulties with cap and trade is that most people still don’t get it, not knowing what the term means. That makes life hard for those working to move the bill forward.
Cap and trade means is that major polluters will have a cap, a limit, on the quantity of greenhouse gases like carbon dioxide (CO2) that they can produce. Some businesses like burning coal for power produce a huge quantity of CO2 and these will be affected the most. You can meet your cap either by reducing how much CO2 you produce, or buying something called carbon allowances. If your business comes in under your cap because you got creative and efficient, then you’re all set. If you produce more than your allotted share of greenhouse gases though and go over your cap, that’s where the trade part comes in. The cap and trade system allows you to buy carbon credits, or allowances, to meet your target.
It’s simpler than it sounds actually, and cap and trade systems like this have been shown to work, helping to greatly reduce acid rain in the U.S. in a short period of time and for a lot less money than the critics said would be needed, for example.
Over 1000 pages long, the ACES also contains a host of provisions to support energy efficiency and renewable energy production to help us realize these reductions in greenhouse gas emissions. Still, when you’re reshaping a good-sized chunk of the economy it’s hard to please everyone, stirring a variety of groups to oppose the bill, and a long list of players angling to secure a piece of the action.
Businesses and states heavily invested in high-carbon industries like coal are not excited about the measure. This is to be expected. If you are an operator of a coal-fired power plant, a cap and trade system will eventually have to make your business more costly, or else it won’t work. Critics of the ACES are saying the cost of implementing the ACES will dramatically increase the cost of electricity as a result.
The biggest argument against the bill so far goes like this is that it will cost money, and is therefore a tax. Since few people understand cap and trade and nobody really likes taxes, this is probably a good way to go for opponents of the measure. But I think the strategy for the supporters should be to compare the cost of doing something with the cost of doing nothing.
The EPA has estimated that the bill will cost the average household somewhere between $80 and $110 a year, and the Congressional Budget Office has estimated it will cost the average household $175 a year.
Let’s compare that to what will happen if no action is taken on climate change. The Stern Report found that failure to take action to slow the rate of climate change could reduce global GDP by 5- 20% a year, a massive impact. Since the impact would be present every year, and not just for a single recession cycle, and the impact would only grow worse, climate change would be the worse economic disaster ever, not merely an environmental problem.
This might be a better argument than polar bears for a lot of people, really bringing home the impact.
Failure to take action on climate change, doing nothing with the present ACES bill, or any others any time soon, would eventually extract an enormous economic cost, and probably a very regressive one, hurting the poorest people around the world and in the US the most. Let’s call this economic cost the "Do Nothing Tax of 2009", producing a little bar chart of $175 per household compared against 5-20% of lost GDP. We can create a campaign to contact senators who oppose Waxman Markey, praising them for their courage in supporting the massive "Do Nothing Tax of 2009".
Some environmental groups are also opposing the bill. One argument is that it doesn’t go far enough. Greenpeace has already pulled their support, along with others, saying that the measures are too watered down by political compromise to achieve what must really be done. Others don’t like the role of carbon offsets in the bill to meet climate targets, or they are upset because most of the carbon allowances will be given away at first.
I’m sure they’re right, that the bill involves compromises, is not perfect, and ultimately may not do enough. And by the time it gets through the Senate, if it gets through the Senate, further changes are likely. Getting 60 votes for a bill like this is still no cakewalk by any means. I’m afraid it’s probably about as good as a climate bill as we’re going to get for now, and I’d really like to see us do something rather than wait for a perfect bill that might not arrive any time soon. Let’s take this bill and push as hard as we can for it to pass, and then start working on the next round to do even more.
Glenn Croston is the author of "75 Green Businesses", the founder of Starting Up Green (www.startingupgreen.com), and the creator of the Green BizBlast, helping green businesses to connect with each other and the world. His new book "Starting Green" coming out in September 2009 provides the definitive guide to start and grow green businesses.