Cross-posted at convergerblog.
Well, the Waxman-Markey climate train has left the station. I'll be talking at length about the massive failure that this legislation represents in a future post. But right now, I'm thinking about whether we can salvage anything from the wreckage. Given that we are going to lose this one, the shift should be towards demanding some small-bore concessions that might ease the pain of losing the big fight to implement an effective carbon reduction regime. Just off the top of my head:
Explicitly allow states to impose additional carbon fees, standards, and protocols: The Federal government has not been a leader in this area. Federal legislation should be the floor, not the ceiling. And, states need the money. Just because the Feds are giving away the store, states shouldn't have to as well.
Retain EPA regulatory authority: soon after passage, it will become abundantly clear that this legislation fails to do the job of effectively reducing US carbon emissions. When that happens, we will need the regulatory option that Waxman-Markey seeks to gut.
Kill zombie coal plants: Specify that coal plants that are exempted from BACT requirements under the Clean Air Act are not eligible for free carbon credits. They shouldn't even be alive. There is no reason to give them yet another subsidy.
Kill end-of-life coal plants: Specify that coal plants that have reached the end of their book life (official economic value of zero, fully amortized) are no longer eligible for free carbon credits. It is an elegant, zero-cost way to encourage coal plant owners to move on.
Limit new damage: ban new coal construction that does not include sequestration. Alternatively, set a mandatory maximum new plant emission standard equivalent to a simple cycle gas combustion turbine.
Set a minimum price: the minimum reserve price for carbon credits is $10/ton in 2012, rising by $2/year through 2032. In effect, if carbon markets fail (as they have repeatedly in markets that make the same mistakes we are about to make), we automatically revert to a partial carbon tax. This sets a predictable floor under long-term infrastructure investment decisions, reducing risk and increasing cost-effective carbon reduction implementation.
Fix offsets: offsets from countries that have not implemented verifiable carbon reduction standards are discounted by 80%. Offsets from countries that have implemented verifiable carbon reduction standards (including the US) that have not agreed to subtract those offsets from net allowable carbon emissions are discounted by 50%. All other offsets are discounted by 20%. This reduces the impact of fraudulent and ineffective offsets, and encourages direct, verifiable reductions.
Require fully allocated carbon reduction value for public development of efficiency and renewable resources: public entities that finance and acquire resources that reduce the carbon footprint of recipients of free carbon credits can demand surrender of those displaced credits at full market value. This prevents the subsidized high carbon utilities from free-riding on independent acquisition of carbon reducing technologies. Restricting this to public entities assures that all of the benefits of this modification flow to society at large.
Require fully allocated system benefit value for all aggregated non-utility load shaping and reduction: the reversal of energy production economies of scale will increasingly drive distributed energy production and load shifting by larger customers in a partial reversion to the early days of the grid, a century ago. The critical difference is that these small-to-medium resources are on an a well-integrated grid that can directly benefit from that reversal of scale. For example, to the grid, a synchronized non-utility network of PV/coldwater storage systems reliably delivering dispatchable reductions in baseline daily peaks is indistinguishable from a reliable, fully dispatchable gas turbine at the point of load, with instantaneous system stabilization and transmission reliability ancillary services thrown in. As such, it is an incredibly valuable resource, and should be compensated as such. Embedding this reality in legislation would advance disintermediation of the current, dysfunctional, monopoly regulated utility system by allowing competitive markets for efficient low-carbon energy services to work. If private entities synchronize with public entities, this can be combined with carbon credit transfers.
I'm sure that there are lots of excellent ideas out there for tweaks that could actually get things done on climate change, despite the epic fail that the current version of Waxman-Markey represents. If we can't agree to blow up this freight train, we should at least be throwing a few useful items on board.