With our narrow victory for common sense in the Supreme Court, the one that upholds the radical notion that regulatory agencies should, um, regulate, the fight to actually do something about reducing carbon emissions now moves to a new, decisive phase. It's time to start getting serious about what it will actually take to save the planet.
There is no chance that this EPA, or Il Duce Piccolo's wastrel crew, will actually do anything about climate change. But the writing is on the wall now. In a little less than two years, our current Federal executive branch will be replaced. Chances are that for the first time, we will see serious movement (as well as serious posturing) on a Federal level about limiting greenhouse emissions. The problem is that the stakes are enormously high, and the window of opportunity for doing something that will actually make a difference is very small – less than a generation, probably less than a decade. We don’t get a mulligan if we blow this.
Many of our nations most polluting industries are acutely aware of this political calculus, and are moving to get in front of the issue. The first effort out of the gate is the US Climate Action Partnership. In addition to Natural Resources Defense Council (NRDC) and Environmental Defense Fund (EDF), it includes perennial corporate favorites like PG&E, Duke Energy, Florida Power, Caterpillar, GE, BP, Alcoa, and more.
Now, all of these corporations are looking for policy certainty before making infrastructure plays that they will have to live with for most of this century. Some of them buy into the idea that climate change is the single biggest threat that we as a species face in this next century, and that we need to act like it (I would put BP in this category). Others are simply looking for a way to make a financial killing, or evade having to actually do very much. Of course, every party in this coalition intends to dominate the debate over how we actually go about substantially reducing greenhouse gas emissions in the United States.
So, what are they calling for? Their twelve-page "solutions-based" PR piece, entitled "A Call for Action" (pdf file), is long on rhetoric and short on specifics. But the specifics that are there should make you sit up and take notice. The short-term and mid-term suggested target reductions, not to put too fine a point on it, are lame – 10%-30% reductions from current levels by, oh, around 2025. The default marker here is the bottom of that range. Just to put that in context, California plans to reduce emissions 15% from current levels by 2020, and 80% by 2050, and is already well below the national average in carbon intensity, thanks to decades of modest energy efficiency and renewable energy efforts. The UK committed to 20% reductions below 1990 – got that? 1990 levels - levels by 2010 a decade ago (they will probably get close to, but not quite hit that target). Both the UK and Germany have committed to further reductions on the order of 40% by 2025 if – and this is a very important if – the US makes a similar commitment. The European Union has already formally committed to a 30% reduction by 2025.
Let's be clear here. Germany and the UK are not making a commitment to an 80% reduction in carbon emissions by 2050 just to be nice guys. They are making that commitment because the evidence indicates that anything less means there is a less than even chance of saving the planet. That's the marker for us. Less than that is not just unacceptable, it's deadly.
But the money quote is in the discussion on mechanisms on page 8. Rejecting the idea of a uniform carbon tax out of hand, the report outlines a cap-and-trade solution, then says that:
"A significant portion of allowances should be initially distributed free to capped entities and to economic sectors particularly disadvantaged by the secondary price effects of a cap including the possibility of funding transition assistance to adversely affected workers and communities. Free allocations to the private sector should be phased out over a reasonable period of time." (emphasis added)
Now, there are good ways and bad ways to put a price on carbon by fixing a price through a tax (everybody pays a predetermined amount for every ton of carbon they generate), or by fixing a supply of pollution credits through a cap-and-trade system (the government issues a predetermined number of carbon credits, which can be traded or sold), or a combination of the two. Getting this part right will not be easy. But we already know how to get it wrong. The key message in the above quote is the part where carbon allowances get given, for free, to the corporations emitting the carbon. Those corporations can choose to do nothing to reduce their carbon emissions, or they can make tons of money by selling their carbon allowances to somebody else - making money off of their pollution instead of getting punished for it. In effect, NRDC and EDF is signing on to the idea that we should grandfather in the right of existing polluters to continue to trash the climate, in exchange for those polluters saying nice things about how somebody should do something about global warming, sometime.
We've been here before. We already have two great examples of how not to limit carbon emissions from the initial implementation of the Clean Air Act, and from the recent failure of Phase One of the European Carbon Exchange.
Briefly, the biggest mistake of the Clean Air Act was exempting existing coal-fired powerplants from best available control technology rules. Originally seen as a temporary concession to dirty utilities with obsolete powerplants near the end of their useful lives, that exemption has become a permanent fixture of the emissions landscape, killing hundreds of thousands of people and wasting the time of thousands of hardworking environmental advocates that would be far better spent dealing with issues like climate change. Grandfathering is a terrible idea. There is no chance, politically, that such a concession would "be phased out over a reasonable period of time".
Furthermore, the decision to give sulfur dioxide credits away to polluters, instead of going to a 100% market-driven auction system, represented a huge subsidy (and another terrible precedent) for the nations dirtiest utilities. Make no mistake about it – this is the deal that NRDC/EDF’s partners in USCAP are aiming for.
Phase One of the Euro Carbon Exchange (the only functional carbon trading market to date, now entering a modestly improved Phase Two) failed for two reasons – each country was allowed to make its own estimate of its greenhouse emissions, and tradable carbon credits were given, for free, to the polluting industries in each of those countries. The three countries that actually underbid (UK, Spain, Slovenia as I recall) had to actually pay for emission allowances. For the rest of the Eurozone, it was free money right up to the point where everybody realized that the market was awash in surplus carbon credits, and the price dropped by 95%. They did learn a lot about how much carbon each country actually generates, and Phase Two should be tighter. But less than 10% of the available credits in Phase Two will actually be in open auction – once again, the vast bulk of credits will be given away to polluting industries, something that my sources in the UK government describe as a straight-up political power play by Europe’s largest corporations.
That’s the reality we’re all up against as we start to gear up for the critical fight to reduce global warming. What is troubling is that NRDC and EDF have already signed onto Alcoa and Duke Power’s position on climate change, before the real discussion has even started.
For better or worse, NRDC and EDF are the go-to national environmental organizations that corporations want to talk to. Occasionally the outcome has been positive. More often the result has been catastrophic. But always NRDC and EDF seem fixated on a style of cowboy diplomacy that forecloses a substantive and genuinely progressive outcome, often for years to decades. We don’t have years to decades to get this one right. I really, really hope that NRDC and EDF don’t end up being part of the problem.