On May 12, the Senate introduced the American Power Act, an energy bill drafted by Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.). Experts from around the halls of Brookings weigh in on the bill, its significance and the future of climate change.
In this edition:
- Strobe Talbott: A Good Step for Climate Change
- William Antholis: The U.S. Must Act on Climate Change
- Charles Ebinger: Senate Climate Bill Falls Short
- Ted Gayer: The Distribution of Allowance Value in the Senate Climate Bill
- Mark Muro: Kerry-Lieberman Climate Bill: Short on Innovation
The legislation introduced today is a good step. The real question is whether senators of both parties will support it. One of the most enlightening comments I’ve heard, which made it into my upcoming book on climate change was made by Senator Graham to Tom Friedman in February. He said to Tom what is inescapably true: that young voters care about the environment and will not support members of Congress who refuse to act on change. There are voices on both sides of the aisle talking sense here.
The legislation would promote and create what I’ll call green jobs, green technology and green exports. Americans pride themselves on being entrepreneurial, innovative and coming up with products that the world wants. We’ve fallen behind a lot of other countries, including China and Germany, in the manufacture, invention and export of the kind of technologies that will allow us to make the transition from being a high-carbon economy to a low-carbon and no-carbon economy. I’m talking about wind and solar, not to mention nuclear and other alternatives. And those investments will pay off for the United States and will help out on the jobs front, which we know is one of the most important aspects of a recovery economy.
The talks during the Copenhagen climate change conference last December were a mess, but it was a constructive mess or what we call a useful disappointment. Europeans have been way out in the front of the rest of us, but they’re going to have to just accept the political realities in other countries, including the United States. Which takes us back to the Senate bill. If President Obama goes to the Cancun Summit – which is the follow up to Copenhagen at the end of this year – and still doesn’t have American legislation, his ability to lead the international community on climate change is going to be greatly diminished.
We have to get our act together and we have to have a breakthrough, not just at the level of political leadership, but on the part of American civil society as a whole. I have a lot confidence in the good sense of the American people. All of us, no matter what age we are, have to think about not just our own generation, but think in terms of about our children and grandchildren. We’re in a whole new zone in regard to the intergenerational trust right now.
The bill’s most important element – and probably most controversial – is a long-term target for reducing greenhouse gas emissions. As Strobe and I argue in Fast Forward, we all need to be thinking now about what the world will look like in 2050. Admittedly, that’s hard to do for members of Congress who are thinking about November 2010. But when you build a coal-fired power plant, you are having a direct impact on the climate that your kids and your kids’ kids will be living in forty years from now. The energy decisions we make – or do not make – today will still be around in 2050.
There is appropriate concern for whether U.S. actions will make a difference if China and India and other fast-growing developing countries fail to act. But the truth is that those countries have begun to act, and probably have already done as much as we have. The real question is whether the U.S. is willing to lead, or are we going to concede the clean energy industries and green jobs to those economies. And once we have acted, we will be in a better position to push them to go beyond export-oriented green jobs and make real commitments to cut their greenhouse gases.
The energy legislation introduced today by Senators Kerry and Lieberman, while well intentioned, is poorly designed, does nothing to streamline the Washington energy bureaucracy which in large part keeps the U.S. from having an effective energy policy, calls for inter-agency studies on issues that have been examined in depth, and gives regulatory oversight to institutions having no capacity to carry them out. The legislation‘s complex provisions for carbon offsets both here and abroad should keep lawyers and consultants, especially third party verifiers, employed for years.
A number of provisions illustrate the problem. The bill calls on the Department of Energy to develop a five-year strategy to lower the cost of nuclear energy—but a major reason for the escalation of costs has been the cost of raw materials such as cement and steel, sure to rise once again when the global economy recovers. Under Section 1204, the bill changes long standing domestic and perhaps international maritime law by giving states the right to enact laws prohibiting leasing within 75 miles of their coastline when this area clearly belongs to all the states not only to those with maritime boundaries.
Section 1415 of the bill levying fees on electric utilities for “all fossil-based” plants is curious since the discovery of large shale gas deposits could be used to back out dirty old coal plants in need of retirement, enhancing our national security while reducing carbon emissions. The fact that these costs will be allowed to be passed through to consumers—raising electricity prices—means the provision will have a hard time surviving a final markup. Section 1432 is among the more bizarre provisions since it calls on the Comptroller General—hardly a renowned energy expert—to conduct a study of the state of carbon capture and sequestration technology and barriers to deployment. These issues are already well known and are covered in almost any energy policy course in the nation. By adding a new institutional mandate for USAID, the bill almost ensures that an already dysfunctional agency will become even more hamstrung.
Subtitle E on Clean Transportation offers some interesting ideas but is woefully short on addressing the need for an “open fuel” standard that would allow the United States’ great biofuel, electric and NGV potential to make a major inroad to our dependence on imported oil in the transportation sector. The bill’s provisions for levying fees on petroleum products will hurt the ability of domestic refiners to use more biofuels since it will divert funds needed for their reconfiguration to allow them to blend higher volumes of biofuels in gasoline.
The offset provisions should be significantly revised or scrapped. If we are trying to reduce carbon emissions in the U.S., let’s do it. Otherwise we simply are exporting capital and jobs. The bill’s price on carbon is unlikely to be high enough to generate any real movement away from fossil fuels. Furthermore, the provisions under schedule E for trading in carbon are too complex and as written could allow gaming of the system.
Energy security and climate change are issues of the most urgent national significance. We should not pretend that we can do it on the cheap with no pain, at no cost, and with no sacrifice for the greater national good.
Climate Bill Misses an Opportunity for Deficit Reduction
Ted Gayer, Co-Director, Economic Studies Program; Joseph A. Pechman Senior Fellow
In a separate analysis, Ted Gayer examines the distribution of cap-and-trade allowances in the Kerry-Lieberman Senate climate bill, introduced in May. He argues that the government giving away allowances for free, instead of in auction, misses an opportunity to lower the overall cost of the program and help reduce the deficit. Read it here »
In a separate analysis, Mark Muro takes a look at the bill’s provisions on innovation. He maintains that funds allotted for energy research significantly fall short of the levels needed to properly wean the United States off its carbon dependency. Read it here »