Entangled Alliances

photo credit: db™

Ronald Reagan, that master of the quotable quip, once said that the nine most terrifying words in the English Language are “I’m from the government and I’m here to help”. But if the Gipper were alive today and in President Obama’s shoes he might well change his mind, since right now there’s only one phrase that should strike fear into the hearts of all, and this time it’s only eight words: “The bill will now move to the Senate”.

Last week America’s first real legislation aimed at tackling climate change – The American Clean Energy and Security Act, better known as the Waxman-Markey Bill – passed the House of Representatives by a razor thin margin of 219-212. It will now move on to the Senate, which is often said to be the place where good legislation is sent to die. Where the House of Representatives is full of progressive reformers, the Senate is full of cautious moderates. Where the House often sees bills passed largely to the whipping efforts of Speaker Pelosi, the Senate is full of obstinate minded grand-standers who won’t be corralled by their party leaders.

It’s no understatement to say that the final bill that lands on Obama’s desk could well determine the future success of world efforts to halt global warming. The problem is, not only is it at risk of being sautéed à la Senate, but it’s not exactly in the best of states after having been through the meat grinder of various House committees. Legislation is often said to be like a sausage – you don’t want to watch it getting made. True to form, the various special interests and lobbyists that virtually own many key committee members have managed to make a meaty mess of the bill as it made its torturous way through the House. And you know what? It wasn’t even the most ideal piece of work to begin with.

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The key mandate of the bill – a 17% cut in greenhouse gas emissions by 2020 and  an 83% cut by 2050 – is also one of its biggest problems. These cuts are based on 2005 emission levels.  But multiple scientific bodies such as the IPCC have recommended that by 2020 there needs to be, at the very least, a 20% cut of 1990 levels. The bill , however, only has  a 4% cut. That’s a big difference. Indeed, it’s led many progressives and environmental groups to question whether the bill will do anything to halt climate change. But that’s not the only provision in the bill which seems rather weak. The first draft had weak but acceptable mandates for renewable energy and efficiency savings:  utilities had to ramp up renewable energy to 25% of their portfolio by 2025, and increase efficiency savings to 15% by 2020. But now those two standards have been combined, to a measly 20% total by 2025.

More problems lie with the bill’s headline feature: a cap and trade system designed to achieve the mandated cuts in carbon emissions. Cap and trade is by far the least understood legislative concept that’s in the public eye, but it’s really not that complicated. It’s simply a system that creates a market for carbon emissions. The “cap” involves  the government setting a carbon emission limit beyond which no polluter can pass. Anyone that exceeds this limit will have to buy a carbon permit off someone who’s not polluting as much – that’s the “trade” part. The idea is that by creating a carbon market like this it will become cheaper for a company to pollute less than it is to have to keep buying more permits. Even if this incentivising doesn’t work, you’re still ensuring less pollution, since no-one’s allowed to go beyond the cap.

So far so good. But the controversial part of this system is whether the government should auction off the carbon permits -raking in some revenue in the process – or gives them to polluters for free. The first draft of the Waxman-Markey bill allowed for 100% of the permits to be auctioned. This concerned the big utility companies, all of whom have a powerful influence on many members of the key energy committee. Therefore, by the time the bill finally escaped committee the cap and trade system was magically transformed into one where only 15% of the allowances  were auctioned, with the other 85% doled out free to various big polluters, most notably power companies. Outraged, this was the final straw for many environmental groups. Greenpeace withdrew their support entirely from the bill, with a slightly bizarre warning that it now threatens to do more harm than good.

However, it’s important to be clear on how bad this change is. It shouldn’t affect the incentive system behind cap and trade, since companies given permits for free will still want to reduce their emissions so they can sell their carbon allowances for a hefty profit – go capitalism! Moreover,the cap is still the cap – emissions will still be reduced. So, beyond sheer disgust at big polluters getting a free handout, it’s not really clear why this was the last straw for groups like Greenpeace. Nevertheless, it is unsettling, because the smaller the percentage of permits that go to auction, the less money the government takes from their sale; money which could then be reinvested into renewable energy. At the moment, however, the small amount of revenue the government would makes from auctions is aimed at refunding households that would otherwise be hit by an increase in their energy bills. In terms of potential investment in clean energy, that’s a real missed opportunity.

I could go on – and on. There’s plenty more things wrong with the bill, and astonishingly they’ve all appeared before it’s even got to the Senate.  The question now becomes what damage the venerable upper chamber will do to the legislation. The omens, it has to be said, don’t look so good. The Senate Energy and Natural Resources Committee, which serves largely at the behest of the oil and coal lobbies, recently released a bill of their own which included even worse renewable energy targets than Waxman-Markey. It’s possible that the faults with the cap and trade system may be somewhat rectified, since this will be the prerogative of Barbara Boxer’s relatively progressive Environment Committee. But waiting in the wings when the bill comes out of committee onto the Senate floor, like a troupe of grandstanding pantomime villains, are several centrist, business-serving Democrats who are waiting to do to a climate change bill what was done to February’s stimulus package – i.e. lop some good bits off.  The only person who can really guarantee that the bill comes out of the Senate better, not worse, is Obama and he’s had – and will have – his hands full with the immensely complex issue of health-care reform, which is running concurrent with climate change legislation. Moreover, Obama’s so far shown absolutely no sign that he wants a good climate change bill as much as he wants a good health-care bill.

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Given that a climate change bill is unlikely to end up on the President desk in a state as good as it should – and needs – to be, does this mean that it’s a complete failure? This question matters right now, because the answer tell us whether progressive and environmental groups should be advocating for perfection or searching for compromise. Paul Krugman has argued in the New York Times that we shouldn’t make the perfect the enemy of the good, and that this is a decent bill that can be built upon in the future. Is he right?

Well, first it’s important to remember that the bill – so far – isn’t completely terrible. The long term target of an 80% emissions cut by 2050 is still a respectable one. The fact that there are mandates to reduce emissions in the first place – and a cap and trade system to implement  them – is an achievement in itself given the immense power of energy lobbyists. If either the targets or method of delivery are weak, then they can be improved upon in the future. After all, it’s not like this is the only chance Obama will have to combat climate change. He’s going to need something to do once he’s reformed healthcare, got the economy back on track, made peace in the middle East and fixed the financial sector, less he run out of things that need fixing and has to spend his second term shooting hoops on the White House court. And though he probably won’t sustain the enormous levels of popularity he has at the moment, there are still going to be times when he has political capital to spend on further legislation – most notably after his inevitable re-election come 2012.

Moreover, Democrats are still on target for a net gain of 2-4 Senators in the 2010 midterms, so you would hope that any future bills that arise in the next three years will have a better chance of not being held hostage by the business lapdogs of the Senate.  I suspect many groups currently demanding perfection are at the mercy of the “Big Bang” theory of legislation that says everything must be done at once, before the window of opportunity closes. Sadly, it just doesn’t look like this will be possible with climate change.

Finally and perhaps most crucially, America needs a bill – however imperfect it is – in time for December’s climate change summit in Copenhagen, where the world’s nations will come together to agree on a strategy to fight global warming. After all, the likes of China and Russia are hardly going to make their gardens green if it’s obvious that America isn’t tending it’s own backyard. And America could shut off all its carbon emissions tomorrow, but if China doesn’t do squat then we’re in for a very bad few centuries.

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All the above may well be true. But it doesn’t change the fact that there’s a very scary disconnect between the apocalyptic predictions of most reputable climate scientists and the moderate-to-weak provisions in the Waxman-Markey bill.  For example, check this quote out from Obama’s own energy chief, the Nobel Laureate scientist Stephen Chu: (emphasis mine)

Right now, the climate scientists feel that if all humans shut off carbon emissions today, it will still glide up by about 1 degree centigrade. In the business-as-usual scenarios, Nicholas Stern says there’s a 50 percent chance we may go to 5 degrees centigrade. We know what the Earth was like 5 or 6 degrees centigrade colder. That was called the Ice Ages. Imagine a world 5 degrees warmer. The desert lines would be dramatically changed. The West is projected to be in drought conditions. And certain tipping points might be triggered. We can adapt to 1 or 2 degrees. More than that, there is no adaptation strategy.

Actually, if our only chance to fully adapt to global warming comes if we shut off all emissions right now, then maybe groups like Greenpeace aren’t so much being perfectionist as they are being ridiculously over-accommodating.

This doesn’t mean, however, that America’s first stab at climate change legislation shouldn’t be embraced as a step in the right direction. But it does mean you might want to start saving up for that condo on Mars.

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