A POLITICAL COMMENT ON ...
Proposals to Regulate Greenhouse Gas Emissions in the 110th Congress
Climate change is a stated priority for the 110th Congress. The discussion so far in both the Senate and the House of Representatives has been wide-ranging, including everything from efficiency and sequestration to alternative fuels. Even so, it remains to be seen what, if anything, will pass both houses of Congress and be signed by President Bush.
In the Senate, the Environment and Public Works Committee, chaired by Barbara Boxer (D-Calif.), has primary jurisdiction. The Energy and Natural Resources Committee, chaired by Jeff Bingaman (D-N.M.), is also involved. Though Senate leadership has not dictated a timeline, Boxer has begun an aggressive hearing schedule and says she aims to produce legislation this year for a vote by the full Senate.
In the House, the Energy and Commerce Committee, chaired by John Dingell (D-Mich.), has the lead on climate change. But many other committees are involved, including Science and Technology, Oversight and Government Reform, and Ways and Means. In addition, Speaker Nancy Pelosi (D-Calif.) recently established a Select Committee on Global Warming and Energy Independence, headed by Ed Markey (D-Mass.), to expedite action. Pelosi has requested that committees produce a climate and energy package by June 1 for floor debate around July 4, though she has made it clear that she does not expect a cap-and-trade bill within this timeframe.
Interestingly, only about half the bills regulating greenhouse gas emissions proposed in the last Congress have been reintroduced in this one. This is partly because some of those bills, though requiring carbon dioxide caps, were intended as alternatives to Clear Skies (the Bush administration’s air pollution proposal) rather than as climate legislation. But some lawmakers are also waiting to see what the committees produce.
Current proposals include: a “discussion draft” bill that has yet to be introduced by Bingaman and Arlen Specter (R-Pa.); the Electric Utility Cap and Trade Act, introduced by Dianne Feinstein (D-Calif.) and Thomas Carper (D-Del.); the Climate Stewardship and Innovation Act introduced by Joseph Lieberman (I-Conn.) and John McCain (R-Ariz.) and its House companion; the Global Warming Reduction Act, introduced by John Kerry (D-Mass.) and Olympia Snowe (R-Maine); the Global Warming Pollution Reduction Act, put forth by Boxer and Bernard Sanders (I-Vt.); and, in the House, Rep. Henry Waxman’s (D-Calif.) Safe Climate Act.
Each of these proposals calls for a market-based, rather than a tax-based, approach to limiting emissions. Market-based approaches allow direct control of emissions but not price — meaning that the government would put in place a cap-and-trade system that caps emissions levels but allows companies that exceed their caps to trade or buy emissions credits from other companies. A tax-based approach allows direct control of price but not emissions, meaning that companies can choose to keep emitting, but will have to pay a price to do so. The tax approach has the advantage of simplicity, but while it has been discussed at hearings and is favored by many economists, it is politically unpalatable: A recent National Journal poll of federal lawmakers found that only 50 percent of Democrats and 3 percent of Republicans would consider a carbon tax, whereas 83 percent and 42 percent (respectively) would consider a market-based cap-and-trade system.
The cap-and-trade system established by the Clean Air Act in 1990 to reduce acid rain by regulating sulfur dioxide emissions from power plants, and administered by the Environmental Protection Agency (EPA), is the most frequently cited model for what a greenhouse gas program would look like. Indeed, several of the bills would establish such a system by amending the Clean Air Act. However, committees have also begun studying state and regional initiatives and the European Union Emissions Trading Scheme for ideas.
All the current proposals except Bingaman’s contain specific climate goals, including keeping temperature increases to less than 2 degrees Celsius above pre-Industrial temperatures, stabilizing atmospheric carbon dioxide concentrations at 450 parts per million (about 65 parts per million above today’s levels and 170 parts per million above pre-Industrial levels), and avoiding “dangerous” human interference with the climate.
Bingaman’s proposal is also the only one that would reduce greenhouse gas intensities (emissions per unit of Gross Domestic Product), rather than capping absolute emissions. Under this proposal, future emissions would be dependent upon economic growth. All of the other bills cap absolute emissions, but vary on their specific reduction percentages and dates by which these reductions must be achieved.
The bills also differ in which economic sectors they regulate. The Feinstein-Carper bill, for example, would regulate emissions only from the electricity sector, which constitute one-third of U.S. emissions. The Lieberman-McCain bill applies to the electricity, transportation, manufacturing and commercial sectors, which constitute 85 percent of U.S. emissions. The Kerry-Snowe, Sanders-Boxer and Waxman bills, which are modeled on California’s bill and supported by major environmental groups, let EPA determine how emissions from different economic sectors are capped or regulated, as long as targets are met.
Establishing a nationwide market-based system for greenhouse gases may be one of the most difficult legislative steps for Congress to take, due largely to the potential environmental, economic and social consequences.
As attention shifts toward details of implementation, questions about these consequences are beginning to more strongly influence the debate. Such questions include whether capping emissions will unduly burden states that rely heavily on coal, if a cap could harm U.S. competitiveness, and where the United States will get its energy, if not from fossil fuels. Current legislative proposals fall along a continuum weighing emissions reductions against potential economic costs and technological uncertainties. For example, an Energy Information Administration analysis found that Bingaman’s proposal would reduce cumulative Gross Domestic Product by only 0.1 percent through 2030. But since this proposal allows U.S. emissions to grow (to 22 percent above today’s levels by 2030, which is 15 percent below projected business-as-usual levels), it has been criticized as producing little or no benefit.
On the other side of the coin, aggressive proposals like Sanders-Boxer and Waxman, which reduce future emissions to about 17 percent of today’s emissions thus requiring major changes throughout the economy, include many unknowns. The bills include assistance for industries and consumers disproportionately affected by this transition, but it is not known how precisely this will work.
All current proposals face an arduous path to becoming law. Though Waxman’s bill has more than 130 co-sponsors, such aggressive legislation may have difficulty passing in the House, much less the Senate. Bingaman’s proposal has been criticized by environmental groups and may not satisfy lawmakers who want to take substantive action. Yet any legislation that caps emissions, no matter how modestly, may well meet with a presidential veto.