Maybe not! You may have heard that the EPA now has the legal authority to regulate CO2 as a pollutant under the Clean Air Act. David Roberts at Grist wrote a great explainer on the situation: the aptly-titled “Everything you always wanted to know about EPA greenhouse gas regulations, but were afraid to ask”. So in fact, EPA could regulate CO2 without Congress passing a climate bill — it would just take some really tough rule-making on the agency’s part, which would likely be challenged in court by carbon-intensive industries. However, one potential upshot that Roberts points out is that EPA regulation could mean relatively painless integration of the various existing regional cap-and-trade schemes — something the House climate bill doesn’t account for.

What if EPA regulations don’t pan out? Well, the Second Circuit has stepped into the breach by remanding Connecticut v. AEP, a nuisance suit brought by eight states and New York City, along with NRDC, the Open Society Institute, Audubon Society of New Hampshire, and others. The plaintiffs claimed that the defendant power companies contributed CO2 emissions causing global warming, which constitutes a public nuisance causing myriad injuries and expected injuries (ranging from reduced snowpack in California’s mountains to salinization of marshes and water supplies.) Today, the Second Circuit held that the plaintiffs could bring their claim “unless and until the legislative and executive branches actually regulate that pollution, either under the existing Clean Air Act or the comprehensive new energy and climate legislation bending in Congress,” as David Doniger, policy director of NRDC, explains in his great blog post on the case and what the remand means.

Doniger’s post also points out the disheartening news that Senator Murkowski of Alaska intends to introduce an amendment to prevent EPA from regulating carbon — see how it comes back in a circle? Senator Murkowski will try to add her amendment to the Interior and EPA appropriations bill; thus, EPA’s funding would be conditioned on its not regulating CO2, although Murkowski’s amendment does allow for continued regulation of CO2 from cars. (Note that essentially, this preemptively creates the same “loophole” that I’ve blogged about here before – a “loophole” that I think is less problematic in the context of an actual cap-and-trade statute.) The Senator says she’s offering the amendment to allow Congress the appropriate “breathing space” to properly consider climate change legislation.

But others say that EPA’s authority to regulate GHGs – and now, the people’s right to bring nuisance claims based on global warming – are just what’s needed to get Congress to pass a strong climate change bill.

1. It will set firm limits on global warming pollution, which will help minimize the impacts of climate change, including storm events.
2. It calls for protecting the wetlands, coastal dunes, and other natural systems that buffer us from storms and help filter out pollutants in stormwater.
3. It offers funding for water utilities and sewage treatment plants to update their storm drains and make their infrastructure more resilient to climate change.

Another critical effect of global warming is ocean acidification. The Conservation Law Foundation does a great job explaining this phenomenon and how it will affect the American industries that depend on marine resources that depend on healthy ocean waters. Here in Maryland, agencies are struggling to sustainably manage the depleted populations of oyster and crab fisheries already severely stressed by pollution and other factors. Climate change will further stress fish and shellfish populations, constituting an economic threat for all the people whose jobs depend on these natural resources. However, a strong climate bill like ACES can help protect American fisheries, waters, and local jobs.

In fact, it seems like Pope, Van Noppen and Schaeffer’s concerns are with the mechanism of cap-and-trade and its effectiveness:

Instead of assuring that the oldest, least efficient, and most polluting plants are phased out, Waxman-Markey leaves that up to the cap-and-trade system created by the bill.

As Romm makes clear, the cap-and-trade system is designed to cause the phasing out of those plants. They don’t come out and say it, but it seems like Pope, Van Noppen and Schaeffer would prefer a command-and-control solution — which might be more effective at combating global warming, but is undoubtedly politically unfeasible in terms of passing legislation.

Romm manages to in two sentences sum up how the climate bill works and why it should be passed:

In the real world the much-maligned House climate and clean energy bill would do what clean energy and climate advocates have been demanding for decades: It would set up the framework to allow low-carbon technologies to compete against fairly — and thus steadily replace — existing coal at the lowest possible cost.

I know the Wall Street crowd can’t wait to sink their teeth into a new trillion-dollar trading market in which hedge funds and investment banks would trade and speculate on carbon credits and securities. In no time they’ll create derivatives, swaps and more in that new market. In fact, most of the investment banks have already created carbon trading departments. They are ready to go. I’m not.

Unless he proposes abolishing all markets out of fear of market speculation, Dorgan’s argument is, of course, unsupportable. Nobel economist and New York Times columnist Paul Krugman explained that the problem is inherent to markets, not carbon emissions allowances:

For example, the fact that wheat is traded means that there’s also a wheat futures market; and because wheat can be stored, futures prices affect spot prices.

So, should fear of speculation lead us to ban trading in wheat? Nobody would say that. Yes, sometimes speculators will get it wrong — but the advantages of having a wheat market vastly overshadow the possible harm that may sometimes come from speculation.

As Joe Romm makes plain, the Waxman-Markey bill already contains provisions against carbon speculation, including lodging regulatory oversight with both the Federal Energy Regulatory Commission (FERC) and the Commodities Future Trading Commission (CFTC) and explicitly criminalizing fraud and manipulation in carbon markets. Permit bidders are also required to publicly disclose information and are limited to purchasing no more than 5% of permits on the market.

Further, steps have already been taken in the Senate towards carbon market oversight. Senators Feinstein (D-CA) and Snowe (R-ME) have introduced a bill to regulate carbon markets under the CFTC: the Carbon Market Oversight Act of 2009 (S. 1399). There are more details on the CMOA at Global Climate Law Blog.

But the unsubstantiated fears of taking action don’t end there! On Thursday, the Senate Environment and Public Works Committee held hearings on the theme of “Climate Change and National Security,” where Senator Barrasso (R-WY) expressed his concern that carbon markets could become a source for “funding streams to international organized criminal elements.” (Behold his stirring oratory on YouTube.)

This is absurd and disingenuous in the same way that Senator Dorgan’s concern is absurd and disingenuous: the problem is one that is inherent to any markets – or money in general – and has nothing to do with carbon markets in particular. I am willing to bet that opposing cap-and-trade carbon markets is not going to have any substantial effect on the financial solvency of international criminal organizations. Both of these fears are valid only in that they are plausible – they are tiny specks in the realm of possibility — but more importantly, they are problems that are totally addressable by appropriate means: regulation and policing. That’s how society and government addresses these problems of manipulation and corruption in every other market context, and there’s no reason to believe it would be different when it comes to carbon emissions allowances. It strikes me as disingenuous and misleading to suggest that these are evils that are peculiar to a carbon cap-and-trade system.

Senator Barrasso was specifically referring to a Reuters report on statements by an Interpol environmental crimes specialist. However, the Reuters article and the Interpol official’s concern was about REDD – a UN-backed international scheme that monetizes the prevention of deforestation. What role does it play in a U.S. climate change bill? I’m not sure, and Senator Barrasso didn’t really say, except for allusions to that fearsome specter – the carbon market! But, again, whatever sort of carbon market that might spring up if/after this legislation passes is not going to be some kind of shadowy exchange of sketchy characters. It will be a fully regulated market, and we have already seen plenty of proposals about how to regulate it to ensure transparency and avoid inappropriate market manipulation.

The Times editorial pointed out two problems: (1) the bill’s grandfathering of existing and already-permitted coal plants, and (2) offsets.  I’ll leave the complex issue of offsets for some hypothetical day in the future and for now, just look at Waxman-Markey’s treatment of existing coal plants.

The Times notes that Waxman-Markey

sets tough performance standards on new power plants permitted after 2009, requiring emissions reductions of 50 percent or more. …

The bill does not, however, impose any performance standards on existing power plants. And it explicitly removes these plants from the reach of the Clean Air Act. This is a mistake. The overall cap on industrial emissions will not be fully effective for a long time, and, meanwhile, the government should be able to impose lower-emissions requirements on the older, dirtiest plants.

You may have heard in the news or from politicians similar statements about how the climate bill removes the EPA’s authority to regulate coal plants, or that it strips the agency of its power under the Clean Air Act to deal with carbon dioxide. Of course, a little context here is useful. After all, the EPA was powerless to regulate CO2 until this past April, when it issued its finding that greenhouse gases endanger public or welfare. Only after making this finding was EPA allowed to regulate greenhouse gases as pollutants under the Clean Air Act – a law that was enacted long before the science of climate change was well-understood. Thus, it’s not surprising that in many ways, the Clean Air Act is not really well-suited for regulating greenhouse gases. Over on Climate Progress, Joe Romm has done a great job explaining why the EPA cannot single-handedly stop dangerous global warming.

However, I do think it’s disingenuous of the Times to assert that the bill “explicitly removes these plants from the reach of the Clean Air Act.” In fact, most of the bill entails amendments to the Act, thus bulking it up into perhaps one of the broadest pieces of environmental legislation in our country’s history. It certainly does not remove old coal plants from the current reach of the Act. It does, however, limit the Act such that carbon dioxide and other greenhouse gases cannot be regulated under the Clean Air Act in the same manner as other air pollutants like SO2 and NOx.

Bruce Nilles, director of the Sierra Club’s Beyond Coal Campaign, describes the performance standard problem in more detail:

…the way the bill works right now, instead of encouraging investment in new industries and new plants that are subject to stringent standards, it leaves the door open to expand the old plants with no added safeguards.

By “grandfathering” existing coal-fired capacity, which accounts for 44 percent of U.S. electricity generation, the bill repeats the mistakes of the 1977 Clean Air Act — mistakes that we have been paying for in the form deadly air pollution ever since.

Setting emissions-reducing performance standards for coal-fired power plants is indisputedly the right policy goal and a valuable – if not critical – part of the climate bill. But this is a cap and trade bill, dealing with permits to pollute – so where do the performance standards come in?

As far as I can tell, the only emissions performance standards applying to coal power plants are found under the subtitle devoted to Carbon Capture and Sequestration. For example, Section 116, Performance Standards for Coal-Fueled Power Plants amends the Clean Air Act by requiring new and already-permitted power plants to achieve CO2 emissions limits of 50-65% (depending on the year of initial permitting) “reduction in emissions of the carbon dioxide produced by the unit.” This section specifies how coal power plants will receive emissions allowances for effectively capturing/sequestrating carbon to reduce emissions. The section also requires the EPA to reduce emissions allowances for plants initially permitted beginning in January 1, 2009.

What’s important to note here is that while these provisions indeed exempt older coal plants, it only applies to the CCS provisions of the bill – as far as I can tell. I haven’t yet had time to carefully read through Title VII of the bill yet – the title that deals with the greenhouse gas inventory, offsets, allowances, and the other messy details of the cap and trade system – but I didn’t see anything in there that created a loophole for regulating old coal-fired power plants. As far as I can tell, Title VII treats all coal-powered plants alike in terms of coverage under the cap and trade system: the Definitions provision in Section 312 defines a “covered entity” as “any electricity source.”

So even if older coal plants are not subject to the same CCS requirements as newer plants, they will still be subject to market mechanisms, including the system-wide cap which decreases allowances over time. Considering that CCS technology is still highly speculative, it doesn’t seem like this “free pass” to older plants is that horrible of a loophole. In fact, if the cap and trade system works as it is meant to, and CCS does in fact eventually become commercially viable, it would seem that operators of older coal plants could be incentivized to implement CCS technology or other emissions-reducing technology.

What do you think? Is my interpretation totally wrong?

A big thanks goes to 1Sky’s Rhiya Trivedi (rhiya {at} 1sky.org), with guidance from Jason Kowalski (jason {at} 1sky.org) for putting this together!!

1Sky is relieved by the House of Representatives’ passing of the American Clean Energy and Security Act in a close 219-212 vote last Friday. 1Sky activists sent more than 18,000 faxes to Members of Congress in 390 districts to convince them to strengthen and support the clean energy bill. Additionally, 1Sky enthusiasts logged 1,600 phone calls to their members of Congress to make sure they heard from constituents who care about a clean energy future. Over 900 1Sky members in 49 states and the District of Columbia signed up to visit their congressional district offices on June 19 to urge their elected representative to strengthen and support the energy bill. 570 climate activists sent letters-to-the-editor urging support of bold climate change legislation.

In the days preceding the vote, key Democratic representatives and members of President Obama’s Cabinet worked hard off the floor to whip up last minute votes, while strong grassroots pressure helped log thousands of calls and faxes to Congress from across the country, so many that the congressional switchboard was shut down. While Chairman Waxman, Representative Markey, and all who worked to get the votes and pass the bill deserve much gratitude for this historic victory, a great deal of work remains to be done in the Senate to pass the strongest climate legislation possible, and grassroots voices will have to be louder than ever in the coming months to demand it.

Read more for the great analysis!

Thanks to 1Sky’s Rhiya Trivedi (rhiya@1sky.org), with guidance from Jason Kowalski (jason@1sky.org) for this report:

Lead Up to the Vote

Deal struck with Agriculture Committee

• After days of backdoor negotiations between House Speaker Pelosi (D-Cali.), Agriculture Chairman Peterson (D-Minn.) and Energy and Commerce Chairman Waxman (D-Cali.), a compromise was finally reached:
  • Authority over the approval and issuance of agricultural offsets was given to the Department of Agriculture
  • EPA has been banned from regulating “indirect land use emissions” from the domestic production of biofuels
  • The “renewable biomass” definitions was made significantly broader, with stripped down language and fewer restrictions on qualifying sources
• The compromise moved several key “Ag” Committee members and representatives from farm states to support the bill and ultimately, help bring about a victory on the floor.
• Environmentalists have expressed concerns over the agreement however, citing the USDA’s history of approving offsets for projects that would have normally occurred and the potential for unsustainable biomass practices to continue under the new bill.
• Grist’s take on the deal: http://www.grist.org/article/2009-06-25-peterson-climate-bill-changes/

Amendments

• More than 220 amendments were submitted to the Rules Committee, which were filtered into a Manager’s Amendment and released early Friday morning.
• The Manager’s Amendment included significant quantities of new funding to increase renewable energy deployment and ease worker and industry transition, in addition to strengthening the presence of natural resource conservation, minorities and marginalized groups in the bill.
• Weakened components included pieces already decided upon in the Agriculture Committee compromise: provisions to solidify free allowances for merchant coal, and adding new language that would spur inquiry into “thorium based fuel reactors” (a form of nuclear energy generation)
• 1Sky Draft Analysis of the Manager’s Amendment: http://www.1sky.org/blog/2009/06/draft-summary-waxman-markey-managers-ammendment
• Grist’s breakdown of included amendments: http://www.grist.org/article/2009-06-26-waxman-final-amendments/

Getting the Votes

• Off the floor, phone calls were being made, and private meetings held to round up key swing votes by:
  • Speaker Pelosi’s (D-Cali.) team of Democratic whips including Democratic Leadership like Rep Van Hollen (D-Md.), and Energy and Commerce members like Reps Rush (D-Ill.), Inslee (D-Wash.), Boucher (D-Va.), Waxman (D-Calif.) and Markey (D-Mass.)
  • Energy Secretary Stephen Chu, Assistant to the President for Energy and Climate Change Carol Browner, Chief of Staff Rahm Emmanuel, and Secretary of the Interior Ken Salazar
  • President Obama and Former Vice President Al Gore: http://www.grist.org/article/2009-06-25-pelosi-climate-bill-votes/
  • Responding to outreach from grassroots groups, constituents bombarded their congressional offices with calls and faxes, demanding that the strongest bill possible be passed:
• Green For All on grassroots pressure strengthening equity in the Manager’s amendment: http://www.greenforall.org/blog/1-000-calls-in-48-hours-paid-off-equity-in-aces
• 1Sky’s Gillian Caldwell recounts growth in the grassroots movement around ACES: http://www.1sky.org/blog/2009/06/breaking-house-passes-clean-energy-and-climate-bill
• In an unprecedented statement, the League of Conservation Voters vowed to withhold their valuable endorsements from any representative who voted in opposition to ACES: http://www.politico.com/blogs/glennthrush/0609/LCV_No_endorsement_for_climate_bill_foes_.html

Floor Debate and Vote

Debate

• For six hours on Friday afternoon, representatives debated not only the various costs and benefits of the bill, but the validity of climate change and the need for American leadership on climate. Highlights:
• Progressive Media USA’s one minute video summary: http://www.grist.org/article/2009-06-29-house-climate-debate-minute/
• House Majority Leader Hoyer’s (D-Md.) address: http://www.grist.org/article/2009-06-27-hoyer-waxman-markey-speech/
• Rep. Broun (R-Ga.) receives a standing ovation for calling climate change a “hoax”: http://climateprogress.org/2009/06/26/rep-broun-receives-applause-on-the-house-floor-for-calling-global-warming-a-%E2%80%98hoax%E2%80%99/
• Minority Leader Boehner (R-Oh.) filibusters the vote for more than an hour by reading portions of the Manager’s Amendment: http://www.youtube.com/watch?v=Tc6zy41_PJo
• Rep. Bachmann (R-Minn.) called the difference between the ACES bill and the GOP energy bill a choice between “liberty and tyranny”
  • Vote: – Final roll call: http://clerk.house.gov/evs/2009/roll477.xml – 219 votes for, 211 against:
  • 44 Democrats voted against the bill
  • 8 Republicans voted yes (8 more than the American Recovery and Reinvestment Act received) • New York Times map: http://politics.nytimes.com/congress/votes/111/house/1/477
  • National Journal map: http://www.nationaljournal.com/njonline/no_20090627_4694.php – What passage means:
  • An international agreement (Former Vice President Al Gore): http://blog.algore.com/2009/06/a_historic_opportunity.html
  • The bigger picture (Joe Romm): http://climateprogress.org/2009/06/26/house-approves-landmark-bipartisan-clean-energy-and-climate-bill-final-vote-waxman-markey/

ACES in the Senate

Friday’s House passage could not have been achieved without GOP votes. The significant number of Democrats voting against ACES only serves to highlight the challenges the bill may face in the Senate, and the need for continued bipartisan support.

• White House Senior Advisor David Axelrod says Senate will pass energy bill, despite not having 60 votes at the present: http://www.politico.com/news/stories/0609/24292.html
• According to E&E news, there are currently 45 “yes” or “probably yes” votes (including Republican Sens. Snowe and Collins of Maine), with 23 fence sitters. More bipartisan support is likely to come with greater compromise outside of the cap-and-trade portion of the bill. GOP support may be found in Sens. Michael Crapo (R-Ida.), Brownback (R-Kan.) and Voinovich (R-Oh.) Subscription Req’d: http://eenews.net/Greenwire/2009/06/29/2/
• Committees with jurisdiction over the bill (Environment and Public Works, Agriculture, Commerce, Energy and Natural Resources, Finance and Foreign Relations) have been given a Sept. 18 deadline by Majority Leader Harry Reid (D-Nev.) to produce their pieces of the bill
  • Environment and Public Works Chairwoman Barbara Boxer (D-Cali.) has said that she now aims to have her committee mark up climate legislation by the end of July (Greenwire)
  • Energy and Natural Resources Committee – The Committee passed a bill two weeks ago featuring provisions that would impose a 15% by 2020 RES (with up to 4% coming from efficiency), establish a wide range of efficiency standards, and boost green jobs training. Also included are liability protections for parties investing in carbon capture and sequestration projects, a significantly smaller offshore drilling buffer in the eastern Gulf of Mexico, protection for oil from the Canadian tar sands, and a nuclear energy title that would support reactors as viable, emissions-reducing technology.
• It is currently unclear as to what the calendar for the “American Clean Energy and Leadership Act of 2009″ is in the weeks before a floor debate
• Most climate advocates, including 1Sky, are refusing to support the bill in its current form, and will seek floor improvements to increase renewable energy deployment and eliminate safeguards for fossil fuels.

See our letter to the Committee here: http://www.1sky.org/blog/2009/06/senate-committee-passes-disappointing-energy-bill-heres-how-to-make-it-stronger

Important New Reports

• New CBO Analysis on Household Costs from ACES, quotes $175 in annual costs for the average household:http://www.cbo.gov/doc.cfm?index=10327
• EPA’s ACES analysis, quotes $111 in annual costs for the average household: http://www.epa.gov/climatechange/economics/economicanalyses.html

The bill got the votes it needed to pass today, but only by a narrow margin. This is a huge step forward for climate legislation in the United States, but there is more work to be done to help it pass the Senate.

Tally sheet of how each representative voted

Ayes: 219
Nays: 212

Republicans who voted aye: 8
Democrats who voted nay: 44

Here are the fence-sitters:

To call your representative and ask them to support the bill, check out this call tool from RePower America.

[Cross Posted from The Breakthrough Institute]

The landmark Waxman-Markey 2009 American Clean Energy and Security Act was introduced in the House this afternoon (May 15, download PDF here), and the Breakthrough Institute has performed a preliminary analysis of how it would invest over $1 trillion in cap and trade revenue between 2012-2025. Our key findings for this period include (all numbers are approximate — download spreadsheet here):

• Polluting industries: 57.3% of allowances would be freely distributed to polluting industries, including 36.7% for the electricity sector, 12.3% for energy-intensive industries, 6.5% for local natural gas distribution companies, and 1.8% for oil refiners
• Direct consumer protection: 16.5% of allowances would be used for direct consumer protection , including 15% for low and moderate-income families and 1.5% to benefit users of home heating oil and propane
• Energy efficiency and clean energy technology: 12.2% of allowances would be used to fund energy efficiency and clean energy technology development and deployment
• Adaptation and technology transfer: 4.7% of allowances would be used for domestic and global climate adaptation and technology transfer
• Workforce development: 0.6% of allowances would be used to fund worker assistance and job training
• Deficit reduction and other: 8.6% of allowances would be used to fund deficit reduction and other public purposes

How much money would these allocations translate into? That depends on the average price for each pollution allowance. The EPA’s initial price estimate was $13-22 per allowance between 2015 and 2020, and has since revised that downward by at least 10% (to $12-20 per allowance) as the bill was weakened and additional offsets were permitted. We will assume here an average price of $15 per allowance. In that case, the allocation would look like this (click images to magnify):

Investment in clean energy technology development and deployment is broken out here (Note: the amount for clean energy technology within the “Renewable Energy and Efficiency” program is not specified):

Our analysis finds that Waxman-Markey would spend about $9 billion annually on a range of things that could generously be classified as technology innovation. By contrast, the legislation would give $32 billion to utilities, $9 billion to heavy industries, and $11 billion to low-income consumers annually. This $9 billion is far less than what Obama promised ($15 billion) and far less than the $30 billion that three dozen energy scientists and experts, including several Nobel laureates, called for in a sign-on letter during the fall of 2007. The large allowance giveaway to polluters also stands in contrast to Obama’s previous calls for a 100% auction, which was included in his final budget proposal.

Of course, these funding levels assume a price of $15 per allowance. Some analysts, including Joseph Romm of Climate Progress, expect the bill to maintain a low price of $5-10 per allowance for the first several years. If the price was $10 from 2012-2025, the average annual investment in all areas generously classified as energy innovation would be $6 billion. This table compares clean energy investments for $10 per ton vs. $15 per ton:

To sum it up, this chart represents the first table above, including all allocation percentages and cumulative funding levels:

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See Breakthrough Institute’s additional analysis of Waxman-Markey ACES climate bill (newest at top, also collected here):

Climate Bill Analysis, Part XI: New UCS Analysis Finds Waxman-Markey RES Won’t Increase Clean Energy Deployment

Climate Bill Analysis, Part X: Smart Provisions Could Spur Clean Technology – If They Are Funded

Climate Bill Analysis, Part IX: Southern Alliance for Clean Energy Confirms Breakthrough’s Analysis of Renewable Electricity Standard

Climate Bill Analysis, Part VIII: Waxman-Markey’s Non-Binding Emissions “Cap”

Climate Bill Analysis, Part VII: Renewable Electricity Standard Severely Weakened; May Have Little to No Impact

Climate Bill Analysis, Part VI: Strategic Reserve May Allow “Cap” to Rise by 10 Percent, Introduce Billions More Offsets

Climate Bill Analysis, Part V: Foreign Offsets Receive 2.5 Times More Money than U.S. Clean Energy

Climate Bill Analysis, Part IV: Emissions “Cap” May Let U.S. Emissions Continue to Rise Through 2030

Climate Bill Analysis, Part III: Waxman-Markey eliminates key offset provision, increasing domestic offset use, lowering allowance prices

Climate Bill Analysis, Part II: Clean Energy R&D Investment May Be 30 Times Smaller than President Obama’s Budget

Climate Bill Analysis, Part I: Waxman-Markey Gives Nearly 5 Times More to Polluters than Clean Energy