Finding the Path Forward on Climate
Legislation
Sen.
Jeff Bingaman (D-NM)
July
9, 2008
A little over a
month ago, on June 6, the Senate failed to invoke cloture on the
Lieberman-Warner Climate Security Act. That vote ended any realistic
prospect we had of dealing with the problems of climate change in any
comprehensive way in this Congress.
From one
perspective, the relatively short debate that we had in the Senate on the
measure was a disappointment. No substantive amendments were considered
or had action taken on them. Despite the tremendous amount of effort put
into developing the bill by the sponsors -- Senators Lieberman, Warner and
Boxer – much of the debate was on the generalities of dealing with
climate change and not on the specific merits of any particular part of their proposal.
Looked at another
way, though, last month’s debate demonstrated an important transition
that is underway in Congress. Congress has moved beyond a debate on the
science of global climate change. We are now starting a much more difficult
debate – one on how best to construct a mandatory regulatory regime to
mitigate global climate change.
No one expected
that last month’s legislative process would produce a law that would be
enacted this year. For one thing, the President issued a statement
declaring that he would veto such a law. More importantly, many of us are
still trying to master the complexities of this issue, in terms of its multiple
effects on the global ecosystem and the global economy, as well as its multiple
effects on both the environment and the economy here in the United States.
One thing is clear
at this point. Any proposal to seriously address the challenges of
responding to climate change will require sustained action -- and a sustained
commitment to keep taking increasingly more stringent actions -- over the
course of many years.
To approach this
issue responsibly, it is important for us to understand two things about the
scale of the global challenge of climate change. First, we need to
understand the scale of the problem. Second, we need to understand the
scale of the system we have -- for producing and using energy -- to change in
order to deal with the problem.
We have to keep our
eye on both these issues of scale. On the one hand, if we fail to recognize
how enormous and urgent the problem of climate change is, we will fail in our
responsibility to act sensibly and soon. On the other hand, if we fail to
recognize how enormous and difficult a task it is to change our energy system,
we may embark on a course of action without making clear from the start the
potential sacrifices involved.
Four Strategies to
Reduce Emissions
Four possible
strategies have emerged to try to deal with the problem.
The first strategy that
has been advanced is one that has been closely associated with the current
Administration. It is to rely primarily on funding new energy technology
research and development. This has been a popular strategy because
everyone likes to invest in technology, and we know that we need a new suite of
advanced energy technologies to reduce the costs of meeting our climate change
challenges. However, by itself, a technology development strategy cannot
work. New technology will always be more expensive than the conventional
way of doing things. So, unless we start assessing a price associated
with greenhouse gas emissions from conventional industrial and electricity
plants, we won’t change the incentives that result in the current
dominant position for high-carbon energy technologies.
The second strategy
that has been advocated is to impose a carbon tax. This is the path the province of British Columbia has recently
chosen. While this would clearly associate a price with greenhouse gas
emissions, we do not know, ahead of time, what price would result in the most
effective reductions of such emissions. Too low a price, and you are just
increasing energy costs without changing the balance of energy technologies
that are being implemented. Too high a price, and you are charging
consumers more than what is needed in order to see the desired change. I
also wonder whether some of my colleagues in the Senate who have criticized
cap-and-trade proposals, arguing that we should be imposing a carbon tax, have
not also signed pledges to vote against imposing any new taxes. I
remember one conversation with a Member of Congress early in my career –
he told me that he was not opposed to seeing new taxes imposed, he was just
opposed to voting for them.
A third strategy that
has been contemplated for dealing with the climate crisis has been to directly
regulate greenhouse gas emitters through command-and-control regulations.
But if you think of the size and complexity of the energy system we are trying
to change, direct regulation on a plant-by-plant basis is very
impractical. It will also likely be more expensive to consumers, because
it is economically inefficient to squeeze reductions from some sources when
those same reductions can be found elsewhere far cheaper.
Therefore, the
fourth – and I believe most reasonable – strategy for us to explore
is to implement a cap-and-trade program. The advantage of cap and trade
is that it places a cap on total emissions, but incorporates flexibility
mechanisms that allow regulated entities to seek out the cheapest possible
reductions in the economy.
I believe that most
Members of Congress are persuaded that this is the preferred strategy to
pursue. Both of the Presidential candidates in the upcoming election
agree as well. But not all cap-and-trade designs will prove workable for
the task that is at hand.
10 Principles for
Climate Legislation
At this point, I
would like to lay out ten principles or thoughts which I believe should be
considered when we return to the task of writing legislation for consideration
in the future.
First, the
legislation should be focused on the effort to reduce greenhouse gas
emissions. That is the paramount goal. There is a temptation to use
climate legislation to accomplish a number of different priorities, many of
which are noble and worthwhile, but which have little to do with the ultimate
goal of reducing emissions. Given the difficulty and complexity
associated with just transforming the energy sector, if we try to make
legislation of this type serve a variety of other worthy purposes, we will wind
up with a system that is too complex to ever get off the ground.
That leads directly
to my second point. We need to avoid making climate change legislation
excessively complicated. We should try to pass legislation with a minimum
of carve outs for particular states or regions or for particular
industries. If we are to have long-term support and buy-in from the
public, the program will need to be sufficiently transparent and
straightforward that it can be generally understood by those who pay attention
to the issue.
Third, we need to
be realistic about how well we can plan for the distant future. Global
climate change is a long-term problem that will need decades of sustained
commitment. Having said that, it is unrealistic to imagine that we can
legislate today for the next thirty to forty years and get it right. The
bill recently before the Senate contained various standing 42-year permanent
appropriations. The reality is that we don’t really know what our
climate-related priorities will be that far into the future. New
information on the climate challenge will become available and new technologies
for responding to the challenges of climate change will either be developed or
will be found not to be practical. We need to force a fresh look at the
whole program at least once a decade, and that probably means crafting
legislation at this juncture that will need to be reauthorized in order to
force that fresh look.
Fourth, we need to
make use of our existing departments and agencies to administer the programs
and Congress needs to be involved in appropriating the funds through existing
committee structures. There is always an attraction to creating new
institutions and boards and trust funds to bypass existing structures. An
institution that exists only in concept may look better than the flawed
institutions that exist in real life. But there is a significant time and
opportunity cost associated with starting a new institution from scratch.
Since addressing climate change is an urgent matter, we probably don’t
have the luxury of inventing significant new chunks of the federal government
before we undertake a serious effort.
Fifth, we need to
set ambitious but achievable targets for emission reductions. Targets are
important to give certainty and guidelines to those who need to plan and they
are important to set out what is necessary to avoid dangerous interference with
the climate system. But it will not do us any good to legislate targets
that are unattainable or technologically unfeasible. Public support for
the program will erode over time if the only thing we accomplish is a failure
to achieve overly aggressive targets.
For a reality check
on what is achievable, a good place to start is the Energy Technology
Perspectives 2008 report issued last month by the International Energy
Agency. That report sets out the actions required to achieve two main
scenarios:
§
First, are the
actions required to insure that global GHG’s emitted in 2050 are no
greater than those emitted today.
§
The second scenario
details actions required to reduce total GHG emission in 2050 to 50% of
today’s level.
As the report makes
clear, the second of these scenarios can only be achieved with an enormous
change in the way the economies of the world function.
Sixth, we need to
provide assurances that the costs of a cap-and-trade system will not go out of
control, either through excessive prices for emission allowances or excessive
volatility. We need to be clear to the American people that a new
regulatory program will increase our energy prices and that those increases are
necessary as investments to reduce climate change. Costs that go out of
control, however, will merely shake public confidence in the legislation and
endanger the stability of the policy. I was concerned that the efforts to
contain costs in the bill that came to the floor were inadequate. Its
cost containment mechanism was a provision to have another auction of
allowances, with a floor price that was more than double the floor price of a
regular auction. In my view, any effective cost control provision would
have to establish a ceiling price on allowances, rather than a floor price.
Seventh, we need an
upfront commitment to technology even before cap and trade legislation could
take effect. Especially what is needed is to figure out if carbon capture
and storage will work at the scales we will need. We need to invest in
this technology agenda immediately, even before the implementation of a
cap-and-trade system, so we can figure out right away if our caps are based on
technically viable options and whether coal can continue to play the major role
it historically has in energy generation. If carbon capture and storage
is found not to be viable, that will severely alter the energy policy pathways
that we will need to pursue.
Eighth, we need to
figure out how any new climate change law will interact with the Clean Air
Act. Recent Supreme Court decisions have mandated that EPA regulate at
least some carbon dioxide emissions under the Clean Air Act. Either we
make clear at the outset that a new climate change law supersedes whatever
might be in the Clean Air Act, or we work through in detail what responsibilities
are covered under each statute, so we don’t have confusion, wasted
effort, and a multiplicity of court cases.
Ninth, we need to
ensure that we start the program up in a workable manner, including the initial
deadlines and timelines that we set in law. Agencies and departments will
have to produce several sets of new rules, and those rules will require
adequate study and public input. The federal government will also have to
administer activities like auctions on a scale that it has never carried out
before. We need to make sure that we set deadlines for this rulemaking
and these new activities and responsibilities that are achievable in the real
world of federal agency operations.
Tenth, and finally,
there needs to be a single national cap-and-trade program for greenhouse
gases. The energy infrastructure of the United States crosses State
boundaries, and energy markets are regional and national in scope. We
cannot effectively regulate something as central to the energy system as carbon
dioxide emissions on a state by state basis. We should not overlay
cap-and-trade programs over cap-and-trade programs. States have a
legitimate role in promoting energy efficiency and clean energy technology
separate from and in addition to a cap-and-trade system, but we should not have
multiple overlapping cap and trade systems in place. I say this with the
recognition that my State of New
Mexico would like to start regulating greenhouse
gases directly, and perhaps even join with other Western States in a regional
cap and trade partnership. In the absence of a Federal program, I
can’t fault anyone for wanting to do just that. But when we are
able to enact a Federal cap-and-trade system, in my view it should preempt the
field.
That is one more reason
why it is imperative that the federal government act sooner rather than later.
The G-8 meeting in Japan
ended yesterday with a statement that the G-8 countries are committed to
reducing GHG emissions to 50% of current levels by the year 2050. Issuing
that statement was the easy part.
The challenge of
crafting legislative proposals that will actually meet that goal is
enormous. Congress will need to work with the new president to help meet
this challenge. I pledge my best efforts to do just that.
