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Tuesday, June 10, 2008

cap and trade gets binned for now

Supporters of Emissions Trading in the EU always want to argue that the rest of the world is about to follow in our footsteps. So we must be doing the right thing. Yeah?

We're not so sure. There's an interesting account of the shooting down of Lieberman-Warner in the Senate in Time this week. The Sentate was largely still debating whether to "do something" and the discussion never really got to the detail stage. Even so the numbers are still a long way off a majority - really only 36-40 senators are on for it.

Wait till they actually look at the specifics of emissions trading as a particular policy to reduce emissions and those numbers will fall further.

One of the main supporting arguments for doing something (and it is fair enough) is calls to kick kick what is always described as "foreign oil".

But as McKinsey's report for the Commission points out, Emissions Trading means importing lots more foreign gas (30% in the case of the EU) because that is the swing sector in ETS. In Europe that means more dependence on Putin, and presumably for the US... Chavez?

If you want "energy security", you probably want a different policy...

---from Time---

To be fair, no one ever called Lieberman-Warner itself inevitable. Sponsored by Independent Democrat Joe Lieberman of Connecticut and Republican John Warner of Virginia, and taken to the floor by Democrat Barbara Boxer of California, the liberal chairman of the Senate Environment and Public Works Committee, the bill was never given much chance of passage. Its carbon-reduction targets were tougher than the business community wanted, but not as tough as many greens demanded. And it was complicated, even bloated — it would have raised $6.7 trillion over 40 years by auctioning global warming pollution permits, using great gobs of that money to buy off various interest groups. But it was significant just the same, because its six-month-long journey from environment and public works committee to Senate floor helped force some reluctant Senators to begin thinking seriously about the issue. Boxer calls the result "a road map [for] the next President, so he knows where are the consensus areas and where are the difficult areas."

It would have taken a truly great floor debate to begin resolving some of those difficult areas — a half dozen thorny deal-breakers (how to contain costs, what to do about China) that need to be figured out before any such bill can pass. But not much of that table setting took place last week, because the debate never made it past the partisan bickering and economic fear mongering. Lieberman-Warner was strangled in its crib, because moderate Democrats weren't ready to go this far, because Boxer and the enviros weren't willing to compromise on their core issues, and because the opponents of global warming legislation remain strong, even though their favorite old tactic, denying the science of global warming, has been all but abandoned.

Just about every Senator who spoke last week, Democrat and Republican alike, wanted to be on record saying that climate change is real and must be dealt with. But far too few were willing to debate the solutions to the crisis, because the opposition has found a new, well-fortified position. It argues that the U.S. can't adopt a cap on carbon emissions (at least not this one) because it would drive up energy prices and wreck the economy.

In fact, the Republican leadership spent last week trying to create not just a new litmus test for climate action but a new third rail for American politics: It wants any climate bill that causes the slightest increase in energy prices to be seen as a non-starter. "Any action should not raise the cost of gasoline or energy to American families," said Oklahoma Senator James Inhofe, the longtime leader of the denial-and-delay crowd, and his words were echoed by many others. That's an impossible standard to meet, and if the Republicans succeed in establishing it, Congress may never get this done.

Lieberman-Warner, like any cap-and-trade bill, would increase the cost of energy derived from fossil fuels while giving clean, alternative energies an enormous boost. In other words, it would drive up gasoline prices and coal-powered electricity rates in the short term (though by smaller amounts than the doomsayers were claiming last week) while delivering far greater energy savings over the long term — by unleashing a clean energy economy that creates jobs and helps free the U.S from dependence on foreign oil.

That's a deal worth taking: a two-cent-per gallon increase in gasoline prices each year between now and 2030, according to an EPA report, in return for deep reductions in gasoline consumption. But with gasoline at $4 a gallon and rising, this was a terrible time to ask panicky voters to think about such a deal. And the Republican leaders were only too happy to exploit the high cost of energy. A G.O.P. strategy memo made public by Democratic leader Harry Reid summarized it this way: "The goal is for a theme (example: climate bill equals higher gas prices) each day, and the focus is much more on making political points than in amending the bill... or affecting policy."

Republican leader Mitch McConnell had an amendment ready that would suspend the bill if it caused gasoline prices to rise by any amount. If that amendment ever went to a vote, it would force the bill's supporters to come out in favor of higher gas prices, and the Republican TV attack ads would produce themselves. No wonder moderate Dems wanted Reid to ditch the bill. At a meeting of Senate Democratic legislative directors, on Monday, June 2 — the day the Senate took up the bill — staffers were howling that Reid and Boxer were leading their bosses into the Valley of Death, forcing debate on a bill that didn't have the votes to pass, one that Republicans would soon be calling the "Boxer Climate Tax Bill" and "the largest tax increase in history" even though it offered nearly $1 trillion in tax cuts to help people pay for rising energy costs.

Reid brought the bill to the floor despite the exquisitely bad timing because climate change is his top domestic priority and because the issue won't be any easier to debate when a gallon of gasoline costs $5 or $6. Barack Obama was busy clinching the nomination and didn't show up for the debate (neither, for that matter, did John McCain). So, for the first couple of days of the fiasco, as the Republicans deployed parliamentary delay tactics and trotted out bogus studies that "proved" the bill would wreck the economy, the story line seemed to be this: What excuse would Reid use to get this bill off the floor?

Then McConnell overplayed his hand, forcing four beleaguered Senate clerks to read the entire 492-page climate bill into the record on Wednesday night — an eight-hour ordeal that unfolded as a wild electrical storm crashed through the Washington area. Twisters touched down here and there, rain lashed the hot streets in wicked sheets, and giant lightning bolts arced through the sky near the Capitol dome. Scientists caution that no single storm can be linked to climate change, but if ever there was heavy weather sent down by angry climate Gods, this must have been it. "It should give Senators pause," said Reid, and then he filed for a procedural vote to break the Republican filibuster. He had found his way out of the Valley of Death. "McConnell sent flowers to the clerks who had to read the bill aloud," says one Democratic policy adviser. "But Reid should have sent flowers to McConnell."

The Republicans had reason to want the debate over as well. They had managed to line up in a circular firing squad, since a number of G.O.P. senators, including Mel Martinez of Florida, Elizabeth Dole of North Carolina, and the party's standard-bearer, John McCain, support the cap-and-trade approach if not this bill in all its details. And some Republicans find themselves in tough reelection battles in states where voters take the climate crisis very seriously — John Sununu of New Hampshire, Norm Coleman of Minnesota, Gordon Smith of Oregon — and don't like being associated with delay tactics.

When Reid's procedural vote finally came, on Friday morning, 48 Senators voted to move ahead with the debate, and 36 voted against. Boxer was happy to claim that a total of 54 were in favor of moving ahead — because six absent Senators, including Obama, McCain, Hillary Clinton, and Ted Kennedy, had written letters saying they would have voted in favor had they been present. Fifty-four would have been significant — the first time a majority of Senators voted for climate action. But 48 is the number in the Congressional Record, and it only got that high because 10 moderate Democrats who would have voted against the bill cut a deal with Reid: nine of them voted for the procedural motion to help their party save face, then they published a letter explaining why they didn't support the bill.

That detail was overlooked in the cheerful post-vote statements of the green groups. But that's not surprising; it's their job to be optimistic and keep pushing and pushing and pushing. So they pointed to a hopeful sign: 10 Senators who had never before supported cap-and-trade legislation voted for Reid's attempt to move the bill forward. That was good news by any measure. But it would be a stretch to call it a sign of inevitability. This is a war, and in war, the outcome is never preordained.

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