(U.S.) Senate Climate Bill Dies-Does the Environment Win?

“For over a dozen years, since before the 1997 Kyoto climate summit, the Environmental Defense Fund, the Natural Resources Defense Council, the Pew Charitable Trust and other Big Green groups have been unshakably committed to cap-and-trade. Without bothering to consult grassroots activists or more maverick groups like Greenpeace or Friends of the Earth, Big Green anointed cap-and-trade as its climate mantra and forged a high-minded Beltway alliance with corporate giants like Exelon and GM.”

Charles Komanoff

July 28, 2010

Despite a Democratic supermajority in Congress, and despite President Obama’s campaign promise to tackle global warming, there will be no climate bill this year. The demise last week of the Kerry-Lieberman Senate bill makes that official. But that may actually be a good thing: it clears the way for genuine solutions to global warming­­—solutions that ordinary Americans can understand and support. And remember, most Americans do want their government to tackle climate change. A recent Stanford University poll found that 74 percent of the public believes climate change is human-caused, poses real threats and requires government action.

The bill that was withdrawn last week, like the Waxman-Markey bill that squeaked through the House last year and similar measures dating back to a 2003 Senate bill sponsored by John McCain, would have attempted to curb carbon emissions by creating a cap-and-trade market, a corporate-friendly approach to reducing greenhouse gas emissions. Under this system, a “capped” number of carbon emission permits are offered to coal, oil and gas extractors and importers, who can then sell (trade) the permits among themselves. As the volume of emissions permitted by the cap declined over time, the price of the carbon permits would rise, causing fossil-fuel energy to cost more and creating incentives to use less.

Cap-and-trade was popular inside the Beltway—some business interests and many mainstream environmental groups insisted on it—but it is a total loser in the larger battle to excite and mobilize public opinion. Attacks by climate-change denialists took a toll, but the arcane nature of cap-and-trade made it hard to love, and its links to the financial industry, originally viewed as an asset, turned toxic after the housing bubble burst.

There is a better way. Virtually everyone who truly desires emissions reductions agrees that putting a (rising) price on carbon is essential. But there’s another, better way to do that, one that also would deliver an economic bonus to a majority of Americans: the government should institute a fee-and-dividend system.

Like cap-and-trade, fee-and-dividend would limit emissions by building a fee for carbon emissions into the price of gasoline, coal-fired electricity and other carbon-based fuels, thereby giving consumers and businesses powerful incentives to use less. As in cap-and-trade, the fee would be imposed at the wellhead or import dock, eventually to be passed down the supply chain to consumers. But there are two critical differences.

First, fee-and-dividend would turn the proceeds of these higher energy costs over to the American public to spend as they wish, rather than to corporate emitters to fatten their bottom lines or to Washington lawmakers to lavish on pet projects. Under fee-and-dividend, each and every American would receive a monthly check, which for most people would offset the higher energy prices caused by the fee.

The other difference is a bit technical but is just as key. Under a cap, the price on carbon would be murky, since it would be set in a vast trading market and determined by fluctuating factors like the economic growth rate, consumer and producer price elasticities and hedge bets by speculators. With the carbon fee, the carbon price would be set up front and its rising trajectory known in advance, allowing consumers and entrepreneurs to bank on the future value of saving energy. The price incentive to move away from carbon-emitting fossil fuels would penetrate every crevice of the economy, ensuring that few if any opportunities to reduce climate-changing emissions were left on the table.

Fee-and-dividend is superior to cap-and-trade on grounds of both political appeal and economic efficiency. Here’s how James Hansen, the nation’s pre-eminent climate scientist, contrasted the two approaches in an op-ed in the New York Times last December:

Consider the perverse effect cap and trade has on altruistic actions. Say you decide to buy a small, high-efficiency car. That reduces your emissions, but not your country’s. Instead it allows somebody else to buy a bigger SUV—because the total emissions are set by the cap. In a fee-and-dividend system, every action to reduce emissions—and to keep reducing emissions—would be rewarded. Indeed, knowing that you were saving money by buying a small car might inspire your neighbor to follow suit. Popular demand for efficient vehicles could drive gas-guzzlers off the market. Such snowballing effects could speed us toward a pollution-free world.

Hansen’s example applies equally to renewable energy. Under a cap system, a wind farm, no less than his efficient auto, will lower the price for carbon emission permits, thus undermining the price incentive for other actions that would reduce emissions. In contrast, a carbon fee is immune to this effect, since individual actions have no effect on the legislated carbon price.

But can the environmental movement unite around cap-and-dividend?

For over a dozen years, since before the 1997 Kyoto climate summit, the Environmental Defense Fund, the Natural Resources Defense Council, the Pew Charitable Trust and other Big Green groups have been unshakably committed to cap-and-trade. Without bothering to consult grassroots activists or more maverick groups like Greenpeace or Friends of the Earth, Big Green anointed cap-and-trade as its climate mantra and forged a high-minded Beltway alliance with corporate giants like Exelon and GM.

The idea was to “put a price on carbon,” but in secret. Decision-makers at utilities and auto companies would use economic models to intuit the extent to which mandated declines in the amount of carbon emissions permitted by the cap over time would cause the prices of carbon permits (and, hence, fossil fuels) to rise, and would retool their power plants and products accordingly. But ordinary Americans, ponying up more for electricity and heat and gasoline, wouldn’t know that the declining cap was driving the higher prices.

That was the plan. Alas, though cap-and-trade had functioned well in a kind of pilot program involving electric utilities and acid rain, it wasn’t up to the job of transitioning the American economy from fossil fuels to energy efficiency and renewable sources. To manage that Herculean task in decades rather than centuries, the rising trajectory of fossil fuel prices must be not just steep but plainly visible to all—from the aircraft manufacturer weighing the use of costly exotic materials to raise fuel efficiency, to local officials wrestling with whether a new school should be built in town, near the bus stop and bike lane, or on the car-dependent outskirts. Millions of similar carbon-critical decisions, from the individual level of riding transit and switching light bulbs to the societal level of ensuring that those options are available, attractive and valorized, must be taken with full knowledge of those prices. A stealth price on carbon, one that’s lost in the noise of fluctuating prices and general inflation, won’t do the job.

The fate of the climate—and perhaps the viability of EDF, NRDC et al. as well—may now turn on the environmental lobby’s willingness to embrace the alternative that has been there all along: a revenue-neutral, steadily rising carbon fee, the proceeds from which would be redistributed to Americans via equal monthly dividends—or, in a variant favored by some economists, in which the regressive and anti-jobs payroll tax is phased out as carbon fee revenues ramp up.

A climate bill based on a revenue-neutral and rising carbon fee would not require a cap-and-trade market in carbon derivatives; would be transparent and hence less vulnerable to the K Street carve-outs that turned cap-and-trade bills into laughing stocks; could be imitated internationally (since carbon fees are fungible while carbon caps are not); and wouldn’t require a PhD in complexity to grasp. Indeed, one such bill, America’s Energy Security Trust Fund Act of 2009, sponsored by Connecticut Democrat John Larson, is all of twenty-one pages, versus upwards of 1,500 for the Waxman-Markey cap-and-trade bill that squeaked through the House last year and the similar Kerry-Lieberman bill that just died in the Senate. Yet the emission reductions under the Larson bill would be two to three times as great as those from Waxman-Markey.

A climate bill like the Larson bill would also honor a fundamental tenet of environmentalism: that the costs of pollution must be internalized into the price of the activities that cause it.

We can drive emissions reductions throughout the economy while protecting Americans’ pocketbooks if we reframe the climate debate. Cap-and-trade is dead, and not a moment too soon. With its simplicity, its transparency and its economic rewards for everyone but die-hard polluters, fee-and-dividend could be a political winner. If environmentalists and others who care about averting climate catastrophe can unite around this approach, the public is ready to be convinced and, one hopes, mobilized. And, as two centuries of struggle for racial, labor and gender justice should have taught us, a mobilized public is essential to winning the climate battle.

http://www.thenation.com/senate-climate-bill-dies-does-environment-win

Big Green’s pursuit of carbon cap-and-trade in the U.S. branded the climate movement as servants of Wall Street Elites

Published on Tuesday, July 27, 2010 by Carbon Tax Center

Can Viable Carbon Tax Arise from the Senate’s Ashes?

by Charles Komanoff

And now, ve may begin?

Readers of a certain age, and a certain literary bent, will recognize the words of Alexander Portnoy’s psychiatrist, spoken at the close of Philip Roth’s transgressive 1969 novel, Portnoy’s Complaint.

After lo these many years, they popped into my head last week as I read that Senate Democrats had finally thrown in the towel on an energy bill that would have included a partial cap-and-trade provision for limiting carbon emissions from power plants. The bill, written by Senators John Kerry and Joe Lieberman, was touted by Washington insiders and some major environmental groups as this year’s last hope for federal climate legislation. Yet it would have relied on carbon offsets and other dodges to postpone the day of reckoning with true, visible carbon emissions pricing – the cornerstone of meaningful climate policy.

Instead, reported the New York Times, Senate Democrats will pursue a limited bill aimed at increasing oversight of oil drilling and tightening energy efficiency standards – with no direct assault on climate-destabilizing CO2. (For a later Times story amplifying the first, click here.)

Yes, now, we may begin – “we” being Americans who care about climate, sustainability, and Earth – to unite around a climate approach that is effective, equitable and transparent enough to win the support of our fellow citizens and a Congressional majority.

I’m referring of course to the idea advanced by climatologist Jim Hansen as fee-and-dividend and by the Carbon Tax Center as a revenue-neutral carbon tax, by which fossil fuel extractors and importers pay the U.S. Treasury fees pegged to the carbon content of the coal, oil and gas they take from the ground or bring into U.S. ports, and the Treasury distributes the revenues to all Americans via equal monthly dividends (“green checks”), or by tax-shifting from regressive taxes such as payroll taxes.

The Senate’s antipathy to even the partial cap-and-trade proposed by Sen. Kerry will doubtless be spun as indicating that for the foreseeable future the well for climate legislation has been poisoned. The Carbon Tax Center says that the opposite may be true: with cap-and-trade out of the way at last, the political well can begin to be de-toxified so that the effective, equitable and transparent carbon fee-and-dividend can be seriously considered.

For this to happen, however, the Big Green groups like EDF and NRDC that for years have dominated climate discourse among environmentalists, and that convinced Congressional Democrats and the White House that the only way to “put a price on carbon” in America was via carbon cap-and-trade, will have to abandon that approach and allow others, and themselves, to try a fresh start.

It will be said that cap-and-trade failed because Fox News and other climate deniers branded it as “cap-and-tax” and, therefore, a carbon tax (or fee) cannot possibly succeed. And it is true that carbon cap-and-trade was looked to, years ago, as a way to build on the success of acid rain cap-and-trade, win over Republican free-marketers, and put a price on carbon without having to parade the dreaded t-a-x word before the public.

In the event, though, carbon cap-and-trade did none of these things.

Instead, Big Green’s pursuit of carbon cap-and-trade tethered the climate movement to complex financial instruments and branded us as servants of Wall Street elites. It opened the legislative floodgates to off-the-charts Beltway deal-making that rightly repulsed the public. Perhaps most importantly, the co-optation of climate advocacy by the cap-and-traders robbed us of the high moral ground we might have shared with abolitionists, suffragists, labor agitators and civil rights workers – true American heroes who fought to liberate our society of oppression and injustice.

If you’re in the climate movement, you recognize that fossil fuels’ assault on Earth’s climate is an ultimate form of oppression and injustice: of rich against poor, of the profligate against the frugal, of the present against the future. Ending this assault will require concerted action on many fronts; and it starts by internalizing the climate-damage costs of coal, oil and gas into their prices, so that the free ride for fossil fuels is ended and all of the alternatives, from energy efficiency, renewable energy and low-carbon fuels to conservation-based behavior and mindfulness toward energy consumption, may compete fairly and effectively.

Political action to accomplish this must be done in bright sunlight, not in Beltway shadows.

Cap-and-trade, let us hope, is dead. And now, we may begin!

© 2010 Carbon Tax Center

Charles Komanoff is co-founder of the Carbon Tax Center.

https://www.commondreams.org/view/2010/07/27-5

UPDATE | Grassroots resolution calling for a full debate within the Sierra Club on energy-related legislation within the United States Senate

SPONSORS OF RESOLUTION CALLING FOR DEMOCRATIC DEBATE WITHIN SIERRA CLUB re: SENATE CLIMATE / ENERGY LEGISLATION RESPOND TO DAVE SCOTT AND OFFER MODIFIED TEXT (LIST OF SIGNATORIES INCLUDED)

To Dave Scott and all who have received his critique of the grassroots resolution calling for a full debate within the Sierra Club on energy-related legislation within the Senate,

The sponsors of this resolution request an opportunity to respond to Scott’s critique. As his statement has been circulated to a substantial number of chapter leaders – a fact which was not made known to us and only belatedly learned through third parties – we request that in fairness this response be sent to the same list so that these leaders can hear both sides of this tremendously important issue. We start with a general overall response, and then move to a more specific paragraph by paragraph reply directly inserted (and highlighted in red) within the text of his statement.

Gary Houser (of the Ohio chapter) and Robert Jereski (of the New York chapter).

************************************************************************************

OVERALL RESPONSE –
The great challenge facing the environmental movement is that we are fighting an intractable foe. It is simply not possible to negotiate with the alarming amounts of methane gas now venting into the atmosphere from the shallow seabeds of the Siberian coast, nor the other dynamic processes which are now carrying the planet toward irreversible tipping points. Political deal making simply will not work in an environment where nature’s laws of physics are now calling all the shots.

As the nation’s largest membership environmental organization, it is of paramount importance that the Sierra Club throw all of its weight behind what science is saying is necessary to avoid catastrophe rather than become entrapped in the Beltway culture of compromise and political horse-trading. The Club must embrace a higher vision and mobilize its membership to fight for what the planet truly needs rather than allow corporate interests to dictate what is “politically possible”.

Our approach for examining what science-based advocacy would require is just one of many ways the club could move towards a greater democratization of its decision-making process. The web-forum has failed because it is a one-way street in which no response is provided to allow concerned members (some with much expertise in the relevant subject matter) to know whether their views have been considered, except once they read, for example, that the leadership considers K-L a ‘strong foundation’, signaling clearly that member concerns have not had an impact. Certainly our Club, with all of its resources and its legacy of grassroots engagement, could find other (even better-suited) approaches in the future. Members deserve feedback and to be heard. We also deserve to have an impact on the policies that shape our Club’s climate policy.
——————————————————————————————————-
SPECIFIC REPLIES TO DAVE SCOTT EMBEDDED IN RED

To: Sierra Club leaders and activists
From: Dave Scott, Vice President for Conservation
Date: June 26, 2010
Re: “Sierra Club Resolution Will Ensure That Leadership Guarantees Grassroots Participation and Environmental Protection”

This memo is written in response to a resolution circulated by Robert Jereski (below).
Let’s start with what we clearly agree on. Kerry-Lieberman is a deeply flawed bill that the Club would not support in its present form. It is also almost certainly a moot point, in that few observers expect that proposal to ever see the Senate floor. Unfortunately, it’s not clear what if anything will get to the Senate floor — possibly a problematic utility-only cap, or energy-only legislation that we may also have problems with. The Club is pressing for a clean energy package (or Renewable Energy Standard), reduced oil consumption, and the deepest emission cuts we can get from this Congress, and we will keep doing that.

REPLY: Your point regarding the shifting nature of climate/energy legislation is accurate and legitimate, and we acknowledge that. That is why we have modified the resolution so that it is not specifically focused on the Kerry-Lieberman proposal but rather any of the various forms of legislation that may emerge from the Senate. This shifting nature does not diminish the intrinsic value of what we are requesting – an open and democratic debate within the Sierra Club on the fundamental questions and urgent concerns related to climate legislation. Such a focused debate would provide an opportunity for scientific findings on how close we are to tipping points to be measured against all forms of legislation being considered and assess their adequacy in terms of preventing these daunting “points of no return”.

Your resolution mentions the science — Hansen’s warnings about tipping points. We’re well aware of them, of the urgency of getting steep cuts now, and of the stakes of this struggle. The cold fact is that there are nowhere near 60 Senate votes to pass a climate bill that goes far enough in terms of reductions. Environmental groups face an incredibly difficult legislative situation for many reasons: corporate lobbying, the recession, ignorance and well-funded lie campaigns about the need to cut emissions, and the inability to get any support at all from a scorched-earth GOP whose leaders dismiss the science altogether. Over the long term, we have the task of changing the politics of climate. We must also make the most of the opportunities we have outside of comprehensive climate legislation: suing and stopping coal plants, supporting EPA as it moves aggressively to regulate coal, cutting dependence on oil, and achieving what we can with state-level climate work. We must fight for reductions wherever we can get them.

REPLY: All of Scott’s points here are well taken in theory. However, the glaring omission is that the Sierra Club never did carve out a principled position in defense of the scientific requirements for prevention of crossing runaway tipping points. Starting with Waxman-Markey and continuing through Kerry-Lieberman, the Club has instead tragically been pulled into the “inside the Beltway” mentality of political horse-trading and has allowed USCAP – a coalition of corporate interests and all too willing to compromise “environmental” groups such as EDF – to define the parameters of what is “acceptable”.

Instead of setting the standard where it needed to be to prevent planetary catastrophe and then fighting to hold that ground, the Club allowed itself from the very beginning to be drawn into a series of disastrous compromises. Much ground has already been lost, but we feel compelled by conscience to request that the Club not continue this same pattern with Senate legislation. Dr. James Hansen, who, as a leading voice of conscience within the scientific community, has strongly opposed the way that meaningful climate legislation has been sabotaged by far too much yielding to corporate interest by powerful environmental organizations like ours.

That said, we have not yet abandoned hope of getting some kind of federal climate legislation this year that starts us on a path towards significant cuts, either through a renewable energy standard, caps or some other mechanisms. That means engaging in the gritty, difficult process of trying to get 60 Senate votes for something that moves us forward in the short time we have left this session.

REPLY: Other environmental groups (such as Friends of the Earth, International Rivers, and Friends Committee on National Legislation) have documented how full utilization of highly questionable offsets would allow polluters to avoid actual emission reductions for up to 20 years. It is subject to debate whether the institutionalization of such a system (along with the various manipulations possible through a carbon trading system) would actually constitute “progress” or instead lock in a future that would be catastrophic for the planet. ll we are asking for is a chance for an honest and straightforward debate on this and other key issues to occur within the Club.

The Sierra Club has repeatedly complained about the flaws in Kerry Lieberman, and by engaging in the DC lobbying process, we have successfully pressed for some improvements in proposed legislation (such as retaining some crucial EPA authority over coal plants, authority that is not in the House bill). Our leadership teams, which have volunteer representation, have been aware of strategic decisions to join other Green Group members or Labor allies on press releases in an effort to help push legislation forward. Club messaging has recently taken a somewhat harder tone, but you should not read any coalition press releases as if they were the only things the Club is doing or saying to get good legislation. They aren’t.

REPLY:  Statements describing Kerry-Lieberman as a “strong foundation” that only needs to be “finished” were not only released to media, but also sent out in mass emails to the grassroots membership. We fail to see how such positive characterizations of K-L lend themselves to creating an engaged grassroots membership that is willing to fight for the level of protection the planet truly needs at this time of transcendent crisis.

In response to your request regarding press releases, it is not practical for a national organization to have member votes before press releases or staff media appearances, and I don’t believe it would be wise to try — events simply happen too fast. The board has ultimate authority to set direction, the Executive Director — who reports to the elected board — directs staff, and we have a volunteer-staff FICC campaign team that makes week-to-week decisions. That is our board-approved process. That said, the Board’s Constituent Engagement Task Force has emphasized the desirability of doing more online member polls and surveys, and that’s something that I agree we should strongly consider.

REPLY: We do appreciate Scott’s mention of support for the general concept of seeking more input from the grassroots when critical decisions need to be made at the national level. Having this process become as inclusive and democratized as possible is something we fully support. We also recognize that daily operations cannot be conducted in such a way and never inferred that they should. Again, we point out the truly transcendent nature of the issue we are dealing with in this case.

However, we take exception to Scott’s mention of a “member vote” on climate legislation, which is an inaccurate representation of our request. All we have requested is an open and honest debate and then an opportunity for the grassroots to participate meaningfully by providing feedback to the leadership based on hearing this debate that would actually be considered and evaluated based on fundamental principles of environmental protection and democratic participation. . Contrary to taking a position of resistance, we would hope that the leadership would see such as a chance to create a more engaged and empowered grassroots membership.”