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Thursday, October 22, 2009

Greenpeace: Climate Legislation More Likely to Perpetuate Fossil Fuel Economy than Spur Swift Transition to Clean Energy

Originally at the Breakthrough Institute

Climate change legislation recently passed by the U.S. House of Representatives and now under consideration in the Senate will "succeed in perpetuating business as usual and fail to avert catastrophic climate change," according to a new Greenpeace report quietly released yesterday.

Titled "Business as Usual," the report was prepared on behalf of Greenpeace by David Sassoon, who publishes the climate news site, SolveClimate. It is written as a "plain-spoken" analysis meant to be "a call to action to the President of the United States," according to the document.

"In order for federal climate legislation worthy of this nation to pass Congress, we see no alternative to active and principled engagement from the Oval Office," Greenpeace writes.

The report levels five key criticisms of current Congressional legislation, calling attention to what Greenpeace describes as "five points of maximum danger" that the environmental group argues must be addressed to ensure climate legislation is capable of spurring "a swift transition to a clean energy future."

While we certainly don't share Greenpeace's position on all (most) climate matters, this new report levels a pointed and impassioned critique of current Congressional climate action well grounded in the details of the pending legislation. Here's a 'Cliffs notes' version of the full report below the fold...

  1. "Congress is threatening to preempt the Clean Air Act from regulating greenhouse gas emissions from the biggest sources in the nation."

    Greenpeace is referring to a section of the House-passed Waxman-Markey bill that would prevent the U.S. Environmental Protection Agency from regulating point-source emitters of greenhouse gases under existing provisions of the Clean Air Act (e.g. emissions performance standards or new source review).

    After a 2007 Supreme Court ruling that deemed greenhouse gases were a harmful pollutant, the EPA has been moving ahead with regulations under existing Clean Air Act authority to limit greenhouse gas emissions from major stationary sources such as coal plants. Environmental groups have argued that such regulatory authority is critical to protect public health even if Congress moves to establish a cap and trade system to limit economy-wide emissions of greenhouse gases. "Absent EPA authority," Greenpeace writes, "large loopholes and handouts in both the Senate and House version of the climate bill will make it difficult, if not impossible, for the nation to depart from the trajectory of business as usual for decades. EPA involvement is not an either-or proposition."

    As Greenpeace notes, initial drafts of the Senate's "Clean Energy Jobs and America's Power Act" refrains from limiting EPA's authority to regulate emissions. "This is perhaps the most significant difference between the House and Senate versions of the legislation and a critical issue of paramount importance," Greenpeace writes.

    While the House-passed bill does establish a new emissions performance standard for coal-fired power plants that would eventually require the capture and storage of CO2 emissions, the upcoming standards "grandfather," or exempt, close to 40 new coal plants now in the permitting or construction process, according to Greenpeace.

    Referring to coal plants similarly grandfathered into the Clean Air Act, the report contends, "It is yet another bubble of special case coal plants whose burden will be felt for decades to come and slow the arrival of the clean energy future, unless the EPA remains empowered to do its job on behalf of ordinary citizens."

  2. "[B]oth the House and Senate's [emissions reduction] targets are weak and timid in the short term and wishful thinking in the long term."

    Greenpeace criticizes Congressional climate legislation's 2020 emissions reduction targets - 17% below 2005 levels in the House bill and 20% below 2005 levels in the Senate bill, or just 4-7% below 1990 levels - as "far short both of what science demands and what our European allies have committed to achieve." The EU has committed to cut emissions 20% below 1990 levels by contrast, Greenpeace notes, and the Intergovernmental Panel on Climate Change has recommended cuts of 25-40% below 1990 levels.

    While the Breakthrough Institute has long argued that a focus on emissions reduction targets and not concrete, actionable plans to drive clean energy technology development and deployment is misguided, the report accurately notes that modest emissions targets undermine the carbon price signal intended to drive a transition to cleaner energy sources under the legislation's cap and trade program. Both the U.S. EPA and Congressional Budget Office project carbon prices under the House's Waxman-Markey bill will remain between $10 and $20 per ton for at least the first decade of the bill's cap and trade program - equivalent to a change of just 10-20 cents in a gallon of gasoline, for reference.

    "[W]e are being asked to make a leap of faith," Greenpeace writes, "that a carbon price signal--however weak--will conspire with market forces to squeeze carbon out of our economy. It is impossible to ignore the reality that the weak cap undermines the foundation of the theory, fundamental to its integrity. It is as if we are imposing a price on carbon that nobody really has to pay..."

    With the economic recession driving U.S. emissions levels significantly lower than historic 2005 levels, the House bill's emissions cap may not require any emissions cuts at all for up to five years, likely collapsing carbon prices to at or near the lowest levels permitted by the legislation, according to Breakthrough Institute analysis.

  3. "There is probably no better indication of the persistence of business as usual than the fact that both the House and Senate climate legislation prioritize support for the primary industrial source of greenhouse gases... coal."

    Greenpeace notes that 9% of the value of emissions permits created under the Waxman-Markey bill's cap and trade program are devoted to the coal industry, while just 6% are invested in energy efficiency and renewable energy. This includes not only incentives for the commercial deployment of carbon capture and storage technology at coal-fired power plants, but also billions in windfall-profit generating free allowances for the merchant operators of existing, conventional coal-fired power plants. (see Breakthrough's updated Waxman-Markey allowance allocation summary here.)

    In addition, the House-passed bill establishes a new utility-industry-run Carbon Storage and Research Corporation funded with $10 billion raised from electricity ratepayers over the next ten years. According to Greenpeace, $500 million of this funding is "designated simply for 'administrative expenses' to be spent at the discretion of [the] new corporation's officers."

    Greenpeace accurately notes, "There is no parallel provision in the bill to set up a federally created corporation to support solar or wind or geothermal energy development, even though the House legislation is called the American Clean Energy and Security Act." Likewise, no other low-carbon energy technology enjoys the kind of bonus allowance allocation devoted to CCS deployment under the House bill's cap and trade program.

  4. "Handouts and loopholes are legion."

    Greenpeace notes that the bill's already modest emissions reduction objectives are further undermined by "the set of provisions permitting an enormous number of offsets to substitute for pollution reduction." Both the House and Senate bills allow regulated polluters to purchase up to two billion tons of offsets each year instead of reducing their own emissions.

    "It is as if a man with heart trouble and diabetes who weights 360 points is encouraged by his doctor to pay someone else to go on a diet for him," Greenpeace writes, lampooning the logic of offsetting. "To be fair," the report continues, "the economic thinking behind offsets has a narrow theoretical validity."

    However, actual experience with offset markets indicates that fraud and gaming are difficult if not impossible, from a practical perspective, to eliminate. As Greenpeace writes, "The fact is that the allure of immense profits has mostly produced massive instances of cheating in the offset market, with the environment left to suffer the consequences." Extending their metaphor, they continue, "The fat patient will stay fat; the other man paid to go a diet will do no such thing; and the doctor will walk away satisfied."

    If offsets played a limited role in the functioning of the cap and trade system, likely fraud and policing challenges would potentially be minor issues. But as Greenpeace notes, "The number of offsets pending legislation authorized on an annual basis is truly astonishing: Two billion tons worth. That is equivalent to one quarter of annual US emissions--or the first 75 poinds of flesh our fat man would shed on a diet." Greenpeace accurately notes that the practical implication of such massive offsetting would be to delay any required cuts in actual U.S. industrial emissions "for almost another two decades. If that is not business as usual, nothing is," Greenpeace concludes.

    Greenpeace pointedly notes that some "have found ways to rationalize the offsets as necessary, even playing the role of apologist for bad policy." (Gee, who could they be talking about...). They continue:

    "They make the argument about offsets that there simply won't be enough to go around. ... They are saying, in essence, don't worry, offsets won't be a problem, they don't really exist. ... We would be naive to assume that corporate lobbyists secured authorization for two billion tons of offsets without having a plan for where to find them and how to use them. It is money that no profit-maximizing organization is going to leave on a table unclaimed..."

    Greenpeace identifies hydrofluorocarbon (HFCs), an industrial gas and very potent "super greenhouse gas," and forest preservation projects as potentially huge sources of offsets for U.S. and global markets. Furthermore, as Congressional legislation has moved forward, more and more sources of offsets have been permitted in successive drafts, including expanded agricultural offsets in the House bill and various sources of methane in the Senate bill.

  5. "What is especially dangerous, and frankly Orwellian, is that the American Clean Energy and Security Act and the Clean Energy Jobs and American Power Act both provide insufficient and grudging support to clean energy!"

    Greenpeace finally notes that the bill provides very little effective support for renewable energy. "What state governments and private enterprise are doing to promote the adoption of clean energy already surpasses what the federal government is now proposing to do," the report states.

    The report cites yet another analysis, this one from ICF International, concluding that "existing organic growth of business as usual in the clean energy sector will be enough to surpass the target" in the House bill's renewable electricity standard. After exemptions are included, Greenpeace notes, as Breakthrough has, that the bill's nominal 20% "Combined Efficiency and Renewable Electricity Standard" amounts to a real requirement of less than 10%, "a goal that the states alone will achieve with current RPS policies."

    The report notes the disparity between financial support and direct public investments provided for renewable energy -- and research and development in particular -- relative to incentives for CCS in the House bill, and support for nuclear power expected to be included in the Senate bill . But as Breakthrough has noted, overall investments for all low-carbon energy sources, including CCS, totals just $9 billion per year from allowance revenue in the House bill (at a $15/ton average price) - a figure that appears in the report via a quote from the Brookings Institution's Mark Muro.

    Greenpeace contrasts this level of support, less than one-fifth what Breakthrough advocates, with President Obama's remarks to the UN General Assembly that "the US will move forward with investments to transform our energy economy."

    "The climate bill undermines this aim," Greenpeace contends. The report points to direct and proactive incentives provided for renewable energy deployment in Germany, a feed-in tariff "financed by a modest rate increase spread across the entire population," as an alternative approach to accomplish President Obama's objective "to make clean energy the profitable kind of energy."

In concluding, Greenpeace notes that a good number of both "optimists" and "apologists" within the climate advocacy community have continued to support, even champion, current Congressional climate legislation.

"The optimists seem to believe that a price signal, no matter how weak or undermined by handouts and loopholes, will provide the impetus to help us get started to turn the corner on climate change," Greenpeace writes, noting that the Clean Air Act and Social Security legislation are often referenced "as federal measures that started out weak and grew effective over time."

This historical analogy is "ultimately unpersuasive," Greenpeace contends. "The Clean Air Act, for example, did not send hundreds of billions of dollars in handouts and loopholes to the very polluters it was trying to regulate," the report points out. "The pending legislation does."

Greenpeace further rejects oft-repeated appeals to, "Don't let perfect be the energy of the good." That line of reasoning is "a good argument used to poor purposes," Greenpeace says, retorting, "Rather, let us stand firm not to adopt legislation that locks in a permanent and endless fossil fuel future, let us insist that this constellation of great leaders be the enemy of impending catastrophe."

"There are apologists who go a step further than the optimists," Greenpeace continues, those who "argue suddenly that it doesn't matter if you allocate carbon credits for free, rather than auction them; or that offsets might not be [a] bad thing after all; or that the big bet we're placing on technology to capture and bury carbon emissions will actually bring the demise of coal as an energy source."

Greenpeace writes:

"There is all manner of spinning--well-intentioned, disingenuous, self-serving--among supporters of climate action, and it has become almost impossible to separate political calculus from scientific necessity. ... Many supporters of climate action find themselves forced to grasp a flimsy hope--that we just need to get something started--anything--and strengthen it later. And so we witness the cheerleading to which we cannot lend our voice. ... Politics as usual will only produce its corollary, business as usual."

Well there's certainly at least one voice amongst the climate community who won't pull any punches as the Congressional debate moves forward.

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