Tag Archives: United States

Climate Change Bill: An Olympian Feat?

President Obama is off to Copenhagen without any assurances that he’ll get what he wants.

This isn’t a post from the future: Obama is heading to Denmark tonight to lobby the International Olympic Committee to give Chicago the 2016 Summer Games. But there are some similarities between this trip and December’s sortie for climate change talks.

Notably, the President and his advisors are at pains to keep expectations low for both. Canadian Prime Minister Stephen Harper said last week that Obama told other members of the G-20 that “while Copenhagen is a very important meeting we should not view it as a make or break on climate change.”

How does the Boxer – Kerry climate change bill, introduced yesterday, affect that calculus? FT’s Energy Source says the “smart money” is on legislative gridlock until the end of the year, “particularly because of the hard pounding over president Obama’s plans for healthcare reform.” And if Boxer – Kerry doesn’t move, Obama’s Copenhagen talk will be seen mostly as well-intentioned, but empty, rhetoric.

But we at GER think the bill is ready to move – and even see passage before December – for three key reasons. (Edit: OK, maybe we went a bit overboard with the timeline. Still, we’re optimistic.)

First, “the hard pounding” on health care has focused Obama’s detractors on that issue. The opposition to Obama’s “socialist agenda” is going to find it hard to get out of bed for a battle over climate change legislation, which lacks the pop and sizzle of “death panels.”

Second, the Boxer – Kerry Bill, with its 20 percent reduction by 2020 target, is more ambitious than the Waxman-Markey Bill that passed the house, with its 17 percent reduction target. Bloomberg’s analysis is that fewer emissions allowances in Kerry-Boxer mean that it will face a tougher fight. We believe it means that negotiators have a bargaining chip when reluctant legislators ask for concessions on behalf of industry.

Finally, Sen. James Inhofe, R-Okla., wants to know how bill sponsor, Sen.Barbara Boxer, D-Calif., is going to ensure that China and India impose binding targets of their own. The simple answer to that is… Copenhagen! If Obama’s negotiators can bring a house bill and a senate measure that’s at least viable to Denmark, they’ll have a lot more leverage and authority to say that the United States is doing its part. That could motivate senators to move this bill.

Moving a climate change bill through the senate will, no doubt, be an Olympian feat. But the wind, as they say, is at Obama’s back.

Climate Change Bill: An Olympian Feat?

President Obama is off to Copenhagen without any assurances that he’ll get what he wants.

This isn’t a post from the future: Obama is heading to Denmark tonight to lobby the International Olympic Committee to give Chicago the 2016 Summer Games. But there are some similarities between this trip and December’s sortie for climate change talks.

Notably, the President and his advisors are at pains to keep expectations low for both. Canadian Prime Minister Stephen Harper said last week that Obama told other members of the G-20 that “while Copenhagen is a very important meeting we should not view it as a make or break on climate change.”

How does the Boxer – Kerry climate change bill, introduced yesterday, affect that calculus? FT’s Energy Source says the “smart money” is on legislative gridlock until the end of the year, “particularly because of the hard pounding over president Obama’s plans for healthcare reform.” And if Boxer – Kerry doesn’t move, Obama’s Copenhagen talk will be seen mostly as well-intentioned, but empty, rhetoric.

But we at GER think the bill is ready to move – and even see passage before December – for three key reasons. (Edit: OK, maybe we went a bit overboard with the timeline. Still, we’re optimistic.)

First, “the hard pounding” on health care has focused Obama’s detractors on that issue. The opposition to Obama’s “socialist agenda” is going to find it hard to get out of bed for a battle over climate change legislation, which lacks the pop and sizzle of “death panels.”

Second, the Boxer – Kerry Bill, with its 20 percent reduction by 2020 target, is more ambitious than the Waxman-Markey Bill that passed the house, with its 17 percent reduction target. Bloomberg’s analysis is that fewer emissions allowances in Kerry-Boxer mean that it will face a tougher fight. We believe it means that negotiators have a bargaining chip when reluctant legislators ask for concessions on behalf of industry.

Finally, Sen. James Inhofe, R-Okla., wants to know how bill sponsor, Sen.Barbara Boxer, D-Calif., is going to ensure that China and India impose binding targets of their own. The simple answer to that is… Copenhagen! If Obama’s negotiators can bring a house bill and a senate measure that’s at least viable to Denmark, they’ll have a lot more leverage and authority to say that the United States is doing its part. That could motivate senators to move this bill.

Moving a climate change bill through the senate will, no doubt, be an Olympian feat. But the wind, as they say, is at Obama’s back.

How the G8 Fails Greentech Investors

Do G8 leaders discourage investment in green energy by not committing to shared goals on climate change?

Simon Johnson, the MIT Sloan School of Management professor who has successfully transformed himself into a diversified media brand, levels provocative charge against the world’s developed economies in a post on his blog this morning. His broader point is that G8 nations destabilize oil prices but we’re most interested in this claim:

They claim to see no link between their failure to converge on climate change/environmental policies and what happens to energy prices. The extent to which industrialized countries effectively control carbon emissions will have a big impact on the longer-run demand for oil. Flip-flopping on this issue discourages investment in the energy sector (regular and alternative), and thus directly and indirectly contributes to oil price volatility.

This argument dovetails with Rep. Henry Waxman’s claim, made earlier this week on New York Public Radio, that businesses “want to know what the rules are going to be” before they invest in cleantech.

But it points to problems for green energy sector beyond the eventual passage of a cap-and-trade bill in the U.S. Unless some broader accord with enforceable targets for carbon emissions – not just to 2 degrees celsius – can be reached among the G8 countries and beyond, greentech investors will be without a compass.

How the G8 Fails Greentech Investors

Do G8 leaders discourage investment in green energy by not committing to shared goals on climate change?

Simon Johnson, the MIT Sloan School of Management professor who has successfully transformed himself into a diversified media brand, levels this provocative charge against the world’s developed economies in a post on his blog The Baseline Scenario this morning. His broader point is that G8 nations destabilize oil prices but we’re most interested in this claim:

They claim to see no link between their failure to converge on climate change/environmental policies and what happens to energy prices. The extent to which industrialized countries effectively control carbon emissions will have a big impact on the longer-run demand for oil. Flip-flopping on this issue discourages investment in the energy sector (regular and alternative), and thus directly and indirectly contributes to oil price volatility.

This argument dovetails with Rep. Henry Waxman’sclaim, made earlier this week on New York Public Radio, that businesses “want to know what the rules are going to be” before they invest in cleantech.

But it points to problems for green energy sector beyond the eventual passage of a cap-and-trade bill in the U.S. Unless some broader accord with enforceable targets for carbon emissions – not just a desire to limit warming to 2 degrees celsius – can be reached among the G8 countries and beyond, greentech investors will be without a compass.

Industry, electricity win big at expense of cleantech in cap-and-trade bill

By a rough accounting, energy-intensive industry and the electricity sector have scored 50 percent of emission allowances right out of the gate under the Waxman-Markey cap-and-trade bill. Only 6 to 10 percent will go to renewable energy and research and development into cleantech.

Given the reluctance of key committee Democrats to back the bill, it’s not entirely surprising that industry did so well. And there will be some benefit to consumers as a result of these allowances – though consumers could presumably be protected by getting a bulk of the allowances and then using the auction proceeds to offset cost increases, as President Obama originally suggested.

What disappoints in the bill is the failure to allot more allowances to renewable energy.

Most of the allowances under the Energy Efficiency and Clean Energy Technology header will go back to industry and utilities: 2 percent will go to carbon capture and sequestration through 2017, and 5 percent thereafter; 3 percent of allowances through 2017 and 1 percent thereafter will go to advanced automobile technology.

Even the 10 percent devoted to investments in renewable energy from 2012 to 2015 – an amount that decreases to 5 percent by 2022 – can also be used for energy efficiency, which the Wall Street Journal’s Environmental Capital notes, could paradoxically increase demand.

It’s worth noting that the 15 percent of allowances that go to energy-intensive industry don’t sunset until 2025 (most others begin phasing out almost immediately) and the president could decide not to cut the allowances, which sets the table for a 15-year multibillion dollar lobbying effort. The 35 percent devoted to the electricity sector doesn’t start phasing out until 2026.

The allowance allocation, in its current form, satisfies the stated goals of protecting consumers from energy price increases and assisting industry’s transition to a clean energy economy but would do little to spur energy efficiency and the development of clean energy technology.