Climate Change Debate Hinges On
Jul 15, 2007 - Steven Mufson - Washington
Here's the good news about climate change: Energy
and climate experts say the world already possesses
the technological know-how for trimming greenhouse
gas emissions enough to slow the perilous rise in
the Earth's temperatures.
Here's the bad news: Because of the enormous cost
of addressing global warming, the energy legislation
considered by Congress so far will make barely a dent
in the problem, while farther-reaching climate proposals
stand a remote chance of passage.
Despite growing public concern over global warming,
the House has failed to agree on new standards for
automobile fuel efficiency, and the Senate has done
little to boost the efficiency of commercial office
buildings and appliances. In September, Congress is
expected to start wrestling with more ambitious legislation
aimed at slowing climate change; but because of the
complexity of the likely proposals, few expect any
bill to become law. Even if passed by Congress and
signed by President Bush, the final measure may not
be tough enough to slow global warming.
"I don't think there's any question that what is
being talked about now would, over the long term,
be insufficient," said Philip Sharp, president of
the think tank Resources for the Future and a former
House member. "The issue is: Will Congress get in
place a larger architecture that sends a signal to
the economy that accelerates change?"
The potential economic impact of meaningful climate
legislation -- enough to reduce U.S. emissions by
at least 60 percent -- is vast. Automobiles would
have to get double their current miles to the gallon.
Building codes would have to be tougher, requiring
use of more energy-efficient materials. To stimulate
and pay for new technologies, U.S. electricity bills
could rise by 25 to 33 percent, some experts estimate;
others say the increase could be greater.
Most of the technologies that could reduce greenhouse
gases are not only expensive but would need to be
embraced on a global scale, scientists say. Many projections
for 2030 include as many as 1 million wind turbines
worldwide; enough solar panels to cover half of New
Jersey, massive reforestation; a major retooling of
the global auto industry; as many as 400 power plants
fitted with pricey equipment to capture carbon dioxide
and store it underground; and, most controversial,
perhaps 350 new nuclear plants around the world.
"The scope of the problem is really enormous," said
Prasad Kasibhatla, associate professor of environmental
chemistry at Duke University's Nicholas School of
the Environment. Not only must Congress and the White
House reach agreement on emissions limits, developing
nations must also act to achieve temperature goals.
"If the climate change bills go through Congress and
could somehow be coupled to a multinational agreement,
then things could really start to change," Kasibhatla
said. "But I'd like to start seeing real agreements
between countries before I call myself an optimist."
Measures taken by the world's governments to reduce
greenhouse gases could cost 1 percent of world economic
output, according to a report commissioned by the
British government and written last year by former
World Bank chief economist Nicholas Stern. But Stern
said the cost of not taking those steps would be at
least five times as much, hitting the developing world
The shape of U.S. legislation targeted exclusively
at climate change remains a matter of debate.
"I sincerely doubt that the American people are
willing to pay what this is really going to cost them,"
John D. Dingell (D-Mich.), chairman of the House Energy
and Commerce Committee, said in a recent C-SPAN interview,
adding that he intended to introduce legislation that
would impose a carbon tax "just to sort of see how
people really feel about this." He said his proposal
would boost the gasoline tax by 50 cents a gallon
and establish a "double-digit" tax on each ton of
all carbon-dioxide emissions.
In the Senate, five climate change bills have been
introduced recently -- with sponsors from both parties.
They do not tax carbon but use variations on Europe's
cap-and-trade system. Europe modeled its system on
the 1997 Kyoto Protocol, which the Senate rejected
and President Bush later dismissed, saying it would
cause the U.S. economy "serious harm."
A cap-and-trade system creates a new market where
a limited, decreasing number of permits for emitting
greenhouse gases, measured in metric tons of carbon
dioxide, are traded. One hedge fund manager compared
the importance of such a move to the creation of paper
money. If implemented in the United States, it would
alter the calculations of almost every business; hundreds
of billions of dollars of energy investments would
It's impossible to pinpoint the price a ton of carbon
dioxide in the United States, because a cap-and-trade
system would leave the price to the market. In Europe,
however, the price for a permit to emit a ton of carbon
dioxide in December 2008 is $29. J
John M. Deutch, former CIA director and now a physical
chemistry professor at MIT, thinks that price is about
right. He has been pressing policymakers to speed
development of technology that would capture carbon
dioxide gases released by power plants and store them
underground for centuries. This so-called carbon capture
technology, currently applied in a handful of pilot
projects, costs at least $200 million to $300 million
per plant and hasn't been demonstrated on a commercial
Deutch says that the technology, seen as a vital
part of almost any strategy to slow global warming,
won't be commercially viable until carbon dioxide
reaches $30 a ton. That would translate into a 25
percent average increase in electric bills nationwide,
"It's certainly affordable for our economy and our
society," Deutch said.
But the price might be too high for members of Congress
and voters. Jeff Bingaman (D-N.M.), chairman of the
Senate Energy and Natural Resources Committee, is
the lead sponsor of one of the cap-and-trade bills.
Like Europe's system, it would establish a ceiling
for emissions and let companies buy or sell extra
allocations, or credits. But unlike Europe's plan,
Bingaman's would create a "safety valve" so that the
price of a ton of carbon dioxide would not surpass
$12 in 2012. When the price hit that level, the government
would sell permits until the price goes down. The
ceiling level would rise 5 percent a year above the
In response to critics, Bingaman would also give
a certain number of extra credits to carbon capture
and storage projects.
Sen. Joseph I. Lieberman (I-Conn.), who chairs the
subcommittee that will draft a law, opposes a safety
valve, and he is planning another proposal with Sen.
John W. Warner (R-Va.), but they haven't worked out
details. In 2003, Lieberman worked with Sen. John
McCain (R-Ariz.) on an earlier cap-and-trade bill,
which garnered support from 43 senators. With today's
greater sense of urgency about climate change, there
may be more support for a cap-and-trade bill now.
But countless technical details each worth billions
of dollars to regions and companies remain a matter
of debate. Utilities like PNM Resources based in New
Mexico, which burns coal for 64 percent of its power,
want more allowances for current emitters like itself;
environmentalists call these companies "pollution
squatters" seeking rewards for bad past behavior.
By contrast, California-based Sempra Energy, which
has efficient natural gas plants that emit relatively
few greenhouse gases, fears it will be penalized for
its good behavior. Sempra president Neal Schmale says
California, which has high electricity rates, shouldn't
subsidize the rest of the country.
"The thing I'm struck by is the magnitude of the
challenge," said James Rogers, chief executive of
Duke Energy, after listening to a talk on carbon capture
and storage. Rogers said that he feared that the United
States is far -- "we're not even three Zip codes away"
-- from a price that would make that technology economically
In Europe, there is a much greater sense of urgency
about combating climate change, as Bush discovered
at last month's meeting of the Group of Eight major
industrial nations. German Chancellor Angela Merkel
wants to slash greenhouse gas emissions by 40 percent
by 2020 and 80 percent by 2050. Merkel is expected
to push for big increases in power plant productivity
and more renewable energy, although Germany is already
the leading country in Europe for wind and solar power.
Spain and Italy are offering incentives of about 40
cents a kilowatt hour for solar-power installations.
While some energy-intensive industries complain that
the European cap-and-trade program is driving manufacturers
to developing countries where greenhouse gases aren't
regulated, German government officials say that the
campaign to reduce emissions will foster new technologies
and jobs, helping the German economy.
Neither Congress nor the Bush administration is considering
figures anywhere near the cuts Merkel supports. Bingaman's
bill would take effect in 2012 and bring emissions
back to 2006 levels by 2020. The Bush administration
has talked about lowering carbon intensity, meaning
the amount of gases emitted for every unit of economic
output. But in a growing economy, it could still mean
additional emissions overall.
The deepest proposed U.S. cuts are in the bill introduced
by Sens. Bernard Sanders (I-Vt.) and Barbara Boxer
(D-Calif.). Falling in between are proposals by Sens.
Dianne Feinstein (D-Calif.), Thomas R. Carper (D-Del.),
John F. Kerry (D-Mass.), Olympia J. Snowe (R-Maine),
McCain and Lieberman. The bills also differ over whether
to cover all industries or just utilities; on whether
to distribute allocations or auction them; and how
much to allow offsetting credits for projects, such
as reforestation, that reduce greenhouse gas emissions.
One issue for U.S. lawmakers is that the impact of
greenhouse gas restrictions would vary by region and
lifestyle. Some utilities rely more heavily than others
on coal, which faces a big challenge if progress isn't
made on carbon capture and storage. Other utilities
are poised to take advantage of new regulations. Areas
where wind can power huge turbines might benefit.
Wealthier Americans might be better able than poor
Americans to afford new equipment -- more efficient
air conditioners, better insulated windows, solar
panels -- to cut energy costs. In recent lobbying,
utilities from Southern states, who said they would
be disadvantaged, successfully dissuaded the Senate
from adopting renewable-energy standards that would
have applied evenly across the country.
In 2009, one of the first issues to confront the
new U.S. president is likely to be climate change
legislation. In addition to domestic pressures, the
European Union will want a deal including the United
States because the Kyoto framework it is using expires
in 2012, and it takes time for all the member countries
to ratify a new plan.
"Doing something about global warming requires an
intelligent use of lead time," said David Hawkins,
director of the climate change section of the Natural
Resources Defense Council. "Changing the way our economy
functions so that it isn't polluting is like turning
a supertanker. You can't wait until you're on the
reef before deciding how to steer the ship."