Vote nearing on Waxman-Markey

2009-06-25

in Economics, Politics, The environment

Oleh Ilnyckyj

There seems to be a good chance of a vote on the Waxman-Markey climate change bill in the US House of Representatives in the coming week or so. Coverage on the bill has been very mixed, even among strong supporters of action on climate change. Partly, that reflects the sheer complexity of the thing, with all the special favours and unexpected consequences that represents. Partly, that is the product of obvious mistakes, such as giving away rather than selling the right to emit greenhouse gasses. Some have gone as far as to say that this bill is worse than useless. It certainly seems that the overblown cost estimates that some groups have produced are inaccurate. The nonpartisan Congressional Budget office estimates the cost at just $175 per household. Of course, there are legitimate questions about how many greenhouse gas emissions reductions can be secured when households are not presented with strong financial inventives.

The basic strategic questions are (a) is the bill so flawed that it should be rejected as a starting point and (b) what are the timing issues involved here? Timing is important both domestically and internationally. While climate change has had a relatively high profile within the Obama administration, it seems that they are refocusing their attentions towards health care reform – another issue rife with complexity and special interests. Missing this opportunity may mean a great deal of delay before another attempt can be made, as well as making it likely that the administration will have less overall energy and political capital to put forward. Internationally, the UNFCCC negotiations in Copenhagen this December certainly seem likely to go rather more smoothly if the United States has brought forward domestic legislation. If something can get through the Senate – even if it has some serious flaws – it might significantly improve the chances of an effective new global treaty.

How flawed is Waxman-Markey? This isn’t a question I feel that I can answer, given how sources I consider trustworthy have come down on opposite sides of the argument. Organizations like the Sierra Club have seen deep internal splits between those willing to accept the bill’s flaws and those who see it as beyond redemption. It is certainly a corrupt piece of legislation, in the sense that laws that do special favours to influential industries are corrupt, but that seems to be inevitable when advancing complex pieces of legislation in places like the US. In the end, I hope it passes, revealing that the US Congress is at least willing to take the first steps in dealing with climate change. The task then, as with many other environmental laws and regimes, will be to tighten the rules, eliminate the most egregious loopholes and handouts, and hopefully eventually produce an effective system for decarbonizing the American economy.

[Update: 26 June 2009] The bill passed in the House of Representatives, by 219 to 212, with 44 Democrats voting against it. While it is an imperfect piece of legislation, it is nonetheless exciting to see that it squeaked past this hurdle. The Senate will be tougher to convince.

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{ 13 comments… read them below or add one }

. June 25, 2009 at 5:05 pm

How can the costs of Waxman-Markey be so low and, yet, potentially effective?

By John Whitehead on Cap-and-Trade Watch

In my latest Energy Collective post I said something almost identical to this:

The latest research by the Congressional Budget Office shows that the cost of cap-and-trade in Waxman-Markey will be about $175 per year per household in 2020. This might actually sound low and you might wonder how a policy that costs less than a dollar a day would have an impact. The cost is held low because some of the government revenue generated by a permit auction could be redistributed to consumers in the form of lower taxes or energy rebates. The higher energy prices would encourage energy conservation and less pollution, the lower taxes and energy rebates would allow people to spend money on other things, mitigating the negative impact of higher energy prices on happiness.

Mark Nelson June 26, 2009 at 7:17 am

This is very simply a hidden tax on the American public. If the current Administration was serious about addressing the multi-faceted fossil fuel issue they would simply put a tax on gas at the pump.

Tristan June 26, 2009 at 10:27 am

“a hidden tax on the American public.”

To say a tax is “on the american public” is trivially true – all taxes are on the public. The government cannot raise revenue by taxing itself, and everything outside the government is the public, i.e. workers, corperations, etc…

“If the current Administration was serious…”

No, if the current admin is serious, it will do as much as is politically possible to curb climate change. Since American is not a democracy it is difficult to act in the general interest – you can’t do anything without pandering to special, i.e. business interests. So, if the admin is serious it goes as far as it can while being acceptable to a corrupt system, while trying to change that system to become less corrupt.

The best, fastest way to reduce corruption in Washington would be to institute the kind of party discipline we have in Canada. That and hang lobbyists, but that might be more difficult.

Milan June 26, 2009 at 10:36 am

This is very simply a hidden tax on the American public.

It is something like a tax, and some politicians haven’t been effective at conyeying the purpose of the scheme, but neither of these things means that Waxman-Markey should not be passed. Climate change is a huge threat and making people pay a growing share of the costs associated with their emissions is a good mechanism for reducing those emissions.

If the current Administration was serious about addressing the multi-faceted fossil fuel issue they would simply put a tax on gas at the pump.

Cars aren’t the only problem here. We need to decarbonize all the energy we use: from electricity to vehicle fuels to inputs for agricultural production. It would probably be wise to raise gas taxes in the US (not least because of other problems with dependency on importing oil), but that wouldn’t be sufficient to address the problem of climate change.

Milan June 26, 2009 at 10:38 am

It is also worth noting that the cap-and-trade system proposed by the Obama administration is much better than the Waxman-Markey compromise. In particular, that is because it is more tax-like: requiring that people buy 100% of the pollution permits, rather than having most of them allocated for free. That makes both environmental sense and financial sense, given the huge debt hole the US has created for itself.

. June 26, 2009 at 10:21 pm

Funny! Rep. Doggett (D-TX) talks about why he changed his vote from “no” to “yes” on the climate bill. Basically: Republican “flat earth society” and “climate denialism.”

. June 26, 2009 at 10:59 pm

U.S. House narrowly passes Waxman-Markey. Up next: Senate
June 26th, 2009

It’s not enough. It’s too much. It will kill jobs. It will create jobs. If there’s one thing about climate politics, it’s tough to make anyone, let alone everyone, happy. Sure, Waxman-Markey isn’t the kind of tough-ass climate legislation many environmentalists were hoping for, but what’s the reality of scrapping it, starting from scratch and getting something better? Nil.

Fact is, it’s better than what was there before. And considering the U.S. position on climate issues only a year ago, it’s a pretty spectacular feat to pass this kind of legislation in the House in the middle of an economic recession. It’s better than what Canada has, I’m sad to say. And I’m counting on the fact that this piece of law — assuming it can be pushed through the U.S. Senate — will light a fire blowtorch under Canada’s federal government. It’s not perfect, but it lays the foundation. At the very least, it positions that U.S. battleship in the direction of its target, when not so long ago that ship was completely off course.

. June 26, 2009 at 11:01 pm

Yet Waxman-Markey did get 8 Republican votes, which is 8 more than the stimulus bill got! This bill needed Republican votes, which will also be true in the Senate. The closeness of the House vote — with 44 Dems voting No — makes clear that the really hard work is yet to come.

And for those who say this doesn’t do enough — I agree 100%. But then the original Clean Air Act didn’t do enough. And the 1987 Montréal protocol would not have stopped concentrations of ozone depleting substances from rising and thus would not have saved the ozone layer. But it began a process and established a framework that, like the CAA, could be strengthened over time as the science warranted. The painful reality of climate change is going to become increasingly obvious in the coming years, and strengthening is inevitable.

. June 26, 2009 at 11:03 pm

Statement on the passage of the American Clean Energy Security (ACES) Act by the House of Representatives

June 26, 2009 : 7:44 PM
-Al Gore

Speaker Nancy Pelosi, the Leadership of the House, and Chairmen Waxman and Markey have, through their leadership, secured an important bipartisan victory for the American people.

The American Clean Energy Security (ACES) Act is one of the most important pieces of legislation Congress will ever pass. This comprehensive legislation will make meaningful reductions in global warming pollution, spur investment in clean energy technology, create jobs and reduce our reliance on foreign oil.

The next step is passage of this legislation by the Senate to help restore America’s leadership in the world and begin, at long last, to put in place a truly global solution to the climate crisis.

We are at an extraordinary moment, with an historic opportunity to confront one of the world’s most serious challenges. Our actions now will be remembered by this generation and all those to follow – in our own nation and others around the world.

. June 28, 2009 at 9:12 pm

America’s climate-change bill
In need of a clean

Jun 27th 2009
From Economist.com
America’s climate-change bill is a bundle of compromises

THE headline is a big one: for the first time, America’s House of Representatives agreed, by 219 votes to 212, on Friday June 25th to cap emissions of carbon dioxide, the main greenhouse gas. The bill envisions modest reductions of 17% from 2005 levels by 2020, but the cuts get more swingeing over time (under the assumption that technology to mitigate emissions will improve). By 2050 the cuts should hit 83%.

But environmental campaigners have gritted their teeth as the bill has passed through the legislative process. Drafted by Henry Waxman and Ed Markey, with support from the Obama administration, the bill originally envisioned a cap-and-trade system whereby credits conferring the right to emit greenhouse gases would be sold to the highest bidders. The revenue from such an auction would be used to offset increasing energy bills.

But to the ire of the green faithful, the bill will now give away 85% of the permits to emit carbon, while auctioning off the rest. Even in that form, though, the bill looked like it might generate opposition from fiscally conservative Democrats or those that represented states with lots of farmers. The support of those Democrats would be needed to get the legislation past near-unanimous Republican opposition.

. June 29, 2009 at 12:02 pm

US- Great leap forward on climate change
by Dianne Saxe

According to Representative Waxman, the bill contains the following key provisions:
* Requires electric utilities to meet 20% of their electricity demand through renewable energy sources and energy efficiency by 2020.
* Invests $190 billion in new clean energy technologies and energy efficiency, including energy efficiency and renewable energy ($90 billion in new investments by 2025), carbon capture and sequestration ($60 billion), electric and other advanced technology vehicles ($20 billion), and basic scientific research and development ($20 billion).
* Mandates new energy-saving standards for buildings, appliances, and industry.
* Reduces carbon emissions from major U.S. sources by 17% by 2020 and over 80% by 2050 compared to 2005 levels. Complementary measures in the legislation, such as investments in preventing tropical deforestation, will achieve significant additional reductions in carbon emissions.
* Protects consumers from energy price increases. According to recent analyses from the Congressional Budget Office and the Environmental Protection Agency, the legislation will cost each household less than 50 cents per day in 2020 (not including energy efficiency savings).

. July 8, 2009 at 9:11 am

Senate Democrats Begin Drawing Road Map to 60 Votes on Climate Bill

By DARREN SAMUELSOHN of ClimateWire
Published: July 8, 2009

When it comes to climate change legislation, Senate Democratic leaders find themselves in a similar spot to where their House counterparts stood a few months ago: pledging passage of a comprehensive bill without a clear path on how to get there.

Majority Leader Harry Reid yesterday insisted that he wanted to get a sweeping energy and global warming measure onto the Senate floor between mid-September and early October. But the Nevada Democrat and his lieutenants were less specific when it came to defining their strategy for crossing the all-important 60-vote threshold needed to defeat an expected Republican filibuster.

. July 22, 2009 at 11:14 am

Deniers are “full of passionate intensity”—and eating our lunch on climate bill

Posted 1:36 PM on 21 Jul 2009
by Joseph Romm

Things fall apart; the centre cannot hold.

I have heard from multiple sources that many U.S. senators are now getting 100 to 200 calls a day opposing a climate and clean energy bill — and bupkes in favor.

The best lack all conviction, while the worst
Are full of passionate intensity.

Why? Well, the entire conservative messaging apparatus is full-throated in its opposition to this bill — and they have well-heeled funders, aka the dirty-energy bunch. Our side is half-throated, at best. Indeed, many progressive/enviro activists spend their time pointlessly trashing the bill and threatening Democrats (see here and here).

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