Democrats Unveil New Climate Change BillOctober 7, 2008 - by Donny Shaw
Here’s an indicator of priorities: House Democrats today released their first piece of draft legislation for the next session of Congress, and it’s a climate change bill. This summer, Congress failed to enact climate change legislation after the leading bill, the Lieberman-Warner Climate Security Act, was rejected by the Senate. Democrats are eager to increase their majorities in both the Senate and House next session so they can quickly pass a climate change bill and have it signed into law by the next President.
At the center of the new draft bill (pdf file) is a cap-and-trade program designed to reduce greenhouse gas emissions by 80 percent below 2005 levels by 2050. By comparison, the Lieberman-Warner bill proposed reducing emissions by 63 percent over the same time period. The 80 percent goal in the new bill is much closer to the scientific consensus on what must be done to avoid the worst effects of global warming.
The cap-and-trade approach proposed in the new discussion draft is essentially the same as in the old bill. It would encourage businesses to pollute less in the name of profit. Under the bill, the government would place a cap on carbon emissions that would get tighter over time. Businesses covered under the bill – power plants, manufacturers, petroleum producers, etc. – would be issued emissions permits and be required to hold emissions credits specifying the level at which they are able to pollute. Businesses that choose to can buy credits from lesser polluting businesses rather than reducing their emissions level to meet the cap. The net effect is that businesses will to pay to pollute, while clean businesses will profit from selling their unused allowances.
The new legislation also includes mechanisms to help limit the overall cost of the program. Businesses would be allowed to bank and borrow credits. And if the cap-and-trade market were to cause energy prices to rise above a certain level, the draft legislation would automatically release additional credits from a “strategic reserve.”
One major issue that is not addressed in the new bill is how the carbon credits will be allocated. Last year’s Lieberman-Warner bill would have given a certain amount of credits away for free initially, rather than selling them at auction, jeopardizing somewhat the economic incentives for reducing pollution. Many environmental advocates believe that, for cap-and-trade to work, the “polluter pays” principle must be fully upheld by charging a price for each and every carbon credit.
In addition to the cap-and-trade program, the new bill calls for carbon capture and sequestration technology to be deployed on new coal-fired power plants within a timeframe to be set as the technology becomes available.
In a memo to Members of the House Committee on Energy and Commerce, Chairman John Dingell (D-MI) and Subcommittee on Energy and Air Quality Chairman RIck Boucher (D- VA), called the new bill “the culmination of nearly two years of intensive work on climate change.” “We have held 27 hearings, released four white papers on different aspects of climate policy, conducted numerous workshops, and received thousands of pages of written responses to our letters and questions for the record,” they said.