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The Waxman-Markey Green Jobs Bill Isn't Perfect, But it Is Absolutely Necessary

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Representatives Henry Waxman and Ed Markey Tuesday at long last made public a discussion draft of the American Clean Energy and Security Act (ACES). Some are calling this the opening shot in the battle over what the United States will do about global warming. Rep. Markey, not one who is prone to understatement, told a conference call for environmental bloggers Tuesday that this is "the beginning of an incredibly intense period of political debate in our country." Speaker Pelosi amplified this sentiment, explaining that "there's an inevitability to this that everyone has to understand."

Chairman Markey emphasized that "we must have something on the president's desk for Copenhagen." By Copenhagen Markey is referring to the United Nations Climate Change Conference slated to take place this December in the Danish capitol. The annual meeting, which seeks to generate an agreement on reducing emissions among as many countries as possible, takes on added significance this year since it is considered by many to be the last chance to reach a major international climate agreement before the 2012 expiration of the Kyoto Protocol. Appropriately, Democrats in Congress are planning an aggressive schedule, to be wrapped up in "no longer than six months."

- March 31, 2009: Discussion draft

- April 6 - 17: Representatives return home for spring district work period

- Week of April 20: Hearings

- Week of April 27: Energy and Environment subcommittee mark up

- Week of May 4: Full committee hearing

- May 11: Full committee mark up begins

The draft legislation, which is currently 648 pages (pdf), contains four titles:

(1) a "clean energy" title that promotes renewable sources of energy and carbon capture and sequestration technologies, low-carbon transportation fuels, clean electric vehicles, and the smart grid and electricity transmission; (2) an "energy efficiency" title that increases energy efficiency across all sectors of the economy, including buildings, appliances, transportation, and industry; (3) a "global warming" title that places limits on the emissions of heat-trapping pollutants; and (4) a "transitioning" title that protects U.S. consumers and industry and promotes green jobs during the transition to a clean energy economy.

As many have noted, the first two titles of the draft contain some crucially important energy and job-creation initiatives which will provide exactly the type of boost we need to kickstart the green economy of the 21st century:

It has both a renewable electricity standard for utilities (25 percent in 2025, though "a fifth can be met with efficiency measures") and an energy efficiency resource standard -- two essential provision for jumpstarting a transition to a clean energy, green jobs economy, while keeping total energy bills low. It also establishes a Low Carbon Fuel Standard -- eventually, which is to say apparently after 2022.

I can not stress enough the importance of many of the provisions in the first two titles of this legislation. The sustainable energy and energy efficiency incentives are a fundamental component of the job-creation engine we need to get Americans back to work. As Speaker Pelosi noted on Tuesday's call, "This is especially important because the economy is in bad shape." I agree wholeheartedly, and hope that members of the media and policymakers are able to transcend the utterly predictable economy vs. environment storyline forces of the status quo will trot out to attack the very best provisions in the bill. This is a well-funded false choice, and members of Congress who intend to be taken seriously on matters of climate and economics would be wise to treat it as such.

A Democratic House aide familiar with the negotiations tells me that "taking into account concerns over allowances and offsets, if Congress passes something that looks anything close to what this draft looks like, then its a major coup." But it is just these concerns over allocations and offsets that have left some environmentalists skeptical of the discussion draft.

Critically, the section on global warming, Title III, fails to address how allocations for greenhouse gas emissions allowances would be distributed. Joseph Romm, the blogger, physicist and climate expert who blogs at, gives the bill a B+ overall, but notes that the energy provisions are significantly stronger than the climate sections. Natasha Chart seems to agree, calling it "a better job creation engine than a truly climate-friendly policy". Romm explained the significance of the draft's failure to address allowance allocation to me via email:

The danger in not specifying how allowances are allocated is that you don't have revenues to return to consumers as tax cuts. From a policy perspective, you need to auction the vast majority of the permits, and ultimately auction all of them. From a political perspective, you need to do what Obama proposes, give the vast majority of the revenues back to the public, so they are held harmless (or, in fact, do better than break even because they can adopt efficiency measures). From a messaging perspective, giving the money back to the public is the key to undermining the "biggest tax" argument.

The bill also includes a major disappointment on offsets, or as Romm calls them, rip-offsets. Jesse Jenkins, energy and climate policy director at the Breakthrough Institute and blogger at Watthead, emailed me a sharp explanation of the problem with the offset provision in Title III:

As expected, the Markey-Waxman discussion draft includes several provisions to contain the costs of compliance including a heavy reliance on up to two billion metric tons of offsets, or enough to allow almost a third of all emissions permits required under the climate regulations to be swapped for offsets.

Allowing that many offsets pokes a giant hole in the carbon cap, stuffs it with plenty of hot air, guts the carbon price signal for sectors we actually need to transform and - most importantly - robs us of billions of dollars of auction revenue that can and should be reinvested to accelerate and smooth the transition to a clean energy economy.

Title I also includes some troubling language in support of coal. According to the summary of the draft, "The draft promotes development of carbon capture and sequestration (CCS) technologies to ensure a continuing place for coal in our nation's energy future." Talking about a clean energy future while working to ensure a "place for coal in our nation's energy future" is oxymoronic. Similarly, Romm refers to a provision that would allow dirty new coal plants to be built under the condition that they are retrofitted by 2025 as "counterproductive sop to the coal industry."

There is much more to be happy about and much more to be upset about than what I've gone into here, and the details will be hashed out by the experts over the next several days, weeks and months. With that being said, here is what I think needs to happen.

As the bill makes it way through Congress, several principles must be adhered to in order to ensure that we are doing all we can for both the economy AND the environment. These include, among other things, the following:

  • Reducing coal consumption in the near term should be an underlying assumption of all provisions related to coal.
  • Cost containment provisions such as banking and borrowing, offsets, and a so-called "strategic reserve" of allowances should be either eliminated or structured in a way that maintains the integrity of the environmental cap.
  • All reduction targets should adhere to what the the latest credible science says is necessary to prevent catastrophic climate change.
  • A very large majority of emissions allowances should be auctioned, rather than given away as "free allocations."

When all is said and done, some form of this bill must be signed into law by President Obama before the international climate change negotations in Copenhagen in December. Domestically, many of the sustainable energy and energy efficiency provisions are exactly what we need to address our economic, environmental and energy woes simultaneously. These are simply some of the best policy ideas currently on the table, and the potential costs of not implementing them in short order is far too high to let less favorable provisions poison the legislation as a whole.

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