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Graphical Illustrations Depicting the Distribution of Allowances in the Bill
June 3, 2008
This morning, June 6, 2008, for the first time, a majority of the United States Senate signalled its support for mandatory climate action and, in particular, greenhouse gas (GHG) cap-and-trade.
Specifically, the Senate voted on whether to end debate (i.e., to "invoke cloture") on the Boxer substitute to S.3036, the Lieberman-Warner Climate Security Act, a bill that would establish a GHG cap-and-trade program and other measures to reduce U.S. GHG emissions. Had the motion passed, the Senate would have moved to a post-cloture debate on the bill, followed by a vote on the substitute itself. The motion received only 48 votes, with 36 voting against, falling short of the 60 votes required to invoke cloture. In addition to the 48 yes votes, six Senators who were absent – including presumptive presidential nominees McCain (R-AZ) and Obama (D-IL) – entered statements into the record saying they would have voted for cloture had they been present.
Not every vote for this procedural question can be read as support for the bill itself. In particular, 10 of the Democrats who voted for cloture shortly afterwards sent a letter to Majority Leader Reid (D-NV) and Sen. Boxer (D-CA) stating their opposition to the bill in its current form and listing the issues that would need to be resolved to win their support. Nevertheless, it is generally understood that the 54 Senators put themselves on record in support of greenhouse gas cap-and-trade. Moreover, seven of the Senators who either voted against cloture or remained silent on the vote have either cosponsored or voted for previous GHG cap-and-trade bills.
Today's vote shows that the next President will come to office with a majority of support in the Senate for GHG cap-and-trade, and very possibly with the 60 votes needed for passage for the right bill.
The Senate debate on the Lieberman-Warner cap-and-trade bill (S.3036) began in earnest yesterday, June 3, 2008. While the process forward is not yet clear, and there were no votes held, Senators rehearsed arguments for and against the bill, and announced their intention to offer several amendments.
The following Senators spoke in favor of the bill: Senators Boxer (D-CA), Lieberman (ID-CT), Warner (R-VA), Casey (D-PA), Dole (R-NC), Feinstein (D-CA), Kerry (D-MA), Sanders (I-VT), Snowe (R-ME). It is worth noting that Sens. Dole and Warner did not vote for the Lieberman-McCain cap-and-trade bill in 2003 and 2005.
The following Senators spoke strongly against the bill: Senators Inhofe (R-OK), Barrasso (R-WY), Corker (R-TN), Craig (R-ID), Domenici (R-NM), Enzi (R-WY), Grassley (R-IA).
Other Senators—Alexander (R-TN), Gregg (R-NH), and Specter (R-PA)—acknowledged the need to take climate action but spoke against the bill in its current form. These senators described changes they would like make to the bill and indicated forthcoming amendments to do so. However, it is not clear whether these Senators would vote for the bill if amended as they desire. It is worth noting that Sen. Gregg voted for the Lieberman-McCain bill in 2003 and 2005.
These Senators discussed the following amendments:
- Would establish a cap-and-trade system for fossil-fuel-fired power plants only, and a separate low-carbon fuel standard for transportation fuels to take effect in 2023.
- Would use revenue from allowance auctions to offset taxes, dollar-for-dollar for "working Americans."
- Would replace the GHG reduction targets in S.3036 with the more conservative ranges in his bill (S.1766), which aims for 1990 emission levels in 2030, with further reductions dependent on international action.
- Would replace S.3036's cost-containment provisions with the safety valve in S.1766, which would effectively establish a ceiling price on emissions allowances.
- Would replace S.3036's international trade provisions with those from his own bill, which give less discretion over how imports of certain energy-intensive commodities from countries that do not have cap-and-trade systems are treated.
Last night, the Senate began debate on the Lieberman-Warner Climate Security Act of 2008 (S.3036). This is the first time that greenhouse gas (GHG) cap-and-trade legislation has proceeded through regular order—that is, through the committee process, and potentially to votes on the Senate floor. A previous version of this bill, then designated as S.2191, was passed 11-8 by the Senate Environment and Public Works (EPW) Committee in December 2007. The legislation currently under debate has been extensively revised from the version of the Act passed by the EPW Committee.
If enacted into law, the bill would establish a market-based GHG cap-and-trade program in the United States, and establish other measures to reduce GHG emissions. Most observers consider it unlikely that the Senate will pass the bill this year. To win final passage, it would not only have to garner a simple majority of 51 votes, but also attract the 60 votes needed to break the threat of a filibuster which would likely follow any motion to report it out of the Senate. Moreover, President Bush has promised to veto S.3036 should it ever reach his desk. Nevertheless, the bill's proponents —led by Senators Boxer (D-CA), Lieberman (ID-CT), Warner (R-VA), and Senate Majority Leader Reid (D-NV)—are seeking a result that shows the Senate is ready to pass legislation to reduce GHG emissions, even if S.3036 falls short this year. Proponents of the bill will be speaking to two audiences in the coming debate—the public and other Senators—with the goal of convincing them that the costs of the bill will be minimal compared to the benefits of changing the way the United States uses energy, and avoiding the worst consequences of climate change.
Opponents of cap-and-trade, and of GHG emissions mandates—led by Sen. Inhofe (R-OK)—are hoping for an opposite result. They joined proponents in voting Monday night (June 2, 2008) to allow the bill to inch through the Senate process, and then insisted on the 30 hours of debate due to them under Senate rules before amendments to the bill can even be considered. They will use this time to cast climate change legislation in the most unfavorable light possible. Today (Tuesday) will see opponents decrying the bill for its supposed disastrous effects on the economy, and as a measure which is ill-considered in a time of rising gasoline prices and possible recession.
Where the process goes from here is yet unclear. The current version of Lieberman-Warner has been in circulation for just over a week. A number of Senators who support action on climate change are still familiarizing themselves with its provisions and not guaranteed to vote for it. Only after gauging their support will Reid and the other leaders decide their strategy. This will probably be developed sometime today, though may not be made clear to the public before Wednesday or Thursday.
The Lieberman-Warner Climate Security Act of 2008 was debated in the Senate in early June 2008. This page pulls together various resources on the bill, including insights from economic modeling analyses, a bill summary and quick reference guide to the bill, as well a daily update on debate proceedings. Bookmark this page to easily access key material about the Lieberman-Warner bill.
Quick Reference Guide:
- Brief Summary of the Bill
- Expanded Summary
- Figures Illustrating the Distribution of Allowances in the Bill
- Comparison Chart: Economy-Wide Cap-and-Trade Proposals in the 110th Congress
- The Center's President Eileen Claussen on Climate Bill: A Letter to Senators
On June 6, 2008, for the first time, a majority of the United States Senate signaled its support for mandatory climate action and, in particular, greenhouse gas (GHG) cap-and-trade.
Specifically, the Senate voted on whether to end debate (i.e., to “invoke cloture”) on the Boxer substitute to S.3036, the Lieberman-Warner Climate Security Act, a bill that would establish a GHG cap-and-trade program and other measures to reduce U.S. GHG emissions. Had the motion passed, the Senate would have moved to a post-cloture debate on the bill, followed by a vote on the substitute itself. The motion received only 48 votes, with 36 voting against, falling short of the 60 votes required to invoke cloture. In addition to the 48 yes votes, six Senators who were absent – including presumptive presidential nominees McCain (R-AZ) and Obama (D-IL) – entered statements into the record saying they would have voted for cloture had they been present.
Not every vote for this procedural question can be read as support for the bill itself. In particular, 9 of the Democrats who voted for cloture shortly afterwards sent a letter to Majority Leader Reid (D-NV) and Sen. Boxer (D-CA) stating their opposition to the bill in its current form and listing the issues that would need to be resolved to win their support. Nevertheless, it is generally understood that the 54 Senators put themselves on record in support of greenhouse gas cap-and-trade. Moreover, seven of the Senators who either voted against cloture or remained silent on the vote have either cosponsored or voted for previous GHG cap-and-trade bills.
Today’s vote shows that the next President will come to office with a majority of support in the Senate for GHG cap-and-trade, and very possibly with the 60 votes needed for passage for the right bill.
Models only provide a simplified view of our economy. In the case of the Lieberman-Warner Climate Security Act (S.2191), models can capture many of the key policy elements (e.g., the impacts of targets, timing, and offsets) but cannot incorporate all of them.
This In-Brief examines some of the models that have been used to assess the economic impacts of the Lieberman-Warner Climate Security Act (as reported out of Committee in December 2007) and puts them in context for consumers of this modeling information.
Download the In-Brief (PDF)
- Primer on Liberman-Warner Climate Security Act (S.2191) - As Reported out of Senate EPW Committee (PDF)
Vicki Arroyo, Director of Domestic Policy Analysis, Pew Center on Global Climate Change
- Insights from Modeling Analyses of the Lieberman-Warner Climate Security Act (S.2191) (PDF)
Janet Peace, Director for Markets & Business Strategy & Senior Economist, Pew Center on Global Climate Change
In this paper:
- Download Full In Brief
- Press Release
- Further Reading: Insights Not Numbers: The Appropriate Use of Economic Models
May 21, 2008
Contact: Tom Steinfeldt, (703) 516-4146
Click here to access the study.
ECONOMIC INSIGHTS OF THE LIEBERMAN-WARNER CLIMATE SECURITY ACT
Review of Six Economic Modeling Analyses Reveals Important Policy Insights
WASHINGTON, DC -- The Pew Center on Global Climate Change today releases a new study that provides critical insights regarding economic analyses of the Lieberman-Warner Climate Security Act (S. 2191). The study analyzes six major economic modeling exercises conducted to assess costs of this legislation. The Pew Center’s analysis puts the modeling results in context to provide a clear understanding of what models can - and cannot - reveal about the costs of climate policy.
The Pew Center examines the following economic modeling analyses of the Lieberman-Warner bill to derive insights about the drivers of key results and to inform effective policies.
- Energy Information Administration
- Clean Air Task Force
- American Council for Capital Formation/National Association of Manufacturers
- Massachusetts Institute of Technology
- Environmental Protection Agency
- CRA International
Key insights drawn from these modeling analyses and outlined in the Pew Center brief include the following:
- Availability of advanced, low-carbon technology is crucial to minimizing the costs of achieving greenhouse gas reductions;
- Flexibility in the timing of greenhouse gas reductions and allowing banking and borrowing of emission allowances lowers costs;
- The more offsets available, the lower the costs;
- Energy efficiency provisions reduce costs; and
- Robust economic growth is still achieved with climate policies in place.
“Stepping back from the details, all of these modeling efforts show the importance of policies that provide flexibility - like banking and offsets - and promote advanced low-carbon technologies and efficiency,” said Pew Center President Eileen Claussen. “This study delivers critical insights and demonstrates that cost-effective approaches to address climate change can be achieved with sensible policies.”
While the models offer valuable insights, they do not tell the complete story. They reveal long-term assumptions are at best only approximations. For example, accurately predicting the availability and cost of technologies 50 years in the future is nearly impossible. The models do not fully represent the Lieberman-Warner bill, often omitting potential cost-savings provisions including certain energy efficiency inducements and the Carbon Market Efficiency Board’s role in regulating allowances. The models also fail to consider the costs of inaction, and any credible analysis finds that unabated climate change will cost far more than reasonable climate policy.
As a companion to this study, a recent Pew Center paper describes the advantages and limitations of economic models for evaluating policy options. Insights Not Numbers: The Appropriate Use of Economic Models explains that economic modeling cannot predict future events or produce precise projections of the consequences of specific policies. Instead, model results are more appropriately used to provide insights into key economic relationships, to explore the impact of alternative policy designs, and to produce ranges of results based on plausible assumptions and reliable data.
For more information about global climate change and the activities of the Pew Center, visit www.c2es.org.
The Pew Center was established in May 1998 as a non-profit, non-partisan, and independent organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.
Statement of Eileen Claussen, President
Pew Center on Global Climate Change
April 16, 2008
The proposal announced by President Bush today is a step backwards for U.S. climate policy. In 2002 the administration laid out a plan that allowed U.S. emissions to grow until 2012 - the current proposal will allow our emissions to grow until 2025. This proposal is a non-starter both domestically and internationally. The only good news is that this is irrelevant - both in the U.S. and globally - because this administration has only 9 months left in office and we have three presidential candidates who will take this issue seriously.
Pew Center Contact: Tom Steinfeldt, 703-516-4146
Science Friday's Ira Flatow talks with Eileen Claussen, who explains why President's Bush's new climate change proposal is a non-starter. (April 18, 2008)
On NPR's Morning Edition, Eileen Claussen discusses President Bush's climate change goals and why they are a step backward. (April 17, 2008)
A cap-and-trade system is one of a variety of policy tools to reduce the greenhouse gas emissions responsible for climate change. A cap-and-trade program sets a clear limit on greenhouse gas emissions and minimizes the costs of achieving this target. By creating a market, and a price, for emission reductions, cap and trade offers an environmentally effective and economically efficient response to climate change.
Ultimately, cap-and-trade programs offer opportunities for the most cost-effective emissions reductions. Many challenging issues must be addressed before initiating the program. Once established though, a well-designed cap-and-trade market is relatively easy to implement, can achieve emissions reductions goals in a cost-effective manner, and drives low-greenhouse gas innovation.
Resources accessible on this page help explain what cap and trade is and how it works to address the climate change challenge:
- Climate Change 101 Series: Cap and Trade explains how a cap-and-trade program sets a clear limit on greenhouse gas emissions and minimizes the costs of achieving this target.
- Cap and Trade vs. Carbon Tax
- Understanding the options for market-based mechanisms
- Carbon tax basics
- Congressional Policy Brief Series
- Climate Policy Memo Series
- Capitol Hill Briefings
- Paper: Offsets in Cap & Trade
- Brief: Policy Options to Reduce GHG Emissions from Transportation Fuels
- Op-Ed: Handling Climate Change
Response of the Pew Center on Global Climate Change to the House Energy and Commerce Committee's Climate Change Legislation Design White Paper: Competitiveness Concerns/Engaging Developing Countries
The Center commends the Committee for initiating this examination of options for addressing competitiveness and developing country engagement, in the context of domestic climate change legislation, and welcomes the opportunity to provide input on these critical issues. This submission offers a general perspective on these issues and responses to the questions posed by the Committee.
The issues of competitiveness and developing country engagement are closely related, and some policy approaches that might be incorporated into domestic climate change legislation could, to some degree, address both concerns simultaneously. However, it is important that these two issues be disentangled and that each be considered in its own right, both in order to understand their full characteristics and dynamics, and to identify policy options that may address one but not the other. Further, it is important to consider whether a particular policy approach that appears to hold promise in addressing one concern may complicate or undermine efforts to address the other.
Speech by Eileen Claussen, President, Pew Center on Global Climate Change
Pew Center State and Federal Workshop
February 25, 2008
On behalf of the Pew Center on Global Climate Change and the Pew Center on the States, I’d like to welcome you to our conference: Innovative Approaches to Climate Change: A State-Federal Workshop. I welcome the opportunity to be with all of you and kick-off this very timely conference that will examine the specific roles of Washington and the states in addressing the urgent challenge of global climate change.
As most of you know, what is happening on this issue right now is this: In the absence of federal action, states have taken the lead in designing regulatory approaches to reduce the greenhouse gas emissions that cause climate change. And while it is good that the states are acting - it does not mean the federal government is irrelevant. In fact, both Washington and the states have specific and important roles to play. And I will spend a few minutes this morning discussing what these different yet complementary roles look like and mean.
But first, let’s examine why states are acting. I think there are three reasons: risks, opportunities and authority. States are very close to what is happening - they see the risks that climate change poses to their states – not just higher temperatures and heat waves, but more coastal flooding, more intense rainfall, higher levels of drought, increases in the number and intensity of wildfires, and more. But many states also see opportunities in responding proactively to climate change, including developing new industries in alternative energy, applying information technology to buildings to improve energy efficiency, and improving the quality of life for their citizens through smarter growth.
States also recognize that they have real authority to reduce emissions. They are empowered to take action. States can promote clean electricity and energy efficiency with policy tools such as net metering, green pricing, and public benefit funds. States have authority to adopt building efficiency codes, which can have a major impact when you consider that energy use in buildings produces about 43 percent of U.S. carbon dioxide emissions. States also have great control over smart growth policies and transportation policies aimed at reducing emissions from cars and trucks. These are examples of things that fall within a state’s authority and in many instances, outside the authority of the federal government.
But what about the federal government? Washington most assuredly has been absent from the effort to reduce U.S. emissions, as I have said. But there are signs this will change, probably in the next couple of years. And so, when the federal government finally chooses to act, is there a risk that it might come in and supercede all the good and thoughtful work of the states?
I think not. I think the question of federal vs. state action on climate change is not a question of either/or. My thesis is that the states can do some things (indeed they are better suited to do some things) and Washington can do other things that only Washington can do. And I think there is more than enough responsibility and hard work to go around.
For example, certain actions, if they are taken nationally, can be more cost-effective. And we also have to keep in mind that there is no guarantee that all states would act individually. In order to reduce emissions of greenhouse gases, and to do so both cost-effectively and to the levels scientists say are necessary, I do believe we need the federal government to step up to the plate at the same time that the states are doing their part.
One of the things that Washington can and should do is to create a national cap-and-trade program to reduce greenhouse gas emissions. Cap-and-trade has been embraced by business and political leaders from both parties as the best and most cost-effective way to achieve real, specified reductions in emissions. But cap-and-trade works best when it covers many emission sources.
The more states, or the more countries, that are part of the system, the more you can achieve efficiencies of scale and the more you can lower the cost of reducing emissions. This is why many states are reaching across their borders to establish regional cap-and-trade programs. They understand that the economics of cap-and-trade get better when more states and more communities are involved. But if regional approaches are better than going state-by-state, it is also true that a national approach is better than doing this on a region-by-region basis.
Ultimately, we need a national cap-and-trade program like the one making its way through the U.S. Senate. This plan aims to reduce emissions across the country and levels the playing field for businesses in all 50 states. It ensures that we’re able to take full advantage (as a nation) of the cheapest emission reductions we can find.
Another thing that only the federal government can do is negotiate and enter into international agreements on climate change. At the federal level, the United States needs to commit to play an active part in crafting an effective global response to this problem. We have not been playing a constructive role in this process – and that has to stop.
International negotiators, including the U.S., have agreed to a process aimed at producing a new global climate treaty by the end of 2009. This is an extremely ambitious goal, but one worth pursuing. Clearly, we need a global agreement as soon as possible that includes binding commitments from the world's largest economies. And a global agreement that creates a worldwide market for emission reductions will help lower the global costs of achieving our emission reduction goals.
Negotiating such an agreement is clearly a federal government responsibility … and it is a responsibility we will carry out more effectively if we commit as soon as possible to a national program of reducing emissions. Right now, emerging economies and major sources of emissions like China and India are hiding behind U.S. inaction on this issue. U.S. leadership, in the form of mandatory emission limits at home coupled with a strong push for binding international commitments, would set the stage for effective global action – and, ultimately, real progress in reducing emissions around the world.
Does this mean the states should step aside and cede the leadership role on the climate issue to Washington? No. The states can and should keep exploring ways to leverage their unique authorities in areas from energy regulation to building codes, smart-growth planning and more. States are doing important and valuable work in all of these areas, and that must continue at the same time that the federal government begins to fulfill its role in the partnership.
In closing, I want to remind you of the vision of Justice Louis Brandeis. He saw the U.S. states as “laboratories of democracy” where policy innovations could take hold and perhaps provide models for other states, and for our national government as well.
And I honestly believe we would not be where we are today in the climate debate – on the verge of adopting a national cap-and-trade program – if many of the states had not acted first to adopt their own targets and to pursue cross-border emission trading regimes.
The U.S. states are acting in the best traditions of federalism by advancing an array of solutions to climate change that address their specific concerns and that take advantage of their unique responsibilities in our federalist system of government. Today, the challenge is to create a more balanced state and federal partnership – a partnership that promises to bring much-needed certainty to the question of how we as a nation are going to address the most critical environmental issue of our time.