By Eileen Claussen
This article originally appeared in Environmental Finance.
The prospects for serious US action to address climate change have never been better – and it’s not just because we have a new President. In fact, an important reason why we’re likely to see real action on this issue by the current Congress is because of leadership not in the world of politics but in the world of business. Even in the middle of a serious economic downturn, many of America’s top business leaders are standing firm in their support for climate solutions.
Just days before the inauguration of President Barack Obama on January 20, the US Climate Action Partnership (USCAP) took its engagement on the climate issue to a new level, issuing “A Blueprint for Legislative Action.” The Blueprint represents two years and literally thousands of hours of work by USCAP members and offers federal lawmakers a consensus plan for an integrated package of policies to slow, stop and reverse the growth of US greenhouse gas (GHG) emissions.
USCAP includes the CEOs of 26 major companies in industries from automobiles and oil to coal mining and coal-burning utilities, together with representatives of five non-governmental organisations, including the Pew Center. The coalition’s role as a catalyst for change, and one that has significant influence across the political spectrum, was evident when USCAP CEOs testified before the powerful House Energy and Commerce Committee in January. During the hearing, the panel’s new chairman, Henry Waxman, pledged to pass a climate bill through the committee in May.
Since USCAP’s launch in 2007, its corporate members – which include General Electric, Duke Energy and DuPont – have been calling with their NGO partners for enactment of a domestic cap-and-trade programme. USCAP’s new landmark recommendations provide Congress with details for how such a programme could be designed to achieve steep reductions in emissions in an economically sustainable manner.
The USCAP Blueprint calls for a cap on US emissions of 14-20% below 2005 levels by 2020, 42% below by 2030, and 80% by 2050. USCAP believes we can achieve these targets while rebuilding and reinvigorating the US economy. Its key features include:
- A robust carbon offsets programme, setting an overall annual upper limit for offset use starting at 2 billion metric tons with authority to increase the amount to 3 billion metric tons should market conditions warrant. Within this upper limit of 2 billion metric tons, domestic and international offsets would be limited so that each is no more than 1.5 billion metric tons in a given year. For example, the programme would allow for the use of 1.5 billion metric tons of domestic offsets and 500 million metric tons of international offsets;
- A Carbon Market Board to oversee a strategic offset and allowance reserve pool, containing a sufficiently large set of other offsets and, as a measure of last resort, allowances borrowed from future compliance periods that could be released into the market in the event of excessive allowance prices; and
- A combination of an auction of allowances with a significant initial free allowance allocation that facilitates the transition to a low-carbon economy for consumers and businesses, provides capital to support new low- and zero-GHG-emitting technologies, and funds adaptation measures. The free distribution of allowances would be phased out over time.
All of these measures were painstakingly negotiated as a way to both reduce emissions and revitalise the U.S. economy. They are joined in the USCAP Blueprint by a range of other proposals that would complement the national cap-and-trade programme with incentives for rapid technology transformation in areas from coal technology and transportation to buildings and energy efficiency.
Now to the question at the top of everyone’s mind: What are the actual chances of this kind of plan getting enacted during the 111th Congress? While we can only speculate at this point, the Pew Center’s belief is that the chances are very good. And we see several reasons why.
President Obama, in one of his first major policy statements after the election, reaffirmed his commitment to reducing US emissions to their 1990 levels by 2020 and to 80% below that by 2050, and to enacting a GHG cap-and-trade law. He has since appointed an environment and energy team with tremendous expertise and commitment to climate action.
In Congress, the Democratic leadership is made up of some of Congress’s strongest advocates of climate action, including Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi, and the chairmen of the key committees: Waxman of the House Energy and Commerce Committee, Barbara Boxer of the Senate Environment and Public Works Committee, and Jeff Bingaman of the Senate Energy and Natural Resources Committee. Key Republicans are also continuing their leadership on the issue, including Senator John McCain, who plans to reintroduce a cap-and-trade bill with his longtime ally, Senator Joseph Lieberman.
Finally, we see the prospects for near-term enactment of a serious cap-and-trade law as good because of the very fact that these proposals have the backing of many of the nation’s leading businesses. Today, for the first time since climate change appeared as a faint bleep on the national radar screen in the mid-1980s, we are seeing what appears to be a critical mass of leadership and engagement in the White House, Congress and the business community.
However, while the stars may be aligned as never before, the push for serious climate action still faces enormous challenges. Designing an effective cap-and-trade programme will be very hard work – and hard politics.
But progress is possible, and we are beginning to see the outlines of a consensus approach to this problem. Even as the US is facing a significant economic challenge, the nation’s business and political leaders are increasingly vocal about their commitment to addressing climate change not at a later date but right now.
The current consensus bodes well for serious climate legislation finally emerging from Congress – and for the US finally to start exercising leadership on the most important global issue of our time.
- Eileen Claussen is President of the Pew Center on Global Climate Change.