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If Cap-And-Trade Dies, Is An Energy Bill Still Worthwhile?

The talks over the Senate energy/climate bill are still very, very fluid. A whole lot could change in the next ten days as Harry Reid's office tries to cut and paste from different pieces of legislation and assemble something that can garner 60 votes. But, right now, the odds look pretty bleak that a cap-and-trade system will make it into the final bill. Which raises the obvious question: If there's no cap on carbon, what else is there? And could a cap-less bill still be a decent piece of legislation?

First, a recap: An economy-wide cap-and-trade program for carbon emissions has been in trouble ever since Lindsey Graham bailed on the policy back in April. So environmental groups have started focusing on a smaller cap that would only apply to electric utilities. The logic seemed fair: Power plants are where most of the earliest, easiest carbon cuts will get made, and utilities already have plenty of experience dealing with regulations and emission-trading programs. Trouble is, utility executives are arguing that, in exchange for their cooperation, they should be exempt from all sorts of EPA rules. Yesterday I ran down why that was a terrible idea, and green groups seem to be balking, too. So those talks have now reached an impasse.

But if utilities and greens do reach a deal, what then? Reid will unveil an energy bill—probably the week of July 26—with a cap-and-trade component. Republicans (plus a few other Dems like Ben Nelson) will probably filibuster on the motion to proceed, so Reid will take back the bill, strip out cap-and-trade, and push forward with an energy-only bill. Or, there's another possibility: According to a few Senate sources, Republicans are thinking about letting Reid bring the energy bill, complete with cap-and-trade, to the floor. These Republicans are convinced that a debate over carbon caps will be damaging to Democrats—it's a fight they actually want. If that happens, and the bill then fails, Reid won't be able to resurrect energy-only until later in the year—probably after the August recess.

Anyway, enough procedural stuff. If cap-and-trade flames out one way or the other, is there anything good left in the bill? Actually, yes. In fact, some congressional staffers have been grousing lately that environmental groups are so obsessed with cap-and-trade—which has only a slim chance of passing anyway—that they've been neglecting some of the energy bill's other potential provisions, like the national renewable standard that would require utilities to get a certain portion of their power from wind, solar, biomass, etc. by a certain date.

In the absence of cap-and-trade, a renewable energy standard makes a fair bit of sense. Right now, the EPA is starting to ramp up Clean Air Act enforcement for the first time in a long time. The agency just unveiled new rules to crack down on smog- and soot-forming pollutants like sulfur-dioxide and nitrogen-dioxide. As a result, many electric utilities will likely have to close their oldest and dirtiest coal-fired plants in the next few years. The cleanup costs will just be too great otherwise. And that means power companies are going to have to figure out how to replace all that lost capacity. A renewable energy standard will force them to harness cleaner forms of energy, rather than simply building brand-new coal or gas plants.

Now, the trouble is, the renewable electricity standard that's currently floating around the Senate—the one in the ACELA bill passed by the energy committee last year—is woefully flimsy. On its face, it would require utilities to get 15 percent of their power from renewables by 2021. But utilities could get 4 percent of that from efficiency measures—and since efficiency tends to be cheaper than solar and wind, they'd probably opt to do so. Plus, there are all sorts of carve-outs and exemptions for various utilities that water down the standard even further. As a Union of Concerned Scientists analysis found, the ACELA standard would end up doing less than the patchwork of mandates that individual states have already enacted. In other words, it'd be worse than nothing.

Green advocates seem to be catching on to this fact. As Andrew Restuccia (who's doing terrific work on the energy debate) reports at The Washington Independent, many environmental groups are now scrambling to bolster the renewable standard. Even Jeff Bingaman, who wrote ACELA, agrees that it could be strengthened. So, for instance, Tom Udall is sponsoring a bill that would shoot for 25 percent renewable power by 2025. There are also likely to be debates about whether utilities should have mandates for efficiency on top of the renewable standards—rather than putting the two in competition with one another.

Of course, even if Democrats strengthen the renewable standard, it still needs 60 votes. And that's not easy. Certain conservative Dems—like Evan Bayh—hate the policy. And southern politicians have long insisted that they don't have any renewable resources (that's not technically true—there's plenty of biomass down there, although biomass can be dubious). One option to attract votes, then, would be to expand the definition of "renewable." Lawmakers could consider allowing nuclear power to qualify, for instance. I've heard some experts suggest that this concession would be fairly meaningless in practice, since nuclear plants are so expensive—and take so long to build—that few utilities would want to risk building one to comply with the law (especially since the standard comes with hard deadlines, and nuclear reactors are prone to delays). But that's likely to be contentious.

Then there are a bunch of other under-the-radar provisions worth paying attention to in the energy debate. For instance, Jeff Merkeley just introduced a bill that would focus on reducing oil consumption by 8.3 billion barrels per day by 2030 (through fuel-economy standards, electric-vehicle deployment, reducing heating-oil use, etc.). And there's the Home Star proposal, which would give homeowners up-front rebates for retrofitting their homes—insulation, duct sealing, making their water heaters more efficient. A lot of these items could make real headway in chipping away at carbon emissions, but they have to actually make it into the final bill. (The Center for American Progress has a longer, more exhaustive list of similar ideas and policies.)

If you added all this up, would an energy bill without a cap on carbon still be worthwhile? Would it be enough to help us avert a planetary catastrophe? That's a tricky question. An economy-wide limit on greenhouse gases is still the ideal option. But, for now, it looks like the only cap that can pass through the Senate would be watered down and do more harm than good. So we're left with the combination of EPA Clean Air Act regulations—which, first and foremost, will shutter a lot of older coal plants and prevent new ones from being built—along with a grab-bag of subsidies and regulations that would ramp up renewable power and tamp down on energy waste. That's not a recipe for the long-term transformation of the U.S. economy. And it's not going to be the sort of thing you can use to sign an international climate treaty. But in the short run? Sure, a strong energy bill plus the EPA could make a fair bit of progress. But so much depends on the gritty details. And no one knows how those will shake out yet.

(Flickr photo credit: Floydian)