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Bust a Cap

It’s not too late to salvage modest policy success from energy reform’s rotting corpse.

For years, most Democrats and environmentalists have been in rough agreement about how to tackle global warming. Set an overall limit on carbon-dioxide emissions, let polluters buy and sell permits, and watch the market work its magic. Both Barack Obama and Hillary Clinton campaigned on this idea, and the House passed a climate bill last year centered on an economy-wide cap. Sure, experts might have quibbled over the fine print, but the basic framework was pretty straightforward. But, all of a sudden, right as the Senate is set to take up energy legislation, climate advocates are scrambling for a Plan B. The problem is that a big cap-and-trade program can’t get 60 votes in the Senate—not after its lone Republican backer, Lindsey Graham, bailed on the idea in April. And so, as Harry Reid’s office tries to cobble together an energy bill, green groups are searching for a fallback plan that can at least make some headway in curbing carbon pollution—and in steering the country away from its fossil-fueled status quo.

The hot idea of the moment is to design a cap that would apply solely to electric utilities. At first glance, the logic seems sound: Power plants emit 40 percent of the country’s carbon pollution, and many utilities would welcome a cap, if only for the regulatory certainty they need to start making investments again. Yet there’s no guarantee that even a scaled-down cap can get 60 votes—the Republican base has whipped itself into such a frenzy over the term “cap-and-trade” that moderates are scared of anything bearing even a passing resemblance. Worse, the deals needed to pass a utility-only cap could do more harm than good. In exchange for their support, utility executives are asking for an exemption from a host of Clean Air Act rules, including those on toxic pollutants like mercury and sulfur dioxide.

That would be a terrible trade-off from an environmental perspective. Smog-forming pollutants like sulfur dioxide cause thousands of premature deaths each year—it makes no sense to trade one air-quality problem for another. What’s more, those existing Clean Air Act rules may actually be more useful for tackling climate change than a weak utility-only cap would be. After years of dithering under the Bush administration, the Environmental Protection Agency (EPA) is finally starting to enforce air-quality regulations, which will likely force utilities to shut down their oldest, creakiest coal-fired plants. Many of these plants were grandfathered in under the original Clean Air Act and have been spewing enormous amounts of carbon dioxide into the air ever since. A flimsy cap, by contrast, could allow these plants to keep running—if, say, utilities bought carbon offsets instead of making reductions.

The heavy focus on cap-and-trade is in danger of obscuring the fact that there are other crucial components of a strong energy bill—all of which will require careful attention. Reid’s bill, for instance, will contain a provision that requires power companies to get a certain portion of their electricity from renewable energy—that is, solar, wind, hydropower, or biomass. In the absence of a true price on carbon, this is a decent way of nudging the country toward cleaner sources of power (and replacing those scuttled coal plants). Yet the renewable standard passed by the Senate Energy Committee last year is unacceptably weak—its targets are so meager and riddled with loopholes that it would do less to promote clean energy than what individual states are already doing. Environmentalists are just now realizing that a robust renewable standard needs to be a major priority if cap-and-trade talks collapse. Then, there’s energy efficiency— the great solution to global warming that almost no one talks about. A recent McKinsey study found that the country could cut 17 percent of its emissions by 2020—the goal Obama pledged at Copenhagen—and save money, simply by rooting out energy waste. There are a slew of ideas the Senate can adopt along these lines, from stricter building codes to Senator Jeff Merkley’s bill to reduce U.S. oil consumption by 8.3 billion barrels per day by 2030 through tighter fuel-economy rules, electric-vehicle deployment, and a reduction in heating-oil use. Such proposals could add up to significant carbon savings—but only if Democrats focus on making sure these provisions are as tough as possible.

To be clear, if Congress does not enact strong climate legislation, this will count as an enormous failure. Intransigent senators like Ben Nelson who oppose a cap on carbon—yet offer no suggestions on how to avert an ecological catastrophe—are being grossly irresponsible. But, for now, those Democrats who do care about this looming crisis need to remember that the GOP will almost certainly gain seats in Congress next year. This may be the last chance for years to put the country on a saner, cleaner energy course. A strong energy-only bill, combined with EPA regulations, may not be the ideal way to tackle climate change, but it’s better than nothing at all. 

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