Cap and Trade Bill Presents Dilemma for Environmental Movement

There is an old saying that there are two things you never want to watch being made. The first is hot dogs. The second is legislation.

Considering that the legislative twists and turns taken by the first cap and trade bill dealing with carbon dioxide with a legitimate chance of passage, twists that have caused Greenpeace and the American Petroleum Institute to be on the same side of an environmental issue and not in a good way, that saying appears more than ever to be a truism.

On Thursday May 21st the House Energy and Commerce Committee, by a 33-25 vote passed the American Clean Energy and Security Act of 2009, also known as the Markey-Waxman bill, and sent it on to the full House. By the time it had left committee the bill was 946 pages long and already contained over 100 amendments, an indication that a Republican strategy predicted by Grist reporter, Kate Sheppard on May 18th (Republicans plan to offer hundreds of amendments to slow climate bill), had been at least partially successful.

The bill’s length lent itself to an instance of comic relief when Republicans demanded a reading to which Congressman Waxman employed a speed reader. The Republicans quickly waived the reading.

The first “cap and trade” bill was a part of the Clean Air Act of 1990 was aimed at the sulfur emissions that caused acid rain. Due to the fact that emissions were dramatically reduced at lower costs than projected, the bill was overwhelmingly viewed as a success.

The basic idea of cap and trade is to mandate a maximum or “cap” on polluting gases that an industry and/or particular company is allowed to produce that is gradually increased over time. Because some companies can make reductions more efficiently than others, they are allowed to sell any excess reductions as credits to companies unable to make reductions as quickly, thus, theoretically at least, allowing the market and profit motive to enhance the reduction process, making it as efficient as possible.

The “cap” part of the Markey-Waxman bill is a 6% mandated reduction in greenhouse emissions on the part of electrical utilities by 2012 and a 20% reduction by 2020. The bill requires a 17% reduction below 2005 levels by 2020 and a very ambitious reduction of 83% by 2050.

Those reductions can be achieved either by increasing renewable energy generating capacity, conservation measures or, as cap and trade implies, the trading of “credits.”

Not all environmentalists feel that cap and trade is the best strategy for reducing CO2 emissions, however. Robert Shapiro, chairman of the U.S. Climate Task Force, calls cap and trade a dead policy walking, arguing that for those who “care deeply about climate change….a carbon tax system has become the last reasonable policy standing.”

He argues that carbon taxes will lend predictability to energy prices, whereas cap and trade will “aggravate..price volatility.” Further, the complexity of cap and trade regimes make them vulnerable to “manipulation by special interests,” less immediate implementation due to the necessity of “lengthy negotiations,” possible exemptions for some polluters, the creation of a “hidden tax,” which, unlike the carbon tax, would find its way to “market participants, lawyers and consultants,” rather than the public treasury, and a lack of the strong public support needed to overcome special interest lobbying.

Indeed special interest lobbying on the bill has been so extensive that it seems that the crowds in the halls of Congress must be a fire hazard these days. Although the environmental movement had spent an impressive $4.7 million lobbying for the bill, according to 1Sky’s blog, the coal, oil and natural gas industries have spent almost $80 million in lobbying for just the last three months alone, including an onslaught of TV commercials sponsored by the American Petroleum Institute. Exxon alone spent over $9 million.

Unfortunately for proponents special interest lobbying is not the only source of opposition to Markey-Waxman.

The Waxman-Markey bill is dividing the environmental movement. While former Vice President and Academy-Award winning Global warming activist Al Gore thinks environmentalists ought to go all out in support of the bill, climate scientist James Hansen, feels we need to hold out for a better bill. Just how deeply the bill has divided the movement becomes clear when the list of organizations for and against the bill are reviewed.

Grist lists a total of seven organizations supporting the bill including the Environmental Defense Fund and World Resources Institute. Opponents of the bill in its current form include Greenpeace, Friends of the Earth, Rainforest Action Network and a bevy of smaller local organizations.

On its website Greenpeace calls the bill “bogus” and unacceptably weak. It calls on President Obama and the Democratic Congress to “get back to work and produce a bill based on science…”

Arguments in support of the bill seem to center on the idea that it is better to have a bill than no bill at all and/or that the bill is a good “first” step, perhaps employing the old engineering saying that the first workable good solution is always preferable to an improbable best possible to perfect solution.

Echoing that theme 1Sky’sCampaign Director, Gillian Caldwell characterized the bill as “the only viable legislative opportunity…before the Copenhagen Climate Conference in December of 2009 to move… toward a clean energy economy”.

Whether the fact that Markey-Waxman is the only game in town is enough to rally the support necessary to overcome the massive opposition of the special interests, however, remains to be seen.

Arguments against the bill, from the environmentalist perspective, include the idea that a carbon tax would be preferable to cap and trade, that the bill gives away too much to utilities and/or that the bill is too weak in its current form. In his Grist article Gar Lipow makes the argument that statements on behalf of pro-Markey-Waxman “mainstream” environmental groups that the bill “could be worse,” virtually guarantee that it will be. Comparing the groups to naive “first-time car buyers” getting hustled by salesmen in “loud suits,” Lipow contends that such statements indicate a willingness to live with Markey-Waxman in its current state, cementing an already weakened as the furthest left possible position. This, of course, ensures that all future movment on the bill will be the towards the center, further eroding the bill.

Not every environmental organization has taken a position for or against the bill. According to Grist Sierra Club, the Union of Concerned Scientists and 23 others are staking out a middle position, arguing that Congress needs to both “strengthen and support” the bill. If the bill remains in its current form or is further weakened it is not entirely clear which organizations will support the bill anyway.

Some of those organizations seem to have taken a position that could be best described as “nervous support,” of the bill, simultaneously concerned that to not support the bill is to miss an important moment while at the same time concerned about potential negative unintended consequences of the bill’s passage. Some of those worries were expressed during a rally in support of the bill here in Colorado.

The rally took place on Thursday May 28th at Confluence Park. A diverse coalition of groups was present including Environment Colorado, Colorado Wildlife Federation, 25×25 (a group advocating a 25% reduction in greenhouse gases by 2025) and Colorado Interfaith Power and Light.

While supporting the bill as a “spiritual” imperative, Nelson Bock, a spokesman for Colorado Interfaith Power and Light nonetheless wants to insure that the bill will not impact the poor with higher energy prices. He also hopes to make sure that “green” jobs are spread around to all income groups and skill levels.

Following the first 100 days “honeymoon” period, during which the Obama Adminstration was relatively effective in enacting its initial agenda, three of its more ambitious and far-reaching bills are colliding with the stone wall of well-entrenched special interests. The first of these is health care reform. The second, is Markey-Waxman. The third, the effort to close tax loopholes that allow multinational corporations to evade US taxes (such as the Foreign Investment Tax Credit or FITC) with overseas activities, which not only encourages the outsourcing of US jobs but also, if reforms are not enacted, will likely result in multinational flight to avoid the effects of Cap and Trade if only Markey-Waxman is passed.