ACES

The climate bill being drafted by U.S. Sens. John Kerry (D-Mass.) and Lindsey Graham (R-S.C.) is widely viewed as a compromise between lawmakers bent on reducing fossil fuel emissions and those who fear such reductions will cripple the domestic energy industry.

But their approach of applying different types of carbon limits to different sectors of the industry doesn't just downplay the urgency of reducing emissions. Some economists say the sector-specific approach would be costlier to society and less efficient than an economy-wide approach that would limit emissions “upstream” from where fossil fuels enter the economy, such as at companies that supply raw energy.

The U.S. got its first glimpse of the future Senate climate bill today as Democrat John Kerry and Republican Lindsey Graham outlined a compromise plan that fully embraces nuclear power, off-shore drilling, "clean coal" and cap-and-trade.

The framework echoes the House's 17 percent mid-term emissions cut, rather than the tougher 20 percent cut approved by the Senate Environment and Public Works Committee. It also seeks to shield agriculture from the impact of a price on emissions.

Right now, the framework is still just that, a sparse framework. The details will come later as various Senate committees combine their bills with those already passed by the Environment and Public Works and Energy and Natural Resources committees.

What the framework does, Kerry said, is lead the way toward “comprehensive climate change and energy legislation that will pass the Senate early next year.”

Sen. Max Baucus, who has worried fellow Democrats with his concerns about the costs and depth of emissions cuts in the Senate climate bill, said today that he is committed to passing "meaningful, balanced climate change legislation."

Last week, the Montana senator was the only Democrat to vote against the climate bill in the Environment and Public Works Committee.

Today, Baucus opened a hearing of the Senate Finance Committee, which he chairs, by saying:

"I want our children and grandchildren to be able to enjoy the outdoors the way that we can today. So I’m going to work to pass climate‐change legislation that is both meaningful and that can muster enough votes to become law.

"Today we’ll hear predictions — some optimistic, some otherwise — about the effects that climate legislation will have on American jobs and the American economy. We need to consider these predictions. But we also need to consider the consequences of failing to act."

What Baucus's comments will mean for the climate bill remains to be seen.

Starting Tuesday, Sen. Barbara Boxer will be launching a marathon week of hearings in her Environment and Public Works Committee on the Senate’s version of a climate and energy bill.

It comes as new evidence from the Arctic shows climate change is occurring more rapidly than scientists predicted just a few years ago, and as Greenpeace warns President Obama that Congress is on track to undermine his promise of a clean energy future.

Many advocates, including Greenpeace, believe the House and Senate bills aren’t stringent enough to deal with the urgency of the situation.

But there is another argument for taking advantage of the political moment and putting climate change legislation in place, even if it’s not perfect.

When the House passed its version of a federal climate bill in June, lawmakers included a provision to handcuff the Environmental Protection Agency when it came to greenhouse gas emissions from the nation's biggest polluters.

Bowing to demands of coal state Democrats, lawmakers effectively agreed that the agency shall not regulate "stationary sources" for CO2 — in other words, hands off the greenhouse gases from coal plants and large industries.

Today in the Senate, those handcuffs came off. The Senate climate bill introduced by Sens. Barbara Boxer and John Kerry made no mention of restricting EPA authority the way the House version did, and the agency wasted no time in raising both free hands in a move that put it emphatically center stage in the climate game.

Just hours after the roll-out of the Boxer-Kerry bill, EPA issued a press release explaining how it plans to control emissions from big polluters, including new power plants, by establishing common sense regulatory rules. EPA Administrator Lisa Jackson announced the details during a keynote address at the Governors' Global Climate Summit in California.

"We will not continue with business as usual while waiting for Congress to act," Jackson said from the podium.

It was the same Global Climate Summit where last November a newly-elected Barack Obama delivered a videotaped message, vowing U.S. leadership on climate change, and made instant global news.

While today's EPA announcement is not likely to be appreciated worldwide, it does provide evidence of the Obama administration's commitment to climate action ahead of international talks in Copenhagen. It is also an important regulatory development that will help determine whether the U.S. will really be able to reduce domestic industrial emissions of greenhouse gases or not.

Absent EPA authority, large loopholes and handouts in both the Senate and House versions of the climate bill will make it difficult, if not impossible, for the nation to depart from the trajectory of business as usual for decades. That's why one of the fiercest upcoming battles in the partisan war over federal climate law will be over the reach and authority of the EPA in reducing greenhouse gas emissions.

Nike, under pressure from shareholders, became the fourth company in the span of a week to pull away from the U.S. Chamber of Commerce over the business group's opposition to federal climate action and its call for a "Scopes Monkey Trial" on climate science.

The sportswear giant announced this morning that it was resigning from the Chamber's board of directors, though it plans to retain its U.S. Chamber of Commerce membership so it can continue "to advocate for climate change legislation."

"Nike believes U.S. businesses must advocate for aggressive climate change legislation and that the United States needs to move rapidly into a sustainable economy to remain competitive and ensure continued economic growth," the company wrote.

"As we've stated, we fundamentally disagree with the U.S. Chamber of Commerce on the issue of climate change, and their recent action challenging the EPA is inconsistent with our view that climate change is an issue in need of urgent action."

Nike's positions on federal climate action contrast sharply with those of Chamber executives, who have questioned the very science of global warming in their efforts to block greenhouse gas regulation by the EPA — regulations could change how high-emitting industries do business. Even in backpedaling from his Scopes Monkey Trial comment, Chamber Vice President Bill Kovacs continued to argue that there was no proof that global warming threatens public health and welfare.

Chamber President Thomas J. Donohue tried to clarify the group's position again yesterday

When it comes to U.S. environmental laws, individual states almost always blaze the trail for the nation.

They launched the first auto emissions regulations, building efficiency standards and emissions reporting rules. Now, they’re testing cap-and-trade programs, renewable electricity standards and renewable fuel standards, just to name a few.

So, as U.S. senators prepare to write their version of the federal climate and energy bill, five states are speaking out, urging them to step carefully and ensure that Congress preserves the authority of individual states to set even higher standards and to enforce the rules.

The five want a federal climate bill expedited, no question.

“We believe that the climate bill passed by the House, the American Energy and Security Act (ACES), represents a strong foundation upon which the Senate can build,” the attorneys general of California, Arizona, Connecticut, Delaware and New Jersey write in a letter to senators.

But the bills and proposals offered right now need work if they're going to succeed.

In addition to preserving state authority, the Senate should remove the House bill’s shackles from the EPA and allow it to regulate CO2 so the nation’s aging power plants aren’t free to pollute the air with impunity, the attorneys general write:

“In the absence of any controls for existing facilities, the bill would allow owners of older, dirtier plants to continue operating (or expand) their plants, free from controls such as improved efficiency or cleaner fuels."

The Senate also needs to get its reduction targets back on track with the science.

Part III of a three-part series on cap-and-trade looking at the successes, failures and lessons the U.S. government can learn from three programs already in place.

The European Union’s Emissions Trading Scheme creates a common market for trading permits to emit carbon dioxide in 27 countries and puts a price on carbon emissions. But the 5-year-old program isn’t flawless, and critics question whether it’s powerful enough to meaningfully affect global climate change.

Part II of a three-part series on cap-and-trade looking at the successes, failures and lessons the U.S. government can learn from three programs already in place.

The Regional Greenhouse Gas Initiative, a program to regulate carbon dioxide emissions in 10 Northeastern and Mid-Atlantic states, is proving a mandatory cap-and-trade program to address greenhouse gas emissions can work in the United States.

The program’s goals are modest — only one greenhouse gas is regulated and only power plants of at least 25 megawatts are covered. Emissions are capped at current levels through 2014, then the cap is reduced by 2.5 percent annually for four years until emissions are cut 10% by 2018.

Still, the fact 10 states overcame their differences to create a single compliance market to reduce carbon dioxide emissions is a “remarkable achievement,” says Judi Greenwald, vice president for innovative solutions at the Pew Center on Global Climate Change.

Also significant is that the system is working; the market has established a price for carbon dioxide emissions and power companies are willing to pay for allowances to emit.

“From a political perspective, it demonstrates that you actually can design and implement a cap-and-trade program in the U.S.,” Greenwald says. “A lot of people want to see a home-grown example. I think it’s very important that it’s working well and it’s working here.”

At the heart of the Waxman-Markey American Clean Energy and Security (ACES) bill is a national program to cap carbon dioxide emissions, with an accompanying market where polluters can buy and sell an increasingly limited number of pollution allowances.

Over the next few days, we’ll look at three cap-and-trade programs already in place – what works about them, what doesn’t, and what the U.S. government can learn.

Getting the U.S. Congress to consider a cap-and-trade program to reduce greenhouse gas emissions is no easy feat, but the fact it is even being considered at all owes much to the U.S. Acid Rain Program.

Created under Title IV of the 1990 Clean Air Act Amendments, the Acid Rain Program defied critics who saw it as a costly mistake that would burden the economy and concentrate pollution in regional “hot spots.” Instead, emissions of sulfur dioxide (SO2) and nitrous oxide (NOx), which mix with water, oxygen and oxidants in the atmosphere to cause acid rain, have declined dramatically nationwide at far lower costs than expected.

The reductions have had a significant health impact, too: The annual health and welfare benefits of the program are estimated to be $122 billion, in year 2000 dollars, and the prevention of “tens of thousands of premature deaths each year,” says Sam Napolitano, director of the U.S. Environmental Protection Agency’s Clean Air Markets Division. The annual cost of the program is $3 billion.

The program works because its central purpose is to reduce emissions, analysts say.