Whither cap-and-trade? An IM exchange

June 12, 2009

One of the great things about working for Reuters is that I get to pester journalists who actually know what they’re talking about. So after reading Timothy Gardner’s story on the cap-and-trade bill today, I got him on IM, and learned a lot — not least that Waxman-Markey is being considered more of an all-encompassing energy bill, as opposed to simply a way of creating a cap-and-trade scheme. Which on the one hand means that it can be loaded up with enough pork to make it pass, but on the other hand makes everything much more complicated:

Felix Salmon: Your headline says that a cap-and-trade bill is “more likely” in 2010 than in 2009, is that right? And is this a new development?

Timothy Gardner: Well I think a lot of people who are watching Congress closely believe the stars are aligned like never before for action from the U.S. on climate. The EPA has proposed that greenhouse gases are a danger to human health, Obama has set new CAFE standards for vehicles and he also supports a cap and trade market.

TG: But I think too that NGOs, and carbon market developers like the International Emissions Trading Assocation, are beginning to realize that in a lot of ways the compromises have just begun. It’s not new that many people think the bill wont be completed unitl sometime next year. But the complexity of the many of the issues including what to do about nuclear, which is not addressed very much in the bill, and reframing the costs of putting a price on carbon during the recession, are new. The head of the IETA office in Washington, who worked on the Hill for 9 years on climate, said today “there’s not a snowball’s chance in hell” that the bill will pass this year.

FS: Yikes.

TG: There’s still a lot of optimism out there especially because now the White House supports forming a carbon market.

FS: But that was the other thing I wanted to ask you about — this nuclear thing

FS: Obvs nuclear energy has zero carbon emissions, right? So it will benefit from any cap-and-trade bill?

FS: But your story seems to imply that there might be something in the bill to scale back nuclear energy?

TG: Well, it’s close to zero emissions because you would have to build new plants and mine the uranium and dispose the waste. But yes it could benefit from a cap and trade bill but so far it has mostly left out of the process.

TG: I didn’t mean to imply that it would be scaled back. It’s just that any benefit it would get from cap and trade would have to be balanced with a program on what to do with the waste since storing it at Yucca Mountain has run into so many problems.

FS: I’m confused about this. Surely questions about what to do with nuclear waste are questions about what to do with nuclear waste whether or not there’s a cap-and-trade scheme, right? Why should those questions be addressed in a cap-and-trade bill?

TG: Nuclear doesnt necessarily have to be addressed in the Waxman bill, it could be addressed in another bill in parallell, but that could take time

TG: But the bill is first and foremost an energy bill, not just a cap and trade bill. So from what I’m hearing some Senators are looking for funds and loan guarantees to build new nuclear plants. If they get that there would probably have to be some kind of deal or plan on what to do with nuclear waste as well.

TG: It costs $3 to $5 billion to build a nuclear plant, so to build one will take time

FS: Hobbling carbon-derived energy isn’t enough for these guys? They need extra pork for nuclear energy on top?

TG: If the Senate wants to gain a few votes to get to the required 60, particularly if Al Franken doesn’t make it in. There are still more than 20 iffy Democrat Senators and quite a few Republicans that could go either way

FS: Wow, sounds like this is going to end up with more pork than David Chang festival. Thanks for your time!


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