California voters back weakened climate law
-The opinions are the author’s own-
California voters on Tuesday rejected a measure to suspend the state’s innovative climate change law. But the state’s emission trading scheme has been substantially diluted to buy off opposition from energy-intensive industries and allay fears about job losses.
If it is true that “as California goes, so goes the nation”, the past 10 days have confirmed the lack of political support for tough emissions curbs.
The survival of California’s cap-and-trade scheme has kept alive hopes for enacting a patchwork of state and regional schemes in the absence of a federal program. Supporters hope establishing even a diluted system will lay the groundwork for a program that can be toughened as the economy improves.
But the state government’s last-minute decision to give away most emissions allowances rather than auction them suggests voters and politicians are not ready to embrace the steep increase in energy prices needed to decarbonize the economy.
“NO” ON 23 Proposition 23 would have suspended the 2006 Global Warming Solutions Act (AB 32) until the state unemployment rate fell below 5.5 percent for four consecutive quarters. Proposition 23 would have effectively killed the law because unemployment is currently over 12 percent and has only rarely dipped below 5.5 percent in the last three decades.
Voters rejected it by a wide margin following a heavily funded campaign pitting clean technology companies, environmentalists and moderate lawmakers against parts of the oil refining sector. With 92 percent of precincts reporting, “No” votes led “Yes” votes by 4.2 million to 2.6 million (61 percent to 39 percent), according to the Los Angeles Times.
States see pushback against carbon trading
– John Kemp is a Reuters market analyst. The views expressed are his own —
Efforts to implement cap-and-trade programs at state level are faltering, just as policymakers in Washington are struggling to generate enough support to put in place a comprehensive national system.
Recent setbacks in California and Arizona point to growing headwinds against the policy. As cap-and-trade loses momentum and becomes embroiled in bigger political disputes about the size and role of government, opponents are becoming emboldened to try to block the policy completely.
Carbon market supporters have repeatedly expressed the hope that state and regional initiatives can provide at least a temporary substitute as hopes for a national program have dimmed in the wake of last year’s failed summit in Copenhagen and a string of election defeats that have thrown the progressive wing of the Democratic Party onto the defensive.
But the same factors that undermined support for a nationwide program, especially concern about the near-term costs and adverse impact on employment when the economy is only just starting to recover from deep recession, are dimming enthusiasm at state level as well.
In trade policy, policymakers and analysts talk about “bicycling theory”: you have to keep pressing forward with new liberalizing measures or risk forfeiting the gains already made as the process loses momentum and support falls away.
Progress is on the march but it can feel a bit scary.
Don’t let Valero slow down California by stall AB 32.
Go to Ellabakercenter.org/stopvalero
Why step back and progree feels so good.
Emissions bill overhauled to secure votes
– John Kemp is a Reuters columnist. The views expressed are his own –
Prominent U.S. senators are set to substantially re-write climate legislation in a bid to secure the 60 votes needed for passage before Congress is engulfed by the mid-term election campaign.
According to well-sourced media reports that emerged at the weekend from conversations with aides engaged in the process:
(1) The single economy-wide cap-and-trade programme proposed by the American Clean Energy and Security Act (HR 2454) could be ditched in favour of sector-specific programmes for utilities, transportation and manufacturing. Utilities would be covered by an allowance trading system. Motor fuels would be subject to something like a tax. Energy-intensive manufacturers would eventually be covered by a trading programme but with a delayed start date.
(2) Free allocations of allowances to power and gas utilities to cushion the impact on household bills could be abandoned in favour of full auctioning, with revenues rebated directly to households. Proposals could resemble the cap and refund system advocated by Senators Maria Cantwell (D, Washington) and Susan Collins (R, Maine) (S 2877). They would also be consistent with the rebate approach recommended by California’s Economic and Allocation Advisory Committee (EAAC) for the state’s own cap and trade scheme.
The modifications would substantially re-write the main climate bill (S 1733) sponsored by Senator John Kerry (D, Massachusetts) which has been endorsed by the administration and received cautious support from Senators Joseph Lieberman (I, Connecticut) and Lindsey Graham (R, South Carolina).
This had little or no chance of passing before the fraud from East Anglia, the IPCC, and other sources came to light. With us still in a recession, and with public support flailing, it is highly unlikely any of this will pass in the short term. Obama’s window of opportunity has closed.
http://neoavatara.com/blog/?p=10123
Emissions prices in 2020
– John Kemp is a Reuters columnist. The views expressed are his own —
Uncertainty about the future cost of emissions allowances for greenhouse gases is one of the biggest obstacles to winning consent for a cap and trade or cap and refund programme in the U.S. Congress. To have any realistic prospect of passing emissions legislation, lawmakers must find a way to reduce it. Proponents argue a trading programme would ensure emissions reductions are achieved in the most cost-effective manner. They point to the success of the Environmental Protection Agency (EPA)’s Acid Rain Program in cutting sulphur dioxide (SO2) emissions much more quickly and at a fraction of the expected costs during the 1990s.
Title IV of the Clean Air Act Amendments (CAAA) 1990 established a trading programme for SO2 emissions from power plants. Phase I, beginning in 1995, covered the 110 dirtiest coal-fired electricity generating facilities.
Phase II, starting from 2000, covered all facilities with more than 25 megawatts of capacity, plus smaller plants using fuel with a sulphur content of more than 0.05 percent.
Estimates prepared before the programme’s launch put marginal compliance costs, and therefore the price of permits, at $579-760 per tonne (in 1995 dollars). In reality, compliance costs proved lower. Allowances started trading close to $150 per tonne, falling to just $70 in early 1996. While prices climbed above $200 per tonne in 1999 they fell again towards $150 in 2000. In the early years of Phase II, allowance prices fluctuated between $70 and $120.
California tilts towards cap and refund
– John Kemp is a Reuters columnist. The views expressed are his own —
California is set to auction all or almost all allowances under its emissions trading programme, and rebate up to 75 percent of the proceeds to households through a lump sum payment or reductions in income and sales taxes. The proposals, contained in a draft recommendation from the Economic and Allocation Advisory Committee (EAAC) to the California Air Resources Board (CARB), are in sharp contrast to the proposed federal programme, stalled in Congress, which would give away most permits to utilities and other energy intensive industries. Since California’s proposed programme is one of the most advanced, and would be the largest and most comprehensive in the country, with links to other states through the Western Climate Initiative (WCI), the decision gives significant impetus to proponents of the cap and refund approach, now emerging as a credible alternative in Congress. ADVISORY COMMITTEE MANDATE
California’s Global Warming Solutions Act 2006 (AB 32) requires the state to reduce its greenhouse gas emissions back to 1990 levels by 2020. CARB has developed a “Scoping Plan” detailing how the state will achieve this using a mix of direct regulations and an over-arching cap and trade programme. In May 2009, CARB established an Advisory Committee, consisting of technical experts, to make recommendations on two key elements: (a) how to put allowances into circulation (via auctions, free distributions, or some combination of the two); and (b) how to allocate free allowances or the revenues from permit auctions.
In making recommendations, the Advisory Committee must take account of various statutory objectives, among them to “ensure no disproportionate impact on low-income communities” and design the regulations “in a manner that is equitable, seeks to minimise costs and maximise the total benefits to California”. The draft recommendations therefore carry weight as an expert opinion of which system best meets both equity and efficiency criteria.
ALLOCATING PERMITS BY AUCTION
The Committee reviewed a range of auction designs (single or multiple rounds, uniform or discriminating price) as well as mechanisms for free distributions (fixed allocations based on historical emissions, or allocations updated in line with changes in relative output).
Massachusetts election kills cap-and-trade
- John Kemp is a Reuters columnist. The views expressed are his own -
The Republican Party’s stunning special election victory in deep-blue Massachusetts has killed any lingering prospect of passing cap-and-trade legislation in 2010, and with it international negotiations to produce a binding climate accord before the end of the year.
With no chance of U.S. action in the short term, emerging markets such as China and India are under no pressure to accept mandatory emissions reduction targets. If climate legislation is eventually revived in the United States, in 2011 or beyond, it may come back in the form of a carbon tax rather than a permit trading program.
TO RETREAT OR REINFORCE? Perhaps the most important decision any general has to make is when to stand and fight, and when to beat a retreat in order to fight another day. The Massachusetts special election to fill the Senate seat left open by the death of Edward Kennedy confronts President Barack Obama with a similar strategic choice.
The administration can stick to its existing agenda and hope economic recovery comes in time to save the Democratic Party from heavy defeat at the mid-term elections in November. But with the loss of the crucial sixtieth vote in the Senate, much of that agenda now appears destined to sink into the upper chamber’s legislation swamp.
Or it can trim the agenda to de-emphasize the least popular measures, such as the climate legislation, and re-focus on the economy and popular themes, such as stiffening financial regulation. In practice this may now be the only course open to the president.
REBELLIONS WILL ONLY ESCALATE Balky congressional Democrats can read the election returns as well as the White House. Rebellions have already cut the administration’s notional majority of almost 80 to single digits in the House of Representatives, and left it struggling to find a reliable 60-vote super-majority in the Senate.
Senate retirements narrow cap-trade window
– John Kemp is a Reuters columnist. The views expressed are his own –
LONDON – Yesterday’s announcement by Senator Byron Dorgan (Democrat, North Dakota) that he would not seek a fourth term in November, coupled with today’s expected announcement by Senator Chris Dodd (Democrat, Connecticut) that he won’t seek a sixth term, will remove two veterans, once secure legislators from the Democratic caucus. It highlights the mounting problems confronting congressional Democrats facing voters in November’s midterms amid high unemployment, a relatively unpopular agenda led by the administration, and concerns about the party’s capture by special interests.
Dodd’s retirement is not surprising, given his plummeting poll numbers and criticism for being too close to the banking and insurance industries he regulates as chairman of the Senate Banking Committee but which have been major campaign contributors.
Despite trying to reinvent himself as a populist in recent months, the legislation he has worked on has sometimes appeared to show too much favouritism for the industry. He has also run into criticism for receiving VIP mortgages in 2003 from Angelo Mozilo’s failed Countrywide Financial.
Dorgan’s departure is more unexpected. He was re-elected with 68 percent of the vote in 2004. But the state leans towards the Republicans, breaking 53-45 percent in favour of Senator John McCain last year. A poll published last month showed Dorgan trailing behind popular state governor John Hoeven in a hypothetical match up.
SENATE VOTE TALLY In terms of climate change legislation, the prospective departures do not change the overall calculus but do step up the pressure for legislation to be passed within the next six months, if it is to be passed at all.
Dodd and Dorgan are emblematic of the division running through the center of the Democratic Party over cap-and-trade — pitting supporters from liberal states on the coast against sceptics from the heavy-industrial and coal-producing states of the Midwest and Appalachia, as well as Republican-leaning states in the interior. Dodd from coastal, liberal Connecticut, has been a consistent supporter of cap-and-trade, while Dorgan, representing a Republican-leaning coal state in the interior, has expressed reservations. Their contrasting positions were highlighted in last year’s preliminary vote on the proposal. Senator Mike Johanns (Republican, Nebraska) offered an amendment to the annual budget resolution (Senate Vote 126-111, S Amdt 735 to S Con Res 13) prohibiting the reconciliation process being used to approve a cap-and-trade programme. The vote was widely seen as a straw poll for senator’s views on cap-and-trade. Normally, legislation would require 60 votes to secure a motion to proceed under Rule XXIII and forestall a filibuster.
An obvious solution is a carbon tax swap in which other taxes are swapped for a carbon tax. This way taxpayers don’t have to worry about their bills. In fact, such swap is actually cutting taxpayers taxes.
Cost of cap-and-trade for U.S. households
– John Kemp is a Reuters columnist. The views expressed are his own –
How much are U.S. households prepared to pay to avert the threat of climate change? According to the latest polling data published by the Washington Post, the answer is not very much, probably not much more than $25 per month or $300 per year.
Most respondents (65 percent) believe the federal government should regulate greenhouse gases from sources like power plants, cars and factories, including those who believe this strongly (50 percent) or somewhat (15 percent). Only a minority think the government should not regulate them (29 percent).
While the margin favoring regulation has narrowed since the middle of the year (when it was 75 percent to 22 percent), probably in response to a vigorous opposition campaign, there is still a clear majority in favor of taking some action on climate change.
The problem is that, when respondents are confronted with a range of cost estimates, support starts to fall away rapidly.
When asked if they would be prepared to pay for a scheme that cut emissions significantly but raised monthly energy bills by $10, the 65-29 percent margin in favor of regulation shrank to just 60-37 percent. If the cost was $25 per month, the margin was just 55-42 percent.
The poll did not ask respondents about higher charges beyond $300 per year. But if support continues to fall away at this rate, survey respondents would probably not be prepared to pay more than $400 a year in total.
Cap & trade is a scam. It has not worked well in previous formulations, since polluters can just move around their pollution credits and evade making significant changes. It will also become a new market, and boon for Wall St, however the profits will be rolled into price increases for the average consumer. The average person will likely shoulder a disproportionate burden. Simultaneously, adherence to cap & trade in developing countries will be difficult and far from transparent. Its basically an excuse for a big payday.
To be honest, the whole concept of climate change is wearing thin. We have to redirect our focus from CO2 emissions, to more dangerous, and proven, pollutants that go unregulated. We must also stop looking at climate change/ pollution as a global issue, we must start looking at it from a regional or local perspective. Cities, industrial centers, and transportation hubs are the main culprits, so why regulate pristine areas?
When we stop looking at this as “climate change” and “apocalyptic”, and start looking at it as addressing regional pollution, there would be much more support and progress. While the US is not innocent, we are far less of a polluter than China/SE Asia, with their permanent brown cloud. Climate change legislation would do little to stop particulate emissions, toxic chemical releases, and heavy metal and radioactive contamination. These are far more dangerous than one of the most common gases in our atmosphere.
Defeats doom climate bill in ’09
– John Kemp is a Reuters columnist. The views expressed are his own –
Resounding defeats for Democratic Party gubernatorial candidates in Virginia and New Jersey on November 3 have killed any lingering hope Congress will enact climate change legislation this year, and may doom the prospect of passing a cap-and-trade bill this side of the 2010 mid-term elections.
Prospects for eventually passing legislation may now depend on winning Republican support with nuclear loan guarantees and more offshore drilling.
While the president remains personally popular, with high approval ratings, and does not need to face the voters again for another three years, 16 Democratic senators and 256 Democratic members of the House of Representatives will be on the ballot in November 2010.
The Virginia and New Jersey off-cycle elections are often idiosyncratic. But crushing defeats for Democrats at the top of the ticket in both states are already sparking a bout of soul-searching over the lessons that need to be learned if the party is to retain firm control of both houses of Congress next year.
What worries many Democrats is that turnout among the young voters who helped propel them to victory last year fell away sharply, self-identified independents broke heavily for the Republican candidates; and voters overwhelmingly cited the economy and jobs rather than healthcare or climate change as their major concern in exit polls.
Democrats face the classic dilemma for any party after a defeat — press ahead trying to enact a difficult agenda or pull back, re-focus on simpler and less controversial measures.
Look over there, my boy and cheer
For coming from the yonder shore,
Bringing promises and more,
Old Cap’n Trade is here.
Far beyond the politics we know,
He sails the seas of emission trade,
Avoiding the perils of party debate,
Just watch him go.
The perils of the world are grand.
Cresting the waves of voter polls
And the erratic winds of public opinion,
The Cap’n will stand.
So away he sails to foreign lands,
While young girls and presidents
Are tucked safe in bed,
And old men sit on their hands.
Who can say just where or when,
Old Cap’n Trade will sail his boat,
Or when that peerless mariner
Will see our shores again?
from James Pethokoukis:
3 reasons why cap-and-trade is in trouble
The man who will almost certainly become Japan's next prime minister, Yukio Hatoyama, is promising to cut the nation's greenhouse gas emissions by 25 percent from 1990 levels by 2020.
That is a far more ambitious target that can be found in the legislation currently making its way through Congress. The cap-and-trade bill passed by the House of Representatives would trim U.S. emissions by 17 percent from 2005 levels. That translates to around a 6 percent cut from 1990 levels.
But even that lesser reduction seems unlikely to happen anytime soon. Climate change legislation faces a tough road in the Senate, and it may get pushed back to 2010 or beyond.
Cap and trade is, like healthcare reform, in trouble, and for many of the same reasons:
- There doesn't seem to be an acute crisis. Polls show that the vast majority of Americans are satisfied with their healthcare. Reasons for complacency can also be found in recent developments in climate change. A new NASA study notes global temperature increases have stalled out this decade, likely because of decreasing solar irradiance.
Obviously some dire event, such as a terrible swine flu season or a brutal spike in temperatures, could refocus public attention and concern. But for now there doesn't seem to be an emergency to motivate either voters or lawmakers.
- Most people won't see an immediate benefit. Proposed changes in the U.S. healthcare system wouldn't immediately change the current insurance coverage of most Americans, despite new government spending and higher taxes. Likewise, cutting carbon emissions will likely incur big costs today with any tangible benefits coming later this century. During a recession, neither provides the sort of cost-benefit analysis that strapped Americans are likely to find compelling.
Any impact will come from technology to scrub CO2 from the atmosphere, not lower emissions. Only working to lower emissions to stop global warming is like taking your foot off the gas when you’re in a car headed down hill with no brakes. You might crash at a slower speed, but you still crash.
DaBear is wrong as usual, its the republicans and the Chamber of Commerce that heavily supports off shoring our good paying middle class jobs, the republicans killed any legislation that punishes companies for doing so.For some bizarre reason they think the minimum wage workers that remain can sustain our government and pay off the national debt. Talk about a bunch of loons, and then they attempt to blame their evil ways on the democrats. Shame on you DaBear, get some education or shut up…