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CLIMATE CHANGE SOLUTIONS2009
Cap‐and‐Tradevs.
Carbon Fees
By Laurie Williams and Allan Zabel
Education and Work Experience• Laurie ‐ B.A. Yale University,
J.D. UC Berkeley• Allan – B.A. UC Santa Cruz,
J.D. UC Berkeley• Environmental Enforcement
Attorneys for 20+ years at US EPA Region IX, San Francisco
• Allan has worked extensively on Cap‐and‐Trade issues.
Disclaimer –Our presentation does not reflect US EPA or U.S. government position
Speaking as Parents and Citizens www.carbonfees.org
How Urgent is Climate Change?
The Biggest Obstacle ‐Clean Energy is Not Competitive
What is Cap‐And‐Trade?
• Cap on Emissions from Covered Sources• Set Number of Emissions Credits• Declines Annually • Until Reaching Environmental Goal
• Trade – Credits Can be Bought and Sold
What Is the Acid Rain Program?
• “Poster Child” for Cap‐and‐Trade• Existing Coal‐Fired Power Plants • Burning Coal with SO2 = Acid Rain• Acid Rain killed fish and forests• Highly Accurate Emission Measurements• Needed Reductions in SO2 Emissions
What the Acid Rain Program Accomplished
• 43% Reduction in SO2 Emission in 12 Years• Fuel Switch: Low‐Sulfur Western Coal substituted for High‐Sulfur Eastern Coal
• Little New Infrastructure or Innovation– A Few New Rail Lines,– Minor Burner Modifications– Slightly more efficient scrubbers (90 vs 99%)
• Declining Cap Worked – “Proof of Concept”
How is Climate Change Different from Acid Rain?
• Need for New Clean Energy Revolution• Massive New Infrastructure• Extensive Innovation• Complexity (not a simple fuel switch)
Too Many Credits Given Out
Inaccurate Measurement
Outside Offsets
Outside Offsets –An Interactive Set of Problems
• Inaccurate Measurement• Unenforceability• Additionality• Fraud
CAP AND TRADE – OTHER PROBLEMS
• Gaming (counterproductive costs)• Price Volatility – Lack of Clean Energy Investment
• Market Failure – Suspension or Safe Harbor
Summary –Cap‐and‐Trade Weaknesses
• Deception – Shows progress while allowing degradation
• Unproductive Costs – Huge Bureaucracy, Offset Profiteers and Market Manipulation
• Delay in Clean Energy Investments
What are Carbon Fees?
1. Market Mechanism – Raise price of Fossil Fuels above Clean Energy.
2. Gradually phased – Example 10 years3. Point of extraction or importation – IRS4. Carbon Fees Trust Fund – Rebate
What is 100% Monthly Rebate?
• Monthly Payments• Equal Payments to all Adults• Less for Children• Regional Adjustments• Cushions Impact
Carbon Fees’ Impact on Conservation and Clean Energy Investment?
Why Will Clean Energy Prices Fall?
Have We Used Fees To Cut Emissions Before?
• Yes ‐ a U.S. Tax on Ozone‐Depleting Substances, “CFCs”
• Required Substitutes Not Modification of Existing Facilities
• Substitutes were More Expensive but Available
• 37% Reduction in First Year of the Tax
What are Other Critical Measures?
• Ban on New Coal‐Fired Power Plants• Efficient Energy Superhighway• Carbon‐Fee‐Equivalent Tariffs• Energy Efficiency Standards• Green Job Training
Who Else Supports Carbon Fees
• Environmental Justice Groups• James Hansen ‐ NASA• Al Gore – supports price on carbon• Mayor Bloomberg of N.Y.• Many Economists (e.g. Greg Mankiw of Harvard)• Former EPA Administrator Ruckleshaus• ExxonMobil CEO Tillerson (trojan horse?)• Carbon Tax Center in New York • Many Newspapers – NY Times, Detroit Free Press,
Chicago Tribune, Christian Science Monitor
Summary of Benefits of Carbon Fees• Rapid Transition to Clean Energy ‐ Clear Price Signal → Shift in Investment
• Cushions the Impact of Transition• Fair and Affordable for Everyone• Encourages Conservation• Little Government Funding• Cleaner Air• Energy Independence (No Foreign Oil Needed)• Global Leadership in Clean Energy
What Can You Do To Make It Happen?• Write to the Whitehouse (http://www.whitehouse.gov/contact/)
• Write to your other Elected Officials (http://www.beavoter.org/congressorg/home/)
• Write to 60 Minutes ([email protected]) &The Oprah Winfrey Show (https://www.oprah.com/plugform.jsp?plugId=220) – Ask for a show on this topic!
• Talk to Friends, Family, Neighbors and Colleagues• Keep in touch with us –www.carbonfees.org; [email protected]; (510) 390‐4224
Why the Waxman‐Markey Climate & Energy Bill(HR 2454)Won’t Work
• Cap‐and‐Trade with Weak Goals – inconsistent with needed reductions (aims for 3‐4% reductions from 1990 vs. 25%‐40% recommended by Intergovernmental Panel on Climate Change).
• Un‐provable Offsets – 2‐Billion Metric Tons per year of un‐provable offsets (can be used to meet all required reductions in “capped” sector until 2026; U.S. General Accountability Office agrees cannot be verified)
• New Coal‐Fired Power Plants without carbon sequestration• Strips EPA of ability to regulate CO2 as criteria pollutant at “capped”
facilities (our largest CO2 sources)• Clean Energy – Won’t correct Fossil Fuel’s competitive price advantage
over clean energy• International Negotiations ‐ Undermines U.S. ability to participate