New Proposed Climate Change Bill in Washington Is Simpler and More Equitable

On Sept. 22, in a speech to 100 world leaders gathered at the United Nations to discuss climate change, President Barack Obama declared the U.S. "determined to act."

But at the same time, word began to circulate on Capitol Hill that the Senate might be equally determined not to vote on the climate bill any time soon.

"We are going to have a busy, busy time the rest of this year," said Senate Majority Leader Harry Reid, D-Nev. "We still have next year to complete things, if we have to."

The bill is bogged down in part because of contentious and extended negotiations over health care. But to a greater degree, it is stalled because it is so flawed.

Indeed, the House bill is so bad that even those who supported it did so reluctantly. During the House debate, my friend Denis Hayes, president of the Bullitt Foundation, board chairman of the International Earth Day Network and veteran of many a legislative battle wrote a column that offered four strong reasons to reject the bill and then concluded, "If I were in Congress, I would hold my nose and vote for the Waxman-Markey bill."

Happily, a new climate bill drafted by Sen. Maria Cantwell, D-Wash., may soon be introduced that wouldn't require us to hold our noses at all. Indeed, it could change both the nature of the debate and its outcome.

Cantwell brings impressive credentials to the climate issue. Elected in 2000, she chairs the Senate Democrats 20/20 Energy Independence campaign and co-chairs the Apollo Alliance. Among her legislative achievements are the passage of a bill to prevent energy-market manipulation and the successfully blocking of an attempt by GOP Alaska Sen. Ted Stevens to allow drilling on the Arctic National wildlife refuge.

In its introductory text, Cantwell's Carbon Limits and Energy for America's Renewal (CLEAR) Act of 2009 promises "simplicity, transparency and equity." It delivers on all counts.

The bill is blessedly brief, 32 pages compared to the mammoth 1,427 pages in the Waxman-Markey bill (a number that will only grow in the Senate). You can actually sit down and read CLEAR in one sitting and understand how its pieces fit together.

Upstream vs. Downstream

Cantwell's approach to greenhouse-gas reductions is fundamentally different from Waxman-Markey. Rather than focus on carbon emissions, she concentrates on carbon inputs.

CLEAR limits the quantity of fossil carbon allowed to enter the U.S. economy. In other words, rather than requiring a downstream power plant to reduce its CO2 emissions, the bill requires the upstream coal, natural gas and oil companies that supply the power plant to limit their carbon production.

By shifting the responsibility upstream to the wellhead or mine or port of entry, the bill slashes administrative costs to a fraction of what they will be under Waxman-Markey. Only a few thousand energy-producing or importing firms would be covered, versus the hundreds of thousands or more entities covered under Waxman-Markey.

Peter Dorman, at the blog EconoSpeak, noted in May:

The decision to issue permits on an industry-by-industry basis -- to cap the uses of carbon fuels rather than their sources [invites] ... never-ending bickering over who is allowed to emit how much. Every little tweak of the system -- whether to include freight transportation or agriculture [which crops!] -- has to be hammered out separately. Reductions are calculated from a baseline, but there are acres of wriggle room about how to measure who emitted how much in the base year, and therefore how much should be reduced tomorrow. Enforcement is complex, expensive and full of loopholes.

Auctions vs. Allowances

Focusing upstream allows Cantwell to avoid this administrative swamp. It also allows her to do what Waxman-Markey should have done: require carbon polluters to pay for their pollution. CLEAR requires carbon producers to buy 100 percent of the carbon shares they need. None are given away. Waxman-Markey, on the other hand, gives away 85 percent.

The Cantwell way of dealing with the question of how U.S. companies that must use more expensive fuels can compete internationally is also much simpler and transparent than that contained in the Waxman-Markey bill.

Here's a brief summary of the Waxman-Markey strategy: U.S. exporters will receive free carbon allowances in the form of rebated charges for 2012-2025. Under certain conditions, U.S. producers of finished goods could also receive rebates, if producers petition for coverage and the EPA determines they meet statutory criteria and should be covered.