Why EPA, not Coal Burners, Should Be In Charge on Climate Change
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If the climate bill passes in its current form, this "subprime carbon" market would explode, while the optimal regulatory approach would wither. The Waxman-Markey bill would allow polluters to "offset" their emissions via these questionable commodities, and even to bank their pollution allowances -- meaning, if they "underpollute" one year, they are free to "overpollute" the next, so long as the difference between the two approximates their annual target. This banking of emissions credits, coupled with so many carbon offsets, invites market speculators (those who bet on the future price of a commodity) and derivatives traders to turn our planet's carbon cycling capacity into a lucrative investment opportunity.
To make matters worse, in a bid to win passage of the bill, on June 23 the House Agriculture Committee succeeded in ensuring that the Department of Agriculture would wield oversight over carbon offsets generated by the agricultural industry, rather than the EPA. In the offsets world, agricultural offsets are akin to "junk carbon." Why?
First, because CO2 in this industry doesn't come out of a smokestack or a tailpipe. It comes from soil, application of certain fertilizers, and animals' front and back ends. Handing oversight of this amorphous market in flatulence and other gases to the USDA, which is notoriously cozy with corporate farming interests, all but assures we'll be minting yet more money for agribusiness, which already reaps billions of dollars every year in farm subsidies. According to The Wall Street Journal, the Energy Information Administration estimated that the market for agricultural offsets could total up to $24 billion annually. That sum would dwarf all other U.S. farm subsidies combined.
Second, because about 1,000 additional workers would need to be hired just to oversee these offsets, it would create an untenable bureaucracy.
Recent studies suggest these 2 billion tons of offsets -- rather than having "integrity," as Waxman and Markey had pledged -- will instead become the "counterfeit" carbon so many climate activists feared would overload the system.
As the bill proceeds through the Senate for markup, EPA authority should be restored. Remember, the mere threat of regulation from the EPA didn't require offsets, markets in carbon futures, or SEC bureaucracy to deliver a staggering result: A 2 percent increase in U.S. greenhouse gas emissions stalled.
Furthermore, if "junk" agricultural offsets are allowed, the EPA -- not the USDA -- should oversee these trades to avoid the inevitable pressure from agribusiness to turn offsets into yet another subsidy for business as usual.
But Obama should go one step further than simply restoring EPA authority to its rightful place. He should make the case for an even stronger EPA, one that could cut U.S. coal-fired power plant emissions by over 50 percent by simply requiring that all coal burners be retrofitted to burn natural gas. A stronger EPA could weigh in with a louder voice and ensure that no more of our taxpayer dollars subsidize climate change via our development banks and export credit agencies. A stronger EPA could be empowered to better implement the many international treaties we are already signatory to -- such as the UN Convention on Biological Diversity or the UN Convention to Combat Desertification -- treaties that could help us take bold action on climate change internationally, even in the absence of a strong outcome at the UN climate negotiations in Copenhagen this December.
If we took a regulatory approach, instead of a "market-based" one, or, at the very least, if we didn't scrap our strongest regulatory tools and removed the "subprime" and "junk" carbon from the mix, we might actually get this problem solved. Now there's something truly audacious.