Lieberman climate bill: “worse than nothing”

The other night I attended a presentation by Peter Barnes at Vermont Law School. He was talking about different possible policies Congress might pursue to address global warming. Barnes is a persuasive advocate for a specific form of cap-and-trade on greenhouse gases, wherein the limited permits for emitting greenhouse gases are auctioned off and the revenue that comes in from the auction is then distributed on an equal per-person basis to everyone in the country. More on that in a moment (or see Jonathan Alter’s nail-on-the-head article in Newsweek).

I’d heard about Barnes proposal before–in fact, Nancy Folbre, James Heintz, and I used it as the basis for a bit of the Field Guide to the US Economy. What I hadn’t realized was that there is currently legislation working its way through Congress that would implement a different variation of cap-and-trade on greenhouse gases. The leading version is Joe Lieberman’s S.280 in the Senate and the near-identical bill fostered by John Olver, H.R.620, in the House. (Part of my ignorance stems from the recent birth of my daughter Susannah. I haven’t been keeping up with the news very much.) (But she sure is cute!)

“Wow,” you might be thinking, “Congress might actually pass a bill that deals seriously with global warming. Will miracles never cease?” Well, um, don’t get too excited just yet.

The bad news, according to Barnes, is that the Lieberman bill (and pretty much similarly for all the other global warming bills circulating right now) is, quite likely, actually worse than doing nothing. Not worse than doing nothing ever–something pretty desperately does need to be done and soon. But worse than waiting long enough, a year, or two, to get the RIGHT bill passed. Because if the wrong bill gets passed, that’ll take all the steam out of the environmental movement in Congress. There ain’t no way they’ll come back and do a major overhaul to a major piece of global warming legislation until it’s too late.

So what makes the Lieberman bill so bad? The basic problem is that it earmarks 80% of the permits to be handed out for free to the big greenhouse gas creating corporations, ExxonMobil and its fellow ilk. (The other 20% is for a Climate Change Credit Corporation that’s supposed to use money it gets from selling permits to soften the blow to consumers for the inevitable increases in energy costs. The allocation of permits to the CCCC gradually phases out over the first 10 years of the system. After that, 100% of permits are given for free to the corporations.)

That’s a big problem for a few reasons.

1) It’s corporate welfare on a scale never seen before–hundreds and hundreds of billions of dollars worth of valuable permits given for free to the more-or-less most profitable bunch of corporations on the planet. Thus Barnes’ nickname for the bill, “No Polluter Left Behind.”

2) It leaves consumers in the lurch. The fact that the corporations receive the permits for free will not prevent them from increasing the price of fossil fuels. The analogy Barnes used goes something like this: The NFL has a certain, limited number of tickets available for the Superbowl. (Like the limited number of permits in a cap-and-trade program.) It gives a bunch of those tickets to each of the teams in the game at no charge. (The teams are like the greenhouse gas corporations, ExxonMobil, Arch Coal, etc.) Have you ever heard of a Superbowl playing football team giving away all its tickets for free? No, it sells them at the highest price it can–same as it would do if it had to pay to get them in the first place. And that’s what the energy companies will do. They will wheel and deal their freebie permits into windfall profits faster than you can say “Dick Cheney’s Energy Task Force.” All that said, consumers will be faced with significantly higher energy prices and they’ll just have to suck it up.

3) Which leads to the worst problem of all, in Barnes estimation. For a climate policy to work, to really have a chance of reducing the worst effects of global warming, it will have to stay in place for decades–40 to 50 years or so. And for that to happen, given the lobbying pressures of the fossil fuel industries who are used to getting pretty much exactly what they want from “our” government, there will have to be significant public support for the program. A public that sees money going out of its pocket and into the coffers of the oil, gas, and coal corporations will not be very supportive. After a few years, when the permits have kicked in just enough to start causing some real economic pain, the hue and cry will go up (stoked by the faux grassroots political operatives of the fossil fuel industries) to disable the program and give people some relief. They’ll get their relief, and then their kids and grandkids and great-grandkids, and so on, will get full-bore, no holds barred global warming.

So, if Barnes is right in his analysis (and if you can’t tell, I find him persuasive), these bills are poison pills. They aren’t first steps in controlling global warming, they shoot such efforts in the foot.

The alternative? As noted above, a cap-and-trade program that auctions the permits off to the corporations, making them pay for the right to pollute (which is so Econ 101 it’s plain pathetic that most of Congress seems to be dismissing it out of hand), and then taking all that money and passing it out on an equal per-person basis to all Americans. (Barnes talks about this in his books Who Owns the Sky? and Capitalism 3.0, especially chapter 6. It’s also the focus of his soon-to-be-release little “citizen’s guide” coming from my employer, Chelsea Green Publishing, Climate Solutions. Stay tuned.)

That money going to all the folks makes it a lot easier for them to handle rising energy costs (while still preserving the incentive for people to choose more efficient and energy-conserving behavioral patterns). And it gives them a vested interest in the program. More than half the population should end up making money out the whole deal, which doesn’t make the transition away from fossil fuels easy, but a heck of a lot easier than the alternative. Like Alaskans with their Permanent Fund, most Americans will probably be keen to keep the program running and will stand up to efforts to gut it. Fifty years down the road, that kind of enlightened self-interest just might turn out to save the planet from catastrophic global warming.

Note to self: write my Senators and Representatives right away and tell them to avoid any cap-and-trade plan that gives permits away to corporations for free! Promise them I’ll still consider them a good environmentalist as long as they promise to support GOOD legislation that will really work to deal with the problem. And tell all my friends to do the same!

One comment

  • I am writing this because there are a few very pertinent things that are being overlooked in these bills, and I feel should be amended into the global warming debate bills or new ones drawn up.

    S.2191 – A bill to direct the Administrator of the Environmental Protection Agency to establish a program to decrease emissions of greenhouse gases, and for other purposes.

    S.280 – Climate Stewardship and Innovation Act of 2007 } Cap-and-trade bill

    S.309 – Global Warming Pollution Reduction Act } Cap-and-trade bill

    2 Main Issues I have are:

    1. Cost of emission reduction should not fall on consumers shoulders. All costs to reduce CO2 reduction should be undertaken by the Energy producer, after all, they are the “˜owner’ of that company/service, in which consumers pay for the service. It is not the consumers fault, nor do consumers have direct control over the service in which we depend on, or how that service derives the product we are purchasing. It should come out of their pockets, however fat they may be. Maybe they could do some fund-raising, since they are providing such a service that keeps humanity going.

    2. These reductions in greenhouse gases, CO2 emissions, aerial waste, etc. should be employed NOW, not by 2050, when irreparable damage has already been done, or by 2012, but now. Energy companies wanting new construction should not be allowed to use old, hazardous mechanics in their plants. If they want to upgrade, they need to do it using new technology starting now. There are already ways they can reduce their emissions and they should not be allowed to build new constructions if they are not implementing reduced emissions. (refer to Duke Energy Cliffside Plant, North Carolina)

    I think these bills have way overstepped the direction we should be going in and someone needs to wipe these clear out and start completely over.

    We need a fresh starting point with some new bills in Congress.

    ““Shanna D.”“