Climate Change Roundup: Obama Seeks $150 B from Carbon Emissions Rights Auction

By Published On: February 27, 2009

In his proposed federal budget for fiscal year 2009-10, President Barack Obama outlined his plan to cut greenhouse gases under a carbon cap-and-trade program that would generate new federal revenue to plough into clean energy. His draft budget outlines a series of programs--from grid modernization to scientific research--aimed at advancing renewable energy, energy efficiency, and reduced greenhouse gas emissions. Appropriations from existing revenue streams are proposed for these programs in the near-term. “To finally spark the creation of a clean energy economy,” Obama said, “we will make investments in the next three years to double our nation’s renewable energy capacity.” Beyond that, however, the budget proposes funding clean energy programs with new revenue raised by auctioning off emissions rights under a federal carbon cap-and-trade program. The budget outlines Obama’s plans to work with Congress after it passes the 2009-10 budget to enact carbon cap-and-trade legislation. Obama wants the legislation to cut greenhouse gas emissions 14 percent below their 2005 level by 2020, and 83 percent below their 2005 level by 2050. Under the President’s plan, the budget said, 100 percent of the emissions rights would be auctioned by the federal government, bringing an anticipated $150 billion of new revenues to the Treasury over 10 years. The federal government would invest that money in clean energy programs, plus use some to ameliorate any increase in energy costs for families, communities, and businesses, the budget document said. **** A federal renewable energy standard would complement a carbon cap-and-trade program by stabilizing energy prices, a key federal lawmaker said February 26. In the absence of a renewable energy standard, a carbon cap-and-trade system likely will create a “dash to gas” that drives up the price of the fossil fuel. “When paired with a cap-and-trade system, a renewable energy standard could help stabilize natural gas prices and prevent a dash to gas,” said Rep. Henry Waxman (D-CA), opening a hearing by the House Energy & Commerce Committee. The panel, chaired by Waxman, examined the potential role of a federal renewable energy standard in helping to cut greenhouse gas emissions. Waxman said it would be impossible “to avoid catastrophic climate change without a dramatic increase in the amount of energy generated from renewable sources.” At the hearing, an Energy Information Administration official said that requiring utilities to make 15 percent of their power with wind solar, and other renewable energy technologies would cause only a modest price hike for electricity. “EIA found that, with the [15 percent] renewable portfolio standard, residential consumers spent about 0.4 percent more on electricity,” Howard Gruenspecht, the agency’s acting administrator, told the House panel. Setting a renewable energy requirement for utilities would create jobs too, said General Electric general manager Edward Lowe. He noted GE has invested $850 million in renewable energy technology and employs 4,700 people in its renewable energy division. Colorado utilities have readily accepted the state’s renewable energy standard, said Ronald Binz, the state’s Public Utilities Commission chair. Since 2003, he said, the state has ramped up wind power generation from 60 to 1,200 MW under its standard, which requires 20 percent renewable energy by 2020. **** Scientists highlighted the potential for greenhouse gas emissions reductions to create jobs during a February 25 hearing by the U.S. Senate Environment and Public Works Committee. “This committee is geared towards creating green jobs,” pronounced Senator Barbara Boxer (D-CA), panel chair. She applauded President Barack Obama for urging passage of legislation creating a carbon cap-and-trade system the prior evening, noting it would generate revenue for the government. Climate change skeptic Senator James Inofe (R-OK) warned that a cap-and-trade system would impose burdensome costs on Americans. Rajendra Pachauri, United Nations Intergovernmental Panel on Climate Change chair, countered that the potential for carbon mitigation measures to create jobs could turn the costs of reducing climate change into savings. William Happer, Princeton University physics professor, compared efforts to curb global warming with those that led to prohibition and the wrong-headed passage of the 18th Amendment. “Deeply sincere people thought they were saving the country from alcoholism,” Happer said, adding they are much like those today who are trying to save us from global warming. Boxer noted that the institute Happer heads received $1 million from Exxon Mobil. **** Climate change science should better integrate the social impacts of a warming earth to ensure the related issues are better incorporated into national public policy, concludes a National Academy of Science prepublication report released February 25. “[M]any policy decisions on mitigation and adaptation are being made without the science support that could help shape better outcomes,” states Restructuring Federal Climate Research to Meet the Challenges of Climate Change. The 172-page report by the Academy’s National Research Council urges the U.S. Climate Change Science Program to focus research on integrating and better understanding climate, human, and environmental systems. Top priorities listed in the report include: Establishing a U.S. climate observing system; Better incorporating prediction of high impact regional weather; and Improving research on adaptation, mitigation, and vulnerability. **** The California Air Resources Board adopted two greenhouse gas reduction measures February 26 designed to cut emissions of compounds used in the semiconductor industry that cause global warming, as well as emissions of sulfur hexafluoride used in non-utility industry settings, particularly magnesium casting. Combined, the two measures are expected to cut the state’s annual greenhouse gas emissions by 0.28 million metric tons of carbon dioxide equivalent. The Air Board also discussed its plans to establish a carbon cap-and-trade program by 2012, although it has not foreclosed the alternative approach of taxing carbon to cut emissions. “While it’s true the political momentum’s behind cap-and-trade, there’s a lot of reason to not drop the carbon tax off the table,” said board member Daniel Sperling. Air Board chair Mary Nichols replied that the state agency and governor have “stated our preference for cap-and-trade primarily because of the cap.” Yet, she said, she is “willing to do anything that works.” Nichols also noted that as Washington swiftly moves to back renewable energy and greenhouse gas reductions, national leaders are seeking advice from California officials on a regular basis. **** The Western Climate Initiative discussed a draft work plan for this year on February 26. The initiative--a consortium of western states and Canadian provinces--plans to develop further details for its plan to cut greenhouse gas emissions through a regional carbon cap-and-trade program. It also plans to offer member states and provinces help in putting together laws and regulations to actually put the planned market into place. WCI has established a number of committees--covering topics like emissions reporting, emissions allocation, and emissions offsets--to develop the technical details needed to create a functioning carbon market by 2012. The committees will hold meetings throughout the year.

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