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Jesse Jenkins

Jesse Jenkins

Posted April 2, 2009 | 02:13 PM (EST)

Climate Bill is All About the Coal Hard Cash


Yesterday, Congress began the debate that will determine our nation's energy future. Congressmen Henry Waxman (D-CA) and Ed Markey (D-MA) introduced a mammoth 648-page bill designed to fundamentally change the way we make and use energy in this country. The "American Clean Energy and Security Act" may look complicated, but it's really all about the cold hard cash. Or should I say, the coal hard cash.

The bill will establish a limited supply of permits allowing the release of greenhouse gas emissions by major polluters as part of an emissions reduction plan known as cap-and-trade. Those emissions permits are collectively worth tens or even hundreds of billions of dollars annually. That's a lot of cash. And yet the bill is remarkably silent about where all that money will go.

Silent that is, except for on one front: coal.

With billions of dollars up for grabs, the coal industry went straight for a big stack of cash. With the help of allies in Congress, the coal sector has already snagged at least a billion dollars each year in new subsidies to support the development of technologies the industry promises will reduce emissions at coal-burning power plants.

That sweet deal for the coal industry is the only spending the bill specifies so far. And coal companies are likely to snag even more cash as the debate unfolds and deals are cut.

So where is the money for truly clean energy sources? There isn't any. Yet.

This is only a discussion draft, I've repeatedly been reminded, and how to allocate the billions of dollars in value created by the emissions permits is still very much up for discussion (aka vigorous debate).

But the draft we see before us very much reflects the vision of the environmental groups leading the so-called U.S. Climate Action Partnership, including Environmental Defense and NRDC. And with these leading green groups setting the agenda, here's what's so telling: with billions of dollars sitting on the table, these well-known green groups leading the climate charge simply left it there -- or worse yet, looked the other way while the coal industry grabbed their pile of cash.

[Note: A clarifying statement from NRDC appears below, followed by the author's reply]

Why didn't these greens insist that the revenues raised from climate regulations are actually invested in technologies that reduce global warming pollution? Why didn't they fight to make sure that money directly supports the construction of wind turbines in the American Heartland, makes affordable solar panels a reality for every homeowner, and secures our energy independence by driving plug-in hybrid cars off assembly lines in Michigan and Kentucky? With all the rhetoric about green jobs flying around, why did no one else demand that Markey and Waxman reinvest carbon revenues to accelerate the emergence of the clean energy economy, acting as a true engine of job creation?

EDF and NRDC and the rest of the US CAP greens didn't fight for any of this, because for them, it simply isn't really about the money. It's about carbon prices, regulations, and standards.

Rather than fighting for the kind of transformative public investments that built the railroads and the interstate highways, brought water and electricity to rural America, made microchips cheap and invented the Internet, biotechnology, and today's wind and solar power technologies, these leading green groups have their sites on a laundry list of regulations, from renewable electricity standards to low-carbon fuel standards, building codes to appliance standards. And they make backroom deals with industry to preserve an increasingly compromised cap and trade scheme.

Congressman Ed Markey, the man who will shepherd this bill through his House energy subcommittee, says he understands the transformative power of public investments. When he introduced his vision of an ideal climate bill last year, Markey declared that the time had come to "invest in the American economy and in American workers, and launch an energy technology renaissance that will rival the information technology revolution of the past decade." Markey's "iCAP" bill promised to use the money from carbon pollution permits to "invest tens of billions" each year to develop and deploy "the cutting-edge low-carbon energy technologies that will power America's future."

The discussion draft we see today clearly reflects a different vision of climate policy, one dictated largely by the US CAP greens who have already struck devil's bargain with the cadre of big industry players that make up the "United States Climate Action Partnership". While they pay lip service to investments in the green economy and clean technology, when push comes to shove and the deals are cut, the green groups in USCAP will fight to protect their treasured suite of regulations, leaving the cold hard cash on the table.

So if leading green groups setting the climate agenda today won't fight to ensure that money is invested to make a clean energy economy a reality, who will?

Will other mainstream green groups or the rest of the climate movement? Will the youth activists who recently gathered 12,000 strong in Washington D.C. demanding clean energy and green jobs? Or will progressive groups like MoveOn rally their millions of grassroots supporters to the fight? And what about Al Gore's Repower America campaign, which is now running ads that read, "Government investment can change history?"

If these self-declared champions of the new energy economy don't prioritize the fight over the cold hard cash, coal companies and other representatives of the industries of the past will be the only ones at the table, and an historic opportunity to make critical investments in the clean energy technologies and industries of the future will slip through our fingers.

Jesse Jenkins is the director of energy and climate policy at the Breakthrough Institute and the founder and chief editor of WattHead - Energy News and Commentary

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[The following statement from NRDC's David Hawkins (via Julia Bovey) appeared in the comments section below and is followed here by the author's reply...

Julia Bovey writes:

Jesse is simply misstating the bill and NRDC's position on energy efficiency and renewables. This from the head of climate programs at NRDC, David Hawkins:

The coal dollars in the draft bill do not come from the cap allowance program. They come from a fee on fossil fuel used to make electricity. That provision was not in the USCAP Blueprint and not something NRDC asked to have in the bill.

The only allowance value dollars spelled out in the bill is to produce additional reductions by protecting forests abroad. Anyone who is following this legislation knows that the bulk of the allowance dollars will be dedicated to energy efficiency, renewables, consumer protection, transition assistance, and carbon capture and storage as the bill is considered in committee.
NRDC will continue its fight for clean energy and all the tools that will help cut global warming pollution as the bill moves ahead.

As for coal, the USCAP Blueprint has a comprehensive package supported not just by greens but by business too, that requires new coal plants to capture their carbon. That package includes support for financial incentives to speed carbon capture deployment. Given the importance of preventing new uncontrolled coal and the importance of having an option like carbon capture that will dramatically cut CO2 from coal plants that will be built in many countries around the world, we think this a critical policy advance and serious environmentalists should support it.


Author's reply:

Julia and David, thank you for the reply. It is encouraging to hear that NRDC plans to "fight for clean energy," but I can't help but notice that as the statement above is worded, you hedge about your commitment to fighting for the critical and transformational public investments in a clean energy economy I call attention to in my post. The way it is written, your statement could easily be interpreted to mean you are ready to double down and fight for the standards and regulations that appear along with technology transformation investments in the long list of "tools that will help cut global warming pollution" the USCAP Blueprint seems to view not as top priorities but as important but secondary "complementary measures."

To be clear, this post is meant primarily as a challenge for folks like NRDC and wake up call to all who are committed to the birth of a clean energy economy. Your statement in no way strikes me as a spirited response to that challenge. Unless we are all truly prepared to move the clean energy investments we need to the center of the agenda and fight like mad to secure them, by the time this bill moves through the halls of Congress and fights for passage in the Senate, it will simply be inadequate to the urgent task at hand.

The question for NRDC, EDF and others remains: are you going to make the strategic and massive investments that will serve as the engine of a clean energy economy your top priority, or are you willing to let that fall by the wayside in exchange for other priorities? Will you draw a line in the sand for these investments, or will you drop them overboard as you pursue all the compromises needed to keep a carbon "cap" in place, one increasingly constrained by cost containment efforts and which may very well necessitate returning all revenues to customers to get passed the Senate? That outcome would be, in my strong opinion, the worst of all possible outcomes: a weak carbon price signal unquestionably insufficient to dramatically shift private investment or spur innovation on the scale we urgently need, and NO money for public investments in transformational public investments that have driven such innovation in the past and can and must do so again today.

But that is about the fight ahead. My primary concern though today, and the thrust of this post, is what it means that you have apparently not yet even engaged in that fight. My central concern with EDF and NRDC's involvement with the drafting of this bill (through USCAP and as two of the most influential DC green groups) is that if clean energy investment was the top priority for your organizations (or even a top priority), I cannot see how it should have sat as one of several "complementary measures" in your USCAP Blueprint. For the record, your recommendations on technology transformation are an excellent start, but these must be at the core of the policy, not the complementary side issues to be negotiated some point down the line, if possible.

This is a mammoth climate and energy bill we have before us. It is supposed to be "comprehensive". And I know this is just the beginning of the discussion, but unless I'm wrong that USCAP's leadership was consulted more than just about anyone outside of Congress on the drafting of this bill, it still seems clear to me that critical investments in technology transformation were no where near the top of NRDC or EDF's list of recommendations (or better yet, demands) and it's therefore nowhere to be seen in this bill.

Now, I won't close the door on you all yet. The technology transformation recommendations in the Blueprint are still a good starting point. But this isn't about white papers and ideal recommendations. It's about lines in the sand. About priorities. And about what you and all the rest of us are willing to truly fight for. If I don't see that kind of effort from NRDC in the months ahead, I'm going to be left with the conclusion that my initial assumptions in this post are correct. I hope that seems fair. Respectfully,

Jesse Jenkins