What's Next for Climate Policy?
A large majority of Americans (77%)
now believe that Congress and the president should make climate change a priority.
Over the past two years however, discussion
about establishing overarching national climate policy has been almost nonexistent.
But then Hurricane Sandy hit, flooding the most populous
region of the country and causing $30 billion in damages in the New York area
alone. Suddenly, it became clear that ignoring climate change will cost us much
more than doing something to address it.
On November 13, 2012, hundreds of economists and policy
analysts from across the political spectrum gathered
in Washington, DC to discuss an idea that’s gaining momentum at the
national level: a carbon tax. As this conversation comes to the forefront once
again, we thought it was a good time to review some of the most popular policy tools aimed at helping to curb the fossil fuel
pollution that’s overwhemingly contributing to climate change:
Recognizing that fossil fuels cost society in the form of health impacts, soldiers
killed during fuel transport missions overseas, oil spills, climate change,
economists think it’s a good idea to make sure the price tag of
conventional energy reflects those costs. One way to do that is to put a tax on
fuels like coal and oil, typically by charging fuel producers a fee per ton of
carbon sold. Because those fuels will have a higher sticker price with the tax,
renewable energy and efficiency measures will become more cost effective. Norway
Columbia, Canada, among others, have already implemented a carbon tax.
Cap & Trade:
In 2010, the US came very close to passing a cap & trade bill (The
American Clean Energy and Security Act) in Congress. Since then, no new market-based
solutions for pricing carbon have been put on the table. As the name implies,
the policy puts a limit (cap) on the amount of pollution that, for instance, a power plant can emit. If the power plant
exceeds that amount they have to buy an “allowance” (trade) from somewhere
else in the market (from a less-polluting power plant, for example). Europe and Mexico
have well-known emissions trading policies in place, and California just launched its new cap and
trade program on November 15.
Standard (RPS): RPS programs are usually implemented at the state or local
level. They require utilities to produce a certain percentage of their energy
from renewable sources (or offer their customers renewable energy credits).
Most states in the US have implemented RPS programs with varying levels of
ambition (Colorado, for example has a goal of reaching 30% renewables by 2020
while Oklahoma has an RPS of 15% by 2015). You can see a map of those programs here.
Subsidies and Tax
Breaks: Federal, state and local governments have long provided funding to
a diverse range of energy programs through a patchwork of subsidies and tax
breaks. One such renewable energy program in the news lately is the Wind Production Tax Credit, set to
expire at the end of 2012. On the flip side, many environmental groups are calling
for the end of subsidies to fossil fuel producers, which get a significantly
larger portion of government financial support than renewables do.
Regulations: The Clean Air Act and Clean Water Act are two of the most
well-known environmental regulations in the US. These and other laws tell
companies how to safely dispose of chemicals, how many resources may be mined,
which plants and animals are off limits for harvesting, etc. During President
Obama’s first term, the two climate-related regulations that were passed and got
the most attention were new
fuel-efficiency standards for vehicles and the EPA’s
carbon pollution standards for new power plants and other sources.
If you’re concerned about climate change, you’re probably
asking, “Well, which policy is best?” The answer is tricky, because no matter which policy tool is chosen it’s
the design and implementation of the programs that’s key. That’s why some
environmental groups opposed the American Clean Energy and Security Act:
the climate bill they wanted and the one that was proposed were miles apart.
Policies at the international and local level seem to be
moving the discussion forward. As more countries and cities make important
commitments to fighting greenhouse gas pollution, it becomes more difficult for
other regions to delay action.
One of the best ways
to help address climate change is to learn about the laws being considered in your
community, state and country, and work with your neighbors to advocate for a
better future together. Visit the Environmental and Energy and Study Institute and the World Resources Institute to learn more about civic action around climate