Addressing Climate Change
12.09.2009
Flawed trade policies have distorted the benefits of America’s tax, environmental and labor laws, and have perpetuated an artificial dilemma that economic prosperity and a sustainable environment are mutually exclusive. The commercialization of conservation, efficiency and renewable energy technologies and products in a way that contributes to greater community economic and environmental well-being, is the goal of clean energy legislation. A strong and concerted movement in this direction by our state’s leaders in government, manufacturing, business, labor, nonprofit and civic organizations offers an extraordinary opportunity to the Midwest, and especially Ohio, to revitalize economic development while enhancing environmental protection and preserving the quality of life in Ohio for generations to come.
The American Clean Energy and Security Act of 2009 (ACES), passed by the U.S. House of Representatives in June 2009, is a triumvirate of clean energy legislation that addresses energy efficiency, renewable energy distribution, and climate change.[1] This legislation will reduce America’s dependence on foreign oil by 2 million barrels a day in 2030, or the equivalent of what we now import from the Persian Gulf.[2] This important legislation will protect the human environment, promoting a better quality of life for future generations while stimulating the manufacturing base of the American economy.
You have probably seen the commercials by now that describe cap-and-trade as a “jobs killing energy tax.” Climate legislation will have its costs; the U.S. EPA’s analysis of ACES suggests that annual household costs will range from between $98 and $140 per year, or roughly the cost of a postage stamp per day.[3] However, what the oil and coal lobby doesn’t tell you is that the cost of inaction is much greater.[4]
Protecting Our Climate from Irreversible Change
While the Congress and the public debate reforms to health care, immigration policies and other domestic challenges, the greater environment of the world we live in and the delicate climatic balance on which all forms of life depend is on a path toward dramatic and permanent change. According to the Intergovernmental Panel on Climate Change (IPCC) – a nonpartisan scientific body that even the former George W. Bush administration recognized as the most reliable source for climate science – global temperatures are likely to rise between 3.2 to 7.2°F by the end of the century.[5] Temperature changes of this magnitude will effect dire and drastic changes for the world’s environmental ecosystem as we know it now. This will necessarily be played out in the global economy as industries dependent on or affected by temperature, weather and related human conditions will need to adjust, at an economic and often social cost.
The urgency of the need to effectively address global climate change will also by played out in the global economy, especially in its economic implications for states like Ohio whose economies rely on coal power and heavy industry and manufacturing. A well developed and comprehensive policy on climate legislation should (1) recognize the regional differences in the U.S. electricity fuel supply and (2) incorporate trade measures (or so called border adjustments) to prevent the “leakage” of jobs to countries that fail to limit emissions.
Climate change legislation must contain allocations that appropriately recognize the current carbon intensity of industry and electricity generation in the various regions of the country. For states like Ohio, which currently obtains nearly 90% of its electricity from coal,[6] the direct and indirect costs of complying with climate legislation will be greater than in states that have natural sources of renewable energy, such as the massive hydroelectric resources of the Pacific Northwest. Allocating initial emissions credits to vulnerable regions will ensure that all U.S. states have a fair starting point for moving to a low-carbon economy.
Climate change legislation must also include meaningful border adjustments to prevent the exportation of jobs and pollution to developing countries that have not yet taken the steps to similarly protect the world’s climate. These countries must be part of the overall climate change protection mechanism, and this starts with a recognition that climate change policy is valuable to social and economic well-being. While China has indicated a willingness to agree to some emissions reductions, China maintains that it should be judged on a per-capita emissions basis rather than its current status as the world’s largest emitter of greenhouse gases.[7] India has taken a less cooperative approach, referring to binding CO2 reductions as “morally wrong.”[8] Both of these positions are unacceptable if we are to meet the emissions reductions necessary to avoid disastrous climate change.
Meaningful international border adjustments should be instituted that require products imported from countries that do not have comparable restrictions on carbon emissions (e.g. India or China) to purchase offsets before they could enter the United States, placing U.S. and foreign products on a level playing field. If a country refuses to limit emissions, then it must pay an equivalent of what a country that agrees to limit emissions will spend in protecting the world’s climate. These trade measures should be in place immediately upon passage of climate legislation and should remain in place until all major trade partners enact similar emissions limits to protect the planet.
Thoughtful, targeted diplomacy is a critical tool to forming a global compact for effective and sustainable multi-national climate change policies that turn around the harmful effects of unregulated climate damaging carbon emissions. In short, climate change is a global problem that will require cooperation of all countries. This cooperation must not result in the U.S. succumbing to trade deals that allow companies to export pollution and jobs to developing countries, all to be environmentally addressed later, when later may be too late. I stand with Sherrod Brown in his pursuit of “fair trade” policies, as opposed to the NAFTA approach that has devastated the industrial foundation of Ohio’s workforce and bled wealth and primary industries for national self-sustenance from our economic base. Climate legislation is the first opportunity to take a fresh approach to retool trade laws that will protect our world environment by ensuring that our trading partners share a similar commitment to a stable environment and quality of life for future generations of our planet.
Alternative Energy – Enact a National Renewable Portfolio Standard
Ohio stands out in the U.S. as a state with one of the strongest standards for commitment to use of clean energy, and the clean energy sector in Ohio is growing rapidly as a result. In May 2008, Ohio established its Alternative Energy Portfolio Standard (AEPS, codifying a requirements that 25% of all electricity sold by 2025 be derived from alternative sources. A national standard, reflecting Ohio’s exemplary commitment, is a part of the American Clean Energy and Security Act of 2009 and would bring a similar renewable fuel standard into federal law—20% renewable electricity by the year 2020.[9]
Energy Efficiency and Smart Grid
The cheapest and cleanest watt of electricity is the one never produced. This is why the United States needs to prioritize efficient energy use by revising and adopting new building codes while developing a “smarter” electricity grid. The fundamental purpose of implementing a “smart grid” is to optimize how energy is produced and consumed. Smart grid facilitates efficiency by connecting the supply and demand elements of the electricity markets, allowing individuals to “acquire energy from both conventional and renewable sources of power when it is cheap or free, store energy acquired during periods of excess capacity,” [10] and either sell or use the energy later when it is most valuable. Consumers will finally have an interest in their electricity usage patterns, rather than just blindly consuming until the bill comes at the end of the month. In other words, smart grid is a market mechanism to encourage energy efficiency.
Perhaps the greatest benefit of smart grid will be more cost effective generation and transmission energy investments. The current methods for generating and delivering power are not nearly as efficient as they could be. “[F]or every kilowatt-hour of electricity actually consumed by American households, our current system wastes the equivalent of more than two kilowatt-hours.”[11] Between 33-50% of consumer electricity bills go toward funding infrastructure and the remedying of its wear and tear (transmission and distribution lines, substations, etc.).[12] Electricity demand is expected to double by 2050. A failure to remedy the generation and transmission inefficiencies will cause consumer prices to inflate, harming residential and commercial consumers and negatively impacting our economy. A smart grid will give consumers a stake in their energy consumption and enable them to make wise choices that ultimately reduce overall consumption and the cost of producing electricity.
[1] H.R. 2454 (2009).
[2] EDF, American Clean Energy and Security Act Summary, http://www.edf.org/article.cfm?contentID=9854.
[3] EPA, Preliminary Analysis of the Waxman-Markey Discussion Draft 4, Apr. 20, 2009, available at http://www.epa.gov/climatechange/economics/pdfs/WM-Analysis.pdf.
[4] Studies estimate that business-as-usual carbon emissions would cost anywhere between 5 to 20 percent of global GDP by 2100.
[5] US EPA, Future Temperature Changes, http://www.epa.gov/climatechange/science/futuretc.html.
[6] Public Utilities Commission of Ohio, http://www.puco.ohio.gov/PUCO/Consumer/Information.cfm?id=7650.
[7] Premier Wen Jiabao speech to the World Economic Forum, September 10, 2009, available at http://www.fmprc.gov.cn/eng/zxxx/t583527.htm.
[8] See, Rama Lakshmi, India Rejects Calls for Emissions Cuts, Wash. Post, Apr. 13, 2009.
[9] H.R. 2454, § 101 (2009).
[10] John. J Marhoefer, Intelligent Generation: The Smart Way to Build the Smart Grid, 23 Nat. Res. & Envt. 1, 19 (2005).
[11] Id. (citing Energy Information Administration, Annual Energy Review 2006 at 39, DOE/EIA 0384(2006)).
[12] U.S. Dept. of Energy, The Smart Grid: An Introduction 22 (2008).
