Climate 411

EDF is known for unconventional tactics. We often experiment with new ideas to find the ways that work. However, this time I had a chance to do something truly off-the-wall.

I was asked to make a video with the coalition Clean Energy Works that explains cap and trade in a way that non-economists could understand, i.e., in English.  (And with clever animation.)

What were they thinking?

Maybe the idea was just crazy enough to work. Here are a couple of reactions so far:

• The Sightline Daily calls it “thoughtful and friendly”
• Treehugger said it’s a “brief but relatively thorough explanation”

Check it out, let us know what you think, and spread the word.

A lot has happened quickly in the clean energy world. Here’s a wrap-up:

• Yesterday was day two of the Senate Environment and Public Works Committee’s markup process for the Kerry-Boxer bill. Republicans once again boycotted the proceedings, although they made a couple of cameo appearances. The markup continues today — you can see it on C-Span. And, Greenwire is now reporting that Senate Majority Leader Harry Reid has given EPW Chairwoman Barbara Boxer “the green  light” to move ahead without the GOP. Reid reportedly told Boxer to advance global warming legislation on Tuesday, November 10,  if Republicans have not ended their boycott by then.
• At the same time, three strange bedfellows — Sens. John Kerry (D-MA), Lindsey Graham (R-SC) and Joe Lieberman (I-CT) announced they would work on a “dual track” to create a climate bill that would get 60 Senate votes. Our Tony Kriendler says the three have given “new life to a bipartisan process.”
• The U.S. Chamber of Commerce is making tentative gestures of support in the general direction of a climate bill. The Chamber, which has been slammed by the media and abandoned by some of its own members since saying we need a “Scopes monkey trial” on climate science, said today that it “supports most of the principles outlined” in that Kerry-Graham-Lieberman proposal. Details are still fuzzy, but Tony Kreindler says: “We’re delighted to see the Chamber recognize that there’s a bipartisan path forward to a cap on emissions. If they support it, that would be truly a first.” Indeed, we at EDF would all be thrilled if the Chamber’s new tone were followed up with real action.
• A new group launched today “to support action to limit greenhouse gases and counter the U.S. Chamber of Commerce.” American Businesses for Clean Energy includes high profile companies — including some who quit the Chamber because of its stance on climate change. Members include utilities — New Jersey’s Public Service Enterprise Group Inc. (PSEG), Florida’s FPL Group Inc. (FPL) and New Mexico’s PNM Resources (PNM) — as retailer Gap Inc. and Colorado ski resort operator Aspen Skiing Co. More from the Wall Street Journal.
• And New York University School of Law’s Institute for Policy Integrity released a new poll of 144 economists. It found a whopping “94% believe the U.S. should join climate agreements to limit global warming,” and that “significant benefits from curbing greenhouse-gas emissions would justify the costs of action.”

When you want to find out which cars are best, you look to honest experts who do their homework – like Consumer Reports or the National Highway Traffic Safety Administration.

At EDF, we do the same thing when it comes to analyzing how the economy will fare under a carbon cap:  we look at what the neutral, nonpartisan economists are saying.

In the world of economic forecasts, the honest brokers include the Environmental Protection Agency, the Energy Information Administration, the Massachusetts Institute of Technology, and the Congressional Budget Office.

In a just-released publication, EDF’s economics team looks at what these nonpartisan experts are saying about the House-passed American Clean Energy and Security Act (H.R. 2454, or ACES).  As you recall, that bill would put a gradually declining cap on emissions of heat-trapping gases.

Here’s what we found:  according to unbiased economic experts, if we adopt ACES, the US economy will reach $25 trillion in the spring of 2030 – just a couple of months after it would do so with no cap.  In other words, we don’t have to compromise between a strong economy and a better environment.  We can have both.

To help you see how tiny the impact of a cap on economic growth will be, check out this chart:

The new EDF paper builds on our analysis last year of nonpartisan studies of earlier climate bills.  The new studies square up perfectly with last year’s:  fighting climate change is easily affordable.

So what about those wild numbers you hear tossed around – that if we cap carbon, the economy will crater and families will go broke paying ginormous utility bills?   Those numbers aren’t from these neutral, nonpartisan studies; they’re from “studies” by groups who want to kill climate legislation.

We’ve rebutted the crazy numbers elsewhere.  But this brief is about real economic studies done by serious, neutral experts.

The new paper also compares the tiny costs of protecting ourselves against potentially catastrophic global warming with the much larger amounts we spend to protect ourselves in other ways – like police and fire protection, life insurance, and national defense.  This chart tells the story:

There are a lot more goodies in our economists’ new report — check it out.  And if you want the graduate-level course, you can learn still more about climate economics at http://www.edf.org/climatecosts.

The Congressional Budget Office (CBO) just released another report showing that the costs from clean energy legislation would be small – and could help America avoid the severe economic impacts of climate change.

The report, “The Economic Effects of Legislation to Reduce Greenhouse-Gas Emissions,” is based on other previous analysis.

Here are some of the CBO’s main findings:

• Without policies to reduce carbon pollution, climate change will have negative and possibly severe economic impacts on the United States.
• With legislation including a cap on carbon pollution, the cost to consumers will be modest, and in line with previous independent estimates.
• Low-income families (the lowest 20 percent of households) would see purchasing power riseas a result of the House-passed clean energy bill, thanks to the allocation provisions. Higher income households would see a very small increase in costs.
• The reduction in household purchasing power, taking into account compensation from the allocation provisions, would amount to 0.1-percent in 2012 and 0.8-percent in 2050, with an average of 0.4-percent over the period 2012-2050.
• Nationally, the House legislation would reduce the U.S. gross domestic product (GDP) — relative to the no-policy scenario —  by 0.2 to 0.7 percent in 2020; 0.4 to 1.1 percent in 2030; 0.7 to 2 percent in 2040; and 1.1 to 3.4 percent in 2050. At the same time, real GDP is projected to be roughly two and a half times greater in 2050 than today under either scenario. (Note that taking no action would also reduce GDP growth, perhaps to a much greater degree, because of the impacts of climate change.)
• Annual U.S. economic growth between 2010 and 2050 would be reduced by 0.03 to 0.09 percentage points, relative to a business-as-usual growth rate of 2.4 percent. (Again, this “business as usual” estimate assumes a fictional world in which climate change does not occur.)

An earlier CBO analysis [PDF] of the House clean energy bill found it would cost the average American household about as much as a postage stamp per day. Other analyses by the Environmental Protection Agency and the Department of Energy found similar results.

This is the fourth study to confirm the same conclusion (other ones: EPA [PDF], CBO [PDF], EIA, ) – America can afford to pass legislation that will make us more energy independent and will help fight climate change.

In fact, we can’t afford not to.

For those of you wondering what the story is with a Treasury Department document that purports to estimate the cost of climate legislation: it doesn’t.

The Treasury Department analysis simply quantifies the potential revenue from a hypothetical auction of all pollution permits under a cap and trade bill.

Opponents of climate change legislation are now firing up the fuzzy math machine again, dividing that figure by the number of people in the country and concluding that cap and trade will mean high costs for households. Sound familiar? That’s how House Minority Leader John Boehner arrived at his roundly dismissed $3,100 figure.

It’s a flawed analysis of a non-existent proposal.

Even if a 100 percent auction was a live legislative proposal, which it’s not, that math ignores the redistribution of revenue back to consumers. It only looks at one side of the balance sheet. It would only be true if you think the Administration was going to pile all the cash on the White House lawn and set it on fire.

The bill passed by the House sends the value of pollution permits to consumers, and it contains robust cost-containment provisions. Every credible and independent economic analysis of the American Clean Energy and Security Act (such as those done by the non-partisan Congressional Budget Office, the Energy Information Administration, and the Environmental Protection Agency) says the costs will be small and affordable — and that the U.S. economy will grow with a cap on carbon.

For more info on what well-designed cap and trade legislation will actually cost, please visit http://www.edf.org/climatecosts.