US House passes Obama administration’s carbon trading legislation

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The new American Clean Energy Act: Exposing the fraudulence of centrist “solutions” to systemic problems.

By Patrick O’Connor / The World Socialist Web Site
29 June 2009

RELATED (SEE BELOW) Dennis Kucinich: “Why I voted No. Passing a weak bill today gives us weak environmental policy tomorrow”

waxman_henry

Zionlib Henry A. Waxman (D-Calif.) serves as House Energy Committee chair.  He was one of the main drivers of the Act, along with Massachusetts’ Ed Markey.

On Friday, the US House of Representatives narrowly approved Democratic-sponsored legislation for a national “cap and trade” carbon emissions trading scheme.

Hailed by President Barack Obama as an “extraordinary first step,” the proposed measures will do little to address climate change. While the working class will be hit with higher energy and fuel costs, the major corporate polluters will potentially reap enormous profits through the various subsidies contained in the legislation.

The 1,200-page “American Clean Energy and Security Act,” sponsored by Democrats Henry Waxman (California) and Ed Markey (Massachusetts), passed the House by 219 votes to 212. The vote was prepared by intensive lobbying of lawmakers by President Obama and other senior Democrats, including House Speaker Nancy Pelosi, Secretary of State Hillary Clinton and former vice president Al Gore. Those voting against nevertheless included 44 Democrats, while eight Republicans voted in favor of the bill. The legislation must be passed by the Senate, where its prospects are murky, before it can be signed into law by Obama.

The “cap and trade” scheme essentially involves making carbon dioxide pollution a tradable commodity. The cap refers to a goal of cutting total American emissions by 17 percent by 2020 and 83 percent by 2050 compared to their 2005 levels. The major corporate polluters are allocated a share of the total of carbon credits, or allowances. If they subsequently lower their emissions, they can sell their surplus carbon credits for a profit to those who need them.

•••••

Carbon trading represents an attempt to fashion a “free market” solution to the global warming crisis, despite the fact that the crisis is being driven by the anarchic operations of the capitalist market.

First promoted in the 1980s by the Reagan administration, pollution trading schemes have been seized upon as a means of evading regulatory or punitive measures against corporate polluters. Largely due to the insistence of the Clinton administration, carbon trading mechanisms were made a central part of the 1997 Kyoto Protocol.  Several countries that ratified the treaty have their own national cap and trade schemes, with the largest covering the major European economies. In every instance, carbon trading has failed to meet the levels of emission reduction that scientists say are necessary.

•••••

The emissions reduction targets in the American Clean Energy and Security Act are, from any objective standpoint, grossly inadequate.

The United Nation’s Intergovernmental Panel on Climate Change (IPCC) concluded in 2007 that advanced economies’ emissions must be 25-40 percent lower than their 1990 levels by 2020, and 80-95 percent by 2050. Additional scientific evidence gathered in the last two years indicates that climate change is developing more rapidly than previously believed, making even greater pollution cuts necessary.

The Democrats’ carbon trading scheme calls for a reduction in emissions of a mere 4 percent below 1990 levels by 2020.

The Obama administration’s overriding priority is to ensure than its climate change policies do not impinge on the interests of big business. Under the carbon trading legislation passed by the House of Representatives, corporations included in the scheme will receive 85 percent of their allocated carbon credits for free. They will potentially be able to sell these for a substantial profit.

In other countries, businesses claimed more credits than they actually required by ratcheting up reported emissions immediately before the cap and trade scheme commenced. Afterwards, they continued with business as usual while cashing in their excess credits. In Europe, major oil companies, including BP and Shell, made substantial profits through the pollution allowance giveaway.

To ensure the carbon trading bill’s passage through the House, senior Democrats attached numerous concessions, incentives and special provisions to accommodate regional and sectional business interests. According to one report, 880 business and interest groups registered to lobby on the legislation.

The major coal companies—among the worst polluters—are to receive $10 billion in public subsidies over the next decade to research and invest in carbon capture and storage technology. “Coal-state lawmakers wouldn’t be comfortable with a cap-and-trade bill that didn’t include a lot for coal,” the Washington Post noted in an editorial last Thursday.

Agribusinesses have been offered the opportunity of making money through so-called offsetting mechanisms. These allow agricultural operators to generate and sell carbon credits by reporting farming practices which supposedly reduce emissions.

This represents yet another public subsidy for American agribusiness. International “offsetting” schemes under the Kyoto Protocol have been riddled with fraud.

Many of the major coal, mining, oil and energy conglomerates remain opposed to carbon trading, as do less competitive sections of American manufacturing, largely over concerns that they may not be fully compensated for the scheme’s compliance costs.

Other sections of business, however, have enthusiastically backed the Obama administration’s plans. The Climate Action Partnership—comprised of major corporations including Alcoa, Dow Chemical, General Electric and Rio Tinto—has been demanding that Congress enact a national carbon trading market since 2007. Among the potential big winners from Obama’s scheme are the renewable energy operators. The American Clean Energy and Security Act includes a provision that 20 percent of total energy must come from solar, wind and geothermal sources by 2020.

Wall Street is also looking forward to cap and trade. In Europe, carbon has developed into a multi-billion-dollar commodity, with entire divisions of major banks and hedge funds in London, Paris and Frankfurt devoted to investment and speculation in pollution credits.

According to Congressional Budget Office research, the average US household will pay an additional $175 a year in energy costs by 2020 under the proposed legislation, but the real impact will likely be far worse. Under cap and trade, the price of carbon is uncapped and dictated by the market. Ordinary people’s ability to afford to fuel their car and heat their homes is therefore at the mercy of the activities of the carbon market speculators.

Buried within the American Clean Energy and Security Act is a provision—reportedly inserted in the middle of the night before Friday’s House vote—which, from 2020, mandates the president to impose tariffs on imports coming from countries which have not limited their greenhouse gas pollution.

The clause, apparently directed against countries such as India and China which are exempt from emissions targets under the Kyoto Protocol, has the potential to drastically escalate international trade tensions amid intensifying rivalries between the major powers.

Cap and trade schemes internationally have generated economic nationalist demands. In Europe in recent years, several high profile politicians, including French President Nicolas Sarkozy and European Commission President José Manuel Barroso, have called for trade barriers to be erected against the US and other countries without carbon emissions standards equivalent to those of the European Union.

Obama yesterday attempted to play down international concerns by distancing himself from the bill’s tariff provision. “At a time when the economy worldwide is still deep in recession and we’ve seen a significant drop in global trade, I think we have to be very careful about sending any protectionist signals out there,” he told reporters.

The threat of a retaliatory trade war sparked by the national carbon trading scheme underscores the absence of any effective solution to global warming within the framework of the capitalist system.

Climate change can be addressed only on a global basis. But the division of the world into rival nation states, a basic characteristic of capitalism, stymies any rational and systematic international cooperation. Each national government seeks to gain advantage over others for the business interests it represents.

At the same time, the private ownership of the means of production stands as an insurmountable obstacle to the rational utilization of available technologies to address global warming. Powerful vested interests sabotage measures that impinge on their wealth and profits.

What is required is a socialist program, which has as its aim the establishment of an internationally planned economy oriented towards satisfying social need rather than maximizing profit and private wealth.

The lowering of carbon emissions to their required levels—while at the same time increasing people’s living standards internationally—requires the rational reorganization of the world economy, including the restructuring of energy, industrial and agricultural production, along with urban and international transport. This in turn depends upon the development of an independent movement of the American and international working class.

BONUS FEATURE

Why Dennis Kucinich refused to vote for a bill that enshrines a corrupt non-solution to a grave problem.

By Dennis Kucinich


Kucinich: “Passing a weak bill today gives us weak environmental policy tomorrow”-


“I oppose H.R. 2454, the American Clean Energy and Security Act of 2009. The reason is simple. It won’t address the problem. In fact, it might make the problem worse…”

Dateline: June 26, 2009

Kuciniches

Dennis Kucinich and his wife, the former Elizabeth Harper.

“It sets targets that are too weak, especially in the short term,  and sets about meeting those targets through Enron-style accounting methods. It gives new life to one of the primary sources of the problem that should be on its way out”” coal “” by giving it record subsidies.  And it is rounded out with massive corporate giveaways at taxpayer expense.  There is $60 billion for a single technology which may or may not work, but which enables coal power plants to keep warming the planet at least another 20 years.

“Worse, the bill locks us into a framework that will fail. Science tells us that immediately is not soon enough to begin repairing the

planet.  Waiting another decade or more will virtually guarantee catastrophic levels of warming.  But the bill does not require any greenhouse gas reductions beyond current levels until 2030.

“Today’s bill is a fragile compromise, which leads some to claim that we cannot do better.  I respectfully submit that not only can

we do better; we have no choice but to do better.  Indeed, if we pass a bill that only creates the illusion of addressing the problem, we walk away with only an illusion.  The price for that illusion is the opportunity to take substantive action.

“There are several aspects of the bill that are problematic.

1.      Overall targets are too weak. The bill is

predicated on a target atmospheric concentration of 450 parts per million, a

target that is arguably justified in the latest report from the Intergovernmental

Panel on Climate Change, but which is already out of date. Recent science

suggests 350 parts per million is necessary to help us avoid the worst effects

of global warming.

2.      The offsets undercut the emission reductions.

Offsets allow polluters to keep polluting; they are rife with fraudulent claims

of emissions reduction; they create environmental, social, and economic unintended

adverse consequences; and they codify and endorse the idea that polluters do

not have to make sacrifices to solve the problem.

3.      It kicks the can down the road. By

requiring the bulk of the emissions to be carried out in the long term and

requiring few reductions in the short term, we are not only failing to take the

action when it is needed to address rapid global warming, but we are assuming

the long term targets will remain intact.

4.      EPA’s authority to help reduce greenhouse gas emissions

in the short- to medium-term is rescinded. It is our

best defense against a new generation of coal power plants.  There is no room

for coal as a major energy source in a future with a stable climate.

5.      Nuclear power is given a lifeline instead of phasing it out.  Nuclear power

is far more expensive, has major safety issues including a near release in my

own home state in 2002, and there is still no resolution to the waste problem.

A recent study by Dr. Mark Cooper showed that it would cost $1.9 trillion to

$4.1 trillion more over the life of 100 new nuclear reactors than to generate

the same amount of electricity from energy efficiency and renewables.

6.      Dirty Coal

is given a lifeline instead of phasing it out.  Coal-based energy

destroys entire mountains, kills and injures workers at higher rates than most

other occupations, decimates ecologically sensitive wetlands and streams,

creates ponds of ash that are so toxic the Department of Homeland Security will

not disclose their locations for fear of their potential to become a terrorist

weapon, and fouls the air and water with sulfur oxides, nitrogen oxides, particulates,

mercury, polycyclic aromatic hydrocarbons, and thousands of other toxic

compounds that cause asthma, birth defects, learning disabilities, and

pulmonary and cardiac problems for starters.  In contrast, several times more

jobs are yielded by renewable energy investments than comparable coal

investments.

7.      The $60 billion allocated for Carbon Capture and

Sequestration (CCS) is triple the amount of money for basic research

and development in the bill. We should be pressuring China,

India and Russia to slow and stop their power

plants now instead of enabling their perpetuation. We cannot create that

pressure while spending unprecedented amounts on a single technology that may

or may not work. If it does not work on the necessary scale, we have then spent

10-20 years emitting more CO2, which we cannot afford to do. In addition, those

who will profit from the technology will not be viable or able to stem any

leaks from CCS facilities that may occur 50, 100, or 1000 years from now.

8.      Carbon markets can and will be manipulated

using the same Wall Street sleights of hand that brought us the financial

crisis.

9.      It is regressive.  Free allocations doled

out with the intent of blunting the effects on those of modest means will pale

in comparison to the allocations that go to polluters and special interests.  The

financial benefits of offsets and unlimited banking also tend to accrue to

large corporations.  And of course, the trillion dollar carbon derivatives

market will help Wall Street investors.  Much of the benefits designed to

assist consumers are passed through coal companies and other large corporations,

on whom we will rely to pass on the savings.

10.  The Renewable Electricity Standard (RES) is not an improvement. The 15% RES

standard would be achieved even if we failed to act.

11.  Dirty energy options qualify as “renewable”-:

The bill allows polluting industries to qualify as “renewable energy.”-

Trash incinerators not only emit greenhouse gases, but also emit highly toxic

substances.  These plants disproportionately expose communities of color and

low-income to the toxics.  Biomass burners that allow the use of trees as a

fuel source are also defined as “renewable.”- Under the bill,

neither source of greenhouse gas emissions is counted as contributing to global

warming.

12.  It undermines our bargaining position in international

negotiations in Copenhagen

and beyond. As the biggest per capita polluter, we have a responsibility to

take action that is disproportionately stronger than the actions of other

countries. It is, in fact, the best way to preserve credibility in the

international context.

13.  International assistance is much less than demanded by

developing countries. Given the level of climate change that is already in the

pipeline, we are going to need to devote major resources toward adaptation.  Developing

countries will need it the most, which is why they are calling for much more resources

for adaptation and technology transfer than is allocated in this bill.  This

will also undercut our position in Copenhagen.

“I offered eight amendments and cosponsored two more that collectively would have turned the bill into an acceptable starting point.  All amendments were not allowed to be offered to the full House.  Three amendments endeavored to minimize the damage that will be done by offsets, a method of achieving greenhouse gas reductions that has already racked up a history of failure to reduce emissions “” increasing emissions in some cases “”while displacing people in developing countries who rely on the land for their

well being.

“Three other amendments would have made the federal government a force for change by requiring all federal energy to eventually come from renewable resources, by requiring the federal government to transition to electric and plug-in hybrid cars, and by requiring the installation of solar panels on government rooftops and parking lots.  These provisions would accelerate the transition to a green economy.

“Another amendment would have moved up the year by which reductions of greenhouse gas emissions were required from 2030 to 2025.  It would have encouraged the efficient use of allowances and would have reduced opportunities for speculation by reducing the emission value of an allowance by a third each year.

“The last amendment would have removed trash incineration from the definition of renewable energy.  Trash incineration is one of the primary sources of environmental injustice in the country.  It a primary source of compounds in the air known to cause cancer, asthma, and other chronic diseases.  These facilities are disproportionately sited in communities of color and communities of low income.  Furthermore, incinerators emit more carbon dioxide per unit of electricity produced than coal-fired power plants.

“Passing a weak bill today gives us weak environmental policy tomorrow,”- said Kucinich.

Dennis Kucinich is a congressman from Ohio and a 2008 presidential primary candidate. Blocked by the corporate media, and, most egregiously, by his own party, which regarded him as an embarrassing radical (radical he is, dangerous, no), his message failed to reach and mobilize the masses. Meanwhile the media—and the inevitable centrist dunces—were busy inflating and falling for the messianic promise of one Barack  Obama.  [Visit http://kucinich.us/ ]

3 comments on “US House passes Obama administration’s carbon trading legislation
  1. As usual, Kucinich presents a reasoned plan which exposes the corporate corruption of our supposedly representative legislature. Oooops! Better attack him before people read his plans.

  2. Agree with Ormond.

    A very large segment of Democrats (chiefly of the DailyKos/Obamaniac type) have been foaming at the mouth denouncing Dennis Kucinich as “a traitor” for voting “NO” on this travesty of a law. The truth of the matter, as they say, is as Kucinich presented it. This Energy Act is make-believe, it’s a fraud, more of a delay than a step forward on the road to true change in energy policy, jobs, etc. Meanwhile, not even the so-called “left/liberal media (Olbermann, Maddow, Ed Schultz at MSNBC, The Nation, etc.) have uttered a word of SUPPORT for Kucinich, nor sought to explain why this law is objectionable to a true progressive.

    Between the stubbornly reformist rank-and-file, the corrupt DLC honchos at the top, and the “Bluedog Democrats” who really belong on the GOP side, the chances of real change are gasping for air in this nation, while the vacuum of principled leadership widens.

  3. COMMENTARY BY GEORGE MONBIOT (U.K., The Guardian columnist)
    Inserted by the editors

    Why do we allow the US to act like a failed state on climate change?

    It would be laughable anywhere else. But, so everyone says, the Waxman-Markey bill which is likely to be passed in Congress today or tomorrow, is the best we can expect – from America.

    The cuts it proposes are much lower than those being pursued in the UK or in most other developed nations. Like the UK’s climate change act (pdf) the US bill calls for an 80% cut by 2050, but in this case the baseline is 2005, not 1990. Between 1990 and 2005, US carbon dioxide emissions from fossil fuels rose from 5.8 to 7bn tonnes.

    The cut proposed by 2020 is just 17%, which means that most of the reduction will take place towards the end of the period. What this means is much greater cumulative emissions, which is the only measure that counts. Worse still, it is riddled with so many loopholes and concessions that the bill’s measures might not offset the emissions from the paper it’s printed on. You can judge the effectiveness of a US bill by its length: the shorter it is, the more potent it will be. This one is some 1,200 pages long, which is what happens when lobbyists have been at work.

    There are mind-boggling concessions to the biofuels industry, including a promise not to investigate its wider environmental impacts. There’s a provision to allow industry to use 2bn tonnes of carbon offsets a year, which include highly unstable carbon sinks like crop residues left in the soil (another concession won by the powerful farm lobby). These offsets are so generous that if all of them are used, US industry will have to make no carbon cuts at all until 2026.

    Like the EU emissions trading scheme (ETS), Waxman-Markey would oblige companies to buy only a small proportion (15%) of their carbon permits. The rest will be given away. This means that a resource belonging to everyone (the right to pollute) is captured by industrial interests without public compensation. The more pollution companies have produced, the greater their free allocation will be – the polluter gets paid. It also means, if the ETS is anything to go by, that the big polluters will be able to make windfall profits by passing on the price of the permits they haven’t bought to their consumers.

    In one respect the bill actually waters down current legislation, by preventing the Environmental Protection Agency from regulating coal-burning power stations. If the new coal plants planned in the US are built, it’s hard to see how even the feeble targets in this bill can be met, let alone any targets proposed by the science.

    Even so, I would like to see the bill passed, as it at least provides a framework for future improvements. But why do we expect so little from the US? Why do we treat the world’s most powerful and innovative nation as if it were a failed state, rejoicing at even the faintest suggestion of common sense?

    You have only to read the comments that follow this article to find out. Thanks to the lobbying work of the coal and oil companies, and the vast army of thinktanks, PR consultants and astroturfers they have sponsored, thanks too to the domination of the airwaves by loony right shock jocks, the debate over issues like this has become so mad that any progress at all is little short of a miracle. The ranking Republican on the House energy and commerce committee is Joe Barton, the man who in 2005 launched a congressional investigation of three US scientists whose work reveals the historical pattern of climate change. Like those of many of his peers, his political career is kept on life support by the fossil fuel and electricity companies. He returns the favour by vociferously denying that manmade climate change exists.

    A combination of corporate money and an unregulated corporate media keeps America in the dark ages. This bill is the best we’re going to get for now because the corruption of public life in the United States has not been addressed. Whether he is seeking environmental reforms, health reforms or any other improvement in the life of the American people, this is Obama’s real challenge.

    ORIGINAL COMMENT: http://www.guardian.co.uk/environment/georgemonbiot/2009/jun/26/us-obama-climate-monbiot

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