Key To Climate Bill, Offsets Have Plenty Of Critics
Professor Michael Wara's analysis of the Waxman-Markey bill, Clean Energy and Security Act of 2009, is noted in this report from Grist:
America’s first major stab at tackling global climate change comes in the form of the American Clean Energy Security Act, a massive piece of legislation that would touch nearly every corner of the U.S. economy.
The bill, often referred to as “Waxman-Markey” after its principal sponsors in the House of Representatives, contains provisions for clean energy technology, energy efficiency, green building codes, green jobs, and adaptation measures to help ease people into a new world order. But its most talked about feature is the regulation arm, “cap and trade”: limit pollution to a finite amount, lower the allowable amount each year, and let polluters trade pollution permits to create market incentives for businesses to reduce emissions as cheaply as possible.
“Enormous numbers of offsets defer to a later day the time at which [entities under the cap] will have to change their behavior,” said Michael Wara, a climate scientist and professor at Stanford Law School who has studied and written about offsets. “If you look at the EPA analysis of [Waxman-Markey], there will not be a change in the amount of electricity coming from coal until 2020 or 2030. My own analysis shows that emissions under the cap will not have to fall until 2030.”
Some critics stress that offsets are not the only or best way to control costs under a cap-and-trade scheme. Wara would prefer a “safety valve” that would allow regulated businesses to buy unlimited allowances to pollute if the price of carbon rose to a predetermined level. The underlying premise is similar to the strategy behind the inclusion of a large number of offsets in Waxman-Markey: adding supply reduces demand, thereby keeping costs down.
But with a safety valve, the government could use the money raised by selling excess allowances to buy and retire offsets. “What that does is disconnect the cost-control [mechanism from] emission-reduction activities outside the cap, thereby improving the incentives to fund only the higher quality projects,” Wara said.
In spite of these arguments, “the political reality has been that offsets are what we’re using,” said Stanford’s Wara. That reality has been created in part by the voluntary offset market, which has worked to make legislators and the general public alike more familiar with its product over the last few years.
“Current offset companies exist because of the prospect of something like this system,” said Wara. “Companies that do voluntary offsets in the U.S. right now are basically laying down markers on what are going to be very valuable compliance-grade offset projects in the future.”