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July-August 2010
Vol. 35, No. 4

 

Climate change: CLEAR Act a clear winner

On April 20, a drilling rig in the Gulf of Mexico exploded, killing 11 crew members and bursting a pipe 5,000 feet below the surface. Considered the worst oil disaster in U.S. history, the resulting disaster has gushed thousands of gallons of oil into the Gulf of Mexico each day. Attempts to plug the leak have failed, and the government has stopped virtually all current and new offshore drilling activity until an investigation is conducted into the spill. This article was written by Maryknoll Office for Global Concerns intern Mary Gaertner.

See related article here.

President Obama’s initial plans to expand offshore drilling were supported by Sens. John Kerry (D-MA) and Joe Lieberman (I-CT) through a provision included in the Clean Energy Jobs and American Power Act (APA Act, S.1733). However, the lengthy oil spill clean-up has shifted political opinion; Sen. Lindsey Graham (R-SC), one of the original sponsors of the bill, has stated that the bill cannot get the votes needed to pass.

While the prospects for passing the APA look dim, the Carbon Limits and Energy for America’s Renewal Act (CLEAR Act, S.2877), an alternative climate change bill sponsored by Sens. Maria Cantwell (D-WA) and Susan Collins (R-ME) – which does not include provisions for increased offshore drilling – may just be a better option for climate change legislation this year. Demonstrating renewed interest in the bill, five senators have recently asked the Energy Information Administration (EIA) to analyze the CLEAR cap-and-dividend model, signaling their interest in a viable alternative.

CLEAR differs from the APA in several keys areas in which CLEAR comes out ahead.

Offsets and carbon emission reductions: While APA uses offsets (projects in renewable energy or energy efficiency that substitute for carbon emission reductions) to meet its emission reduction requirements, CLEAR treats such projects as additional programs in order to ensure reductions in carbon emissions. In addition, the CLEAR Act would not create the dangerous carbon derivatives market that the APA would.

Emission allowances: In APA, up to 51 percent of emission allowances – permission to emit one ton of greenhouse gases – will be distributed among electricity, natural gas, and oil companies, while the nuclear power industry will receive tens of billions of dollars in loan guarantees and tax credits. Due to these free giveaways, price signals will be minimized; consumers will not fully experience the rising fuel prices that result from placing limits on carbon emissions. Yet clear and consistent price signals provide the motivation for consumers to become more energy efficient. CLEAR offers no free giveaways – all emission allowances are auctioned – and lets oil prices rise as a way of encouraging new technologies and energy efficiency.

At the same time, CLEAR protects consumers by distributing 75 percent of auction revenues to the U.S. population. Under this system, it is estimated that the bottom 65-70 percent of all families would see a net financial gain, as the payments would exceed the money these families must pay for energy, even accounting for rising fuel prices.

APA, on the other hand, fully compensates only those living below 150 percent of the poverty line for rising fuel prices. For families between 150 and 250 percent of the poverty line ($16,000/year and $27,000/year for an individual, respectively), a small amount of income tax rebates is offered; however, as this rebate is funded by only 2.5 percent of the auction revenues, it is inadequate to compensate consumers.

International adaptation: In spite of its evident advantages, CLEAR does need one major improvement: to allocate funds for international adaptation. The United States, as the biggest emitter of greenhouse gases, has the responsibility to assist those countries most impacted by global warming. As the bill now stands, the remaining 25 percent of the auction revenues not returned to the U.S. public will be placed in the Clean Energy Reinvestment Trust (CERT) Fund. This revenue is not specifically accounted for, though the bill highlights some potential uses that include adaptation projects.

If some of the CERT Fund is allocated for international adaptation, CLEAR will outdo APA, as APA provides no revenue for international adaptation until 2019, and even then it only allocates three percent of the auction revenues. This is too long to wait for much-needed aid for the most affected countries.

Both climate change bills need improvements, but CLEAR is a better starting point for climate change legislation, as it includes zero offsets, no carbon derivatives market, no free giveaways, full or more than full compensation for the majority of the U.S. public, and a potential revenue source for international adaptation.

Faith in action:
Contact your senators and ask them to take the lead in responding to climate change by co-sponsoring the CLEAR Act, S. 2877.

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