What Does the Energy Bill Really Mean for CO2 Cuts?

What Does the Energy Bill Really Mean for CO2 Cuts?

With a razor-thin margin of just seven votes, the House of Representatives on Friday evening passed the American Clean Energy and Security Act — the first bill to put a fixed and declining cap on U.S. greenhouse gas emissions. Republicans and Democrats in the House spent much of the day sparring in sharp language over the bill, which will reduce U.S. carbon emissions 17% below 2005 levels by 2020 and 83% below by 2050. In the end, the vote of 219 to 212 included more than 40 Democrats who broke ranks with their party’s leadership to vote against the bill. Republicans savaged the bill as an economy-killing energy tax — one member even called for a moment of silence for the Americans who would lose their jobs because of the bill — and some left-wing environmental groups, including Greenpeace, withdrew their support because they believed the bill’s compromises made it far too weak.

But the bill’s passage is a palpable victory for House Speaker Nancy Pelosi and President Barack Obama — who both made a last-minute push to snap wavering Democrats back in line — and a landmark for the environmental movement. “The American Clean Energy and Security Act is the most important environmental and energy legislation in our nation’s history,” said Fred Krupp, the president of the Environmental Defense Fund . “Today’s vote is a huge achievement for the country and the climate.”

That the bill — also known as Waxman-Markey after its co-sponsors, the Democratic Congressmen Henry Waxman and Edward Markey — is historic is obvious, as it marks the first successful attempt by Congress to address climate change at a national level. But as the bill moves to the Senate, where the virtual requirement for 60 votes means that passage will be even more difficult, it’s far less clear that Waxman-Markey is strong enough to meet the long-term threat of global warming. The sheer difficulty of the negotiations that produced this 1,300-page bill — and the fact that despite weeks of compromises, it barely passed — demonstrates that Waxman-Markey might be as good as the greens can get. But it might not be good enough for a warming planet. “This won’t get us to where we need to go,” says Michael Shellenberger, the president of the Breakthrough Institute, an energy think tank that has been critical of Waxman-Markey.

First of all, it’s important to understand what the climate change bill does and doesn’t do. The bill includes a raft of energy efficiency provisions and a renewable energy standard that will require 20% of all U.S. electricity to come from alternative sources by 2020. Chiefly, though, Waxman-Markey puts a cap on almost all of the greenhouse gas emissions produced by the U.S. economy — everything from utilities to industry to transportation — setting a limit on how much carbon the country can produce. Industries are issued allowances each year that give them the right to emit a certain amount of carbon; they have to reduce their emissions to meet the cap, or buy allowances from other companies if they exceed the cap. The idea is that cap and trade gives you more bang for your climate buck. “This bill produces carbon reductions in an affordable way,” says Steve Cochran, who directs the EDF’s national climate campaign.

The bill’s opponents — Congressional Republicans, along with the oil industry and National Association of Manufacturers, among others — say cap and trade amounts to a massive tax on U.S. energy, which mostly still comes from carbon-intensive fossil fuels like coal. That’s partially true — the whole point behind cap and trade is to raise the cost of emitting carbon and drive investment in energy efficiency and renewable power. “No matter how you doctor it or tailor it, it is a tax,” said Representative Joe Pitts, a Pennsylvania Republican.

But critics have vastly overstated the likely cost. In fact, they’re all but lying. During the House debate, Republican whip Eric Cantor, using numbers from an American Petroleum Institute study, said that the bill would eventually cost more than $3,000 per family per year — but those numbers assume that billions of tons worth of inexpensive carbon offsets won’t be available under the bill, which would significantly inflate the overall cost. That’s not going to happen. A more reliable study from the non-partisan Congressional Budget Office forecast that the bill would cost the average U.S. household $175 in higher energy costs annually by 2020 — and other studies estimate that the energy efficiency provisions in the bill might even save Americans money over time. “The emission reductions in the bill can clearly be achieved at a tiny cost to the economy,” says Nathaniel Keohane, EDF’s director of economic policy and analysis.

True, no economic forecast of 15 years into the future is ironclad, but there are enough safety valves and offsets in Waxman-Markey to ensure the cost will be manageable. But that’s the problem. To keep conservative Democrats on board — especially those in the coal-heavy Midwest and Southeast — Waxman and Markey allowed the bill to be watered down considerably, loosening the overall carbon cap and scaling back the renewable energy standard. When the powerful farm lobby balked at the bill, it was changed to allow farmers to sell offsets from agriculture, such as no-till farming, which leaves carbon in the soil. Worse, oversight of the agricultural offsets was taken away from the Environmental Protection Agency and given to the Department of Agriculture, which isn’t exactly a neutral party.

As a result, the bill will achieve most of its stated carbon cuts through offsets and through improving energy efficiency, rather than encouraging the growth of low-carbon renewable electricity. Energy efficiency is an important low-hanging fruit, and the bill will significantly slow the growth of U.S. electricity consumption over time. But carbon offsets are dicey, and may not actually provide the emissions reductions they claim to. And a new EPA analysis of the bill forecast that the total amount of renewable energy generation under Waxman-Markey would actually be less than the renewable energy that would have been produced without the bill. Instead of investment flowing to new solar and wind companies, to electric cars and public transit, that money is likely to go to foreign offsets and farmers. “It should be a key goal to see renewable energy get picked up under this bill, but it’s not happening,” says Shellenberger. “That’s pretty demoralizing.”

The bill’s defenders, which include almost all mainstream environmental groups, say that it doesn’t matter where the emissions cuts come from, as long as they’re legitimate and the carbon goes down. “This bill will gives us lots of ways to get to where we need to go on emissions reductions,” says Keohane. But over the long run, we need to cut carbon out of our energy supply — and that means vastly increasing the role of renewables like solar and wind, along with low-carbon sources like nuclear and even coal with carbon capture. That will require plenty of hard scientific research to bring down the price of renewables — they have to be competitive not just in the U.S., but in countries like India and China, which will emit the vast majority of new carbon emissions in the future. “This legislation will finally make clean energy the profitable energy,” said President Obama before the bill’s passage — but that doesn’t seem to be the case.

At the very least the bill’s passage will help American negotiators at the upcoming U.N. climate summit in Copenhagen, where the world will try to put together a successor to the expiring Kyoto Protocol. Speaking with Obama at the White House today, German Chancellor Angela Merkel said that the bill represented a “sea change” for the U.S., so long a world pariah on climate change. “I would not have thought it possible a year ago,” she added. But the bill’s emissions cuts still fall far short of what the European Union has proposed, and are even further away from the massive short-term cuts major developing countries have demanded. “In terms of what the U.S. will take on as a target, one year doesn’t make up for the last eight years, so we’ll have to wait and see,” says Shyam Saran, India’s envoy on climate change. “This is not our responsibility.”

Despite its many flaws, Waxman-Markey remains a legislative achievement, and even doubtful environmentalists hope to be able to strengthen it in the future if it becomes law — especially if Americans come to realize that cap and trade isn’t the end of the economy. “No one looking at this three months ago would have estimated that we’d end up here,” says Cochran. But if this is the most that is politically possible in America, we’re in trouble, because climate change demands far more. “We are at an extraordinary moment, with a historic opportunity to confront one of the world’s most serious challenges,” said former Vice President Al Gore after the bill passed. “Our actions now will be remembered by this generation and all those to follow.” He’s right — which is why the battle has just begun.
Watch TIME’s Conversation With Energy Secretary Steven Chu