Monday, March 02, 2009

Too little, too late








Too
Little, Too Late





Why
the electric power lobby remains out of touch on global warming





Now
that President Obama has unveiled his budget – and tipped his
hand about the administration’s goals for passing climate
legislation, it might be time to take a closer look at one of the
strongest opponents: the electric power industry lobby as represented
by the Edison Electric Institute.





Right
before the new President took office, EEI released a set climate
change policy recommendations.
http://www.eei.org/newsroom/pressreleases/Releases/Pages/090114.aspx





The
institute billed its plan as a “significant breakthrough,”
though in reality it’s just a re-packaging of the same old
head-in-the-sand strategy that the coal-dominated power industry has
followed in the past.





Perhaps
it’s no wonder. EEI’s investor-owned power company
members include


some
of the largest greenhouse gas polluters, like AEP, Duke, and Southern
Company. EEI’s “Climate Change Framework” might
have seemed progressive a decade ago (when some of its members were
challenging the existence of global warming), but at this point this
“framework” seems like the skeleton of a structure in the
Twilight Zone.





The
political debate has shifted – and a lot farther and faster
than the power lobby seems to realize. When compared to the concepts
promoted by President Obama and key members of Congress, EEI’s
recommendations smack of the same protectionist policies and delay
tactics that have characterized the association’s past lobbying
efforts.





Let’s
examine just a couple of points in this polluter lobby plan. For
starters, EEI doesn’t have a meaningful near- or even
medium-term target for limiting carbon pollution. In fact, the first
reduction target that EEI is willing to commit to is more than 40
years from now -- in 2050. Rather than committing to specific
interim reduction goals (such as the President’s recently
announced target of 14% below 2005 levels by 2020
http://www.whitehouse.gov/omb/assets/fy2010_new_era/Jumpstarting_The_Economy.pdf
at page 21
) ,
EEI simply advises that interim targets “should be aligned with
technology availability.” In other words, while the global pot
is coming to a boil, EEI recommends a wait and see approach.





Unfortunately,
we cannot afford to sit, wait, and hope for a technology fix. Energy
efficiency and a shift to renewable and cleaner forms of energy are
available now. And as experience with acid rain, ozone, and
automobile emissions has proven, regulation will drive technological
innovation and investment. If EEI wants to show a real commitment to
addressing the threat of global warming, it must agree to aggressive,
real near- and medium-term reduction targets.




Another
lowlight of EEI’s proposal is a self-serving recommendation to
gift the electric power sector billions of dollars by giving away a
whopping 40 percent of the carbon permits, or allowances, under a CO2
cap-and-trade program – and with very little attention to how
the value of those permits would be used.





EEI
also proposes apportioning a substantial share of the permits based
on historic emission levels – thereby rewarding some of the
worst offending polluters, companies that have done little to improve
their environmental performance. And to add insult to injury, EEI
also recommends a special allowance subsidy for “merchant”
coal power plants that will cover 50 percent of their emissions for
free.





This
scheme gets the incentives exactly wrong. The whole point of a
cap-and-trade program is to put a price on carbon and let the market
work. The policy fails if the market is distorted at the outset with
special protections for the dirtiest sources. Even some conservative
members of Congress, like Senator Bob Corker of Tennessee, have
pointed out the fallacy of giving away these permits for free.
Auctioning 100 percent of the allowances, on the other hand, will
send the right financial signals and force dirty sources of pollution
to pay their fair share.





Even
when EEI adopts what on the surface seems like a possible near-term
compromise notion, such as the distribution of permits to local
distribution companies (LDCs), a closer inspection reveals serious
problems. As our prior reports have explained
http://www.cleanairwatch.org/Documents%20&%20Reports/should_big_polluters_own_the_sky_final.pdf
,





giving
permits to the distribution companies could be a short-term
transition to a 100 percent auction if these companies are
required to return the proceeds to benefit low-and middle-income
consumers. EEI’s plan, fails to include the transparent
accounting and enforcement mechanisms necessary to ensure that
consumers will in fact benefit.





Though
cranked out in 2009, EEI’s “framework” seems like
very old news when compared to creative ideas such as “cap and
dividend,” which are becoming more popular by the day. The
creative ideas have two things in common: we must start reducing
emissions right away, and the carbon permits must be auctioned, not
given away to the biggest polluters or campaign contributors. (We
examined that issue last year in a report, “Hot Checks”
http://www.cleanairwatch.org/Documents%20&%20Reports/Hot%20Checks%20report%20pdf.pdf
)





So
EEI’s plan is dead on arrival. Will the power lobby adapt to
the new reality, or dig in and try to torpedo effective legislation?
Stay tuned.



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