Its Waxman-Markey 3, Gingrich 0 in the Climate Policy Debate

While Newt Gingrich is expected to continue his war against climate legislation in favor of "drilling here, drilling now", this is a fight he is going to lose. In fact, climate change legislation, like the draft bill submitted by Representatives Waxman and Markey this week, offers three very compelling reasons why climate legislation should be passed this year to help re-power the American economy.

Reason 1: Jobs

The Waxman-Markey discussion draft would accelerate investment in the low carbon technologies needed to transform America's energy economy from a twentieth century provider of high carbon power to a twenty first century provider of low carbon power. This multi-trillion dollar transition is going to create millions of jobs for electricians, construction workers, plumbers, engineers, manufacturers, and service providers that cannot be exported.

Indeed, "green jobs" offer a very high return on investment from local labor. NRDC estimates that the $50bln in green stimulus offered as part of President Obama's stimulus bill, will create 1.5 million "green jobs". Jobs that will provide society with a very high payback in terms of lowering our over all energy costs, reducing pollution levels, and cutting our carbon emissions.  

Newt is going to have a hard time competing with this kind of payback from the oil and gas industry. Not only can you create four "green jobs" from the investment dollars needed to create one oil or gas job, if you are looking for any kind of payback to society from these investments, the oil industry it is the last place you would look. Exxon alone has paid out $150bln to their shareholders over the past 5 years, creating almost no payback to society in terms of improved energy security, higher employment, or lower energy costs.

Weighing these two approaches, I would have to give the nod to Waxman-Markey for creating more jobs for more Americans.

Waxman-Markey 1, Gingrich O

Reason Number 2: Real Energy Independence

While Newt carries on about the billons of gallons of untapped resources off our coasts, he is kidding himself if he thinks that we can become energy independent based on domestic oil exploration alone.

We currently import two-thirds of our oil and high risk/high cost solutions like off-shore drilling will not solve our problems. Furthermore, as Newt no doubt knows, America's energy bill will increase by $420billion annually within the next 5 years if we do nothing to reduce our dependency on oil and fossil fuels. That amounts to $3,500 annually for every family in the nation or more than ten times the costs of a well designed cap and trade bill.

Indeed, if Newt is actually serious about reducing our dependence on foreign oil, he should be focusing his attention on ways to advance enhanced oil recovery using CO2. Given that the oil industry expects CO2 EOR to grow from 10% today to 25% by 2020, Newt should be hard at work figuring out a way to give EOR CO2 players better access to CO2 so they recover the 45bln barrels of stranded oil that the Department of Energy estimates to be economically recoverable in the US from existing wells.  

The Waxman-Markey climate proposal does just this by investing tens of billions of dollars into carbon, capture, and storage technology for deployment at our nation's coal-fired power plants. If the performance based subsidies are effective, and developers build or retrofit coal-fired power plants with CCS equipment, hundreds of millions of tons of cheap carbon dioxide could be made available to the oil and gas industry, that would then be used to dry clean out the stranded oil.

Furthermore, the Waxman-Markey bill encourages development of a long list of low carbon technologies that will not only reduce the amount of oil and coal we consume (lowering their prices), but will also reduce our dependence on foreign oil in the only way that is meaningful, by diversifying our fuel sources.

If it were up to Newt, we would just remain as dependent as ever on foreign oil, and be subject to events like we are experiencing today where 43% of domestic rigs have been shut down since September due to the credit crisis. These kinds of disruptions will only increase the price volatility for natural gas down the road and seems like an unworkingable long term energy policy prescription. 

Waxman-Markey addresses our energy security on a number of fronts while Newt is leaving us stuck with the same high risk solutions that will cost us ten times the amount of good climate policy. Again Waxman-Markey get the point.

Waxman-Markey 2, Gingrich O

Reason 3: Climate Legislation Will Encourage Investment Needed to Accelerate Our Recovery

The cap and trade legislation put forth by Waxman-Markey reduces our carbon output through a combination of investment incentives and efficiency standards. Whether that is through putting combined heat and power equipment (CHP) into a factory to convert the waste heat from industrial processes into power generation, improving the fuel economy of cars sold in America, or retrofitting commercial and residential buildings to save wasted heating and energy costs, investments to take advantage of the energy and carbon savings will be accelerated under a cap and trade bill.

These types of investments already have a very short payback period. However, under the Waxman-Markey bill, demand side assistance will be given to utilities, industry, schools, and hospitals to invest in these low carbon solutions, creating the needed demand side pull to accelerate these investments. This will also give American suppliers of low carbon solutions the demand needed to increase production and help us recover faster.

Since Newt's economic recovery plan is to remain loyal to business as usual, keep the oil industry fat and happy, and point fingers as to how we got into this mess in the first place, the Waxman-Markey draft bill seems to have the edge again. 

Waxman-Markey 3, Gingrich O

So there you have it. The Waxman-Markey climate bill offers an important first step in passing climate legislation that will grow jobs, improve our energy independence and create the investment needed to accelerate our recovery through supply push and demand pull.

Newt, on the other hand, will continue to supply push the exaggerated costs of a cap and trade bill (and hope that no one checks his math) and demand pull more checks for his lobbying services as a way to re-power his bank account.

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