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Can We Get on the Road to the Emission Reductions We Need by Starting with a Cap on Stationary Sources?

Dan Lashof

Posted July 1, 2010 in Solving Global Warming

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President Obama hosted a bipartisan group of Senators at the White House on Tuesday to talk about the path forward on comprehensive clean energy and climate legislation. He made a strong case for passing a bill that “makes clean energy the profitable kind of energy” by holding polluters responsible for their emissions.

As expected, there was not a consensus in the room on the best way to proceed and most Republicans continued to oppose any limits at all. One breakthrough came from Sen. Olympia Snowe (R-ME), who issued a statement after the meeting calling for Congress “to develop legislation that is pragmatic, reduces uncertainty, and creates business opportunities for a carbon-free economy of the future, without further harming our economy of today” by capping emissions from the power sector. Senator Kerry indicated that he was open to a compromise that would scale back the scope of his proposal. In an online “Open for Questions” session after the meeting, Heather Zichal, Deputy Assistant to the President for Energy and Climate Change, reiterated the president’s commitment to a comprehensive approach that treats energy and climate as two sides of the same coin and puts a price on carbon emissions. She noted that there was a lot of discussion about how to do that during the White House meeting including discussion of a “stationary source only” cap.

Given all these signals the buzz in the Senate in recent days has focused on the idea of including in a comprehensive energy bill a cap that has a more limited scope than the 85% coverage of the Kerry-Lieberman proposal. So if it’s not possible to get 60 votes with the coverage of the House-passed bill and the Kerry-Lieberman proposal, is it possible to get started on the road to the emission reductions we need by starting with a cap on stationary sources?

My answer is a definite maybe.

There is no question that a broader cap is better and that all significant sources of global warming pollution must be subject to strict regulations in order to get to the 80% or more reductions we need by mid-Century. But a “stationary sources first” approach could work if it is structured properly, designed to become broader over time, and part of a comprehensive bill that includes strong measures to reduce emissions from the transportation sector.

Before considering the key issues in designing an effective stationary sources cap, let’s quickly review where the emissions come from: Power plants are the largest single source at 33% of the total emissions inventory, other large stationary sources that would be directly covered under Kerry-Lieberman contribute another 16%, natural gas use in homes and commercial buildings adds 6%, while oil use for transportation accounts for 26%. Those sources sum to 81%. That leaves HFCs at 3% and various miscellaneous sources, mostly from agriculture, which generally wouldn’t be covered directly in any of the proposals.

So covering only stationary sources gets us to nearly half of the total inventory. But there is no reason to leave out natural gas distribution companies (who would be responsible for the emissions from their customers, mostly homes and commercial buildings) or HFCs (which would be subject to a separate production phase-down), which have not been a major source of controversy.  This would boost coverage to 57% of the total inventory or about two-thirds of the coverage under Kerry-Lieberman.

The industrial sector is worth considering in more detail because some critics have charged that limiting emissions from manufacturing would be complicated and could put U.S. firms at a competitive disadvantage. The House bill and the Kerry-Lieberman proposal, however, have provisions that would nullify the competitiveness concern as my colleague David Doniger has discussed here. As for complexity, this could be addressed by phasing in coverage starting with the highest-emitting industrial subsectors. Just the top five subsectors—led by oil refineries—account for over 40% of the total emissions from the industrial sector. Additional sectors may well conclude that they would prefer the regulatory certainty and flexibility that comes from being part of a multi-sector cap and petition to be included sooner, rather than later.

This brings us to the transportation sector, which must be addressed in any comprehensive energy and climate bill. As I have argued previously, covering transportation fuels in the cap is essential to end our addiction to oil and achieve the long-term emission reductions we need. But I also noted that in the near term, more targeted policies will have the largest impact, such as increasing efficiency standards for cars, setting standards for trucks, and building infrastructure to transition from gasoline and diesel to electricity, natural gas, and sustainable biofuels. The stationary source cap also plays a key role because it ensures that electrifying the transportation system will decrease, not increase, emissions and because carbon dioxide captured from smokestacks can increase domestic oil production from existing onshore fields, reducing our reliance on imports and more dangerous offshore drilling.

We should have no illusions that a stationary sources only approach will achieve the overall emission reductions we need. That’s why this approach must be stationary sources first, not stationary sources only. The solution is to set ambitious overall national targets, both for reducing emissions and for reducing oil dependence, and ensure that they are met by adopting strong complementary policies and by expanding the scope of the cap over time to stay on track.

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Comments

Seth KaplanJul 1 2010 04:01 PM

And of course any "interim" bill should address the transportation sector through steps like the mandate that transportation planning and infrastructure spending in the Kerry-Lieberman bill (and in different form in the House ACES bill). Even if the transportation sector is not "going under the cap" immediately it is critical that this sector be addressed - and ending the insane practice of governmental planning and spending that makes the problem worse is a great first start.

Perhaps such a provision could even attract some votes - which is essential because it is not at all clear that stepping away from a comprehensive bill would garner 60 votes in the Senate. It would truly be the worst of all worlds to give up on that fundamental goal and still fall short.

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