Key Elements of Effective Climate Policy
The solutions to grow our economy, strengthen our energy security, and protect our climate are inherently linked. We need bold action and visionary leadership to transition the United States to a clean energy economy and curb global warming. A strong, science-based climate solution—that limits global warming pollution in tandem with a suite of forward-thinking energy, vehicle, and land-use policies—will enable us to break our dependence on oil, put Americans back to work and cut global warming pollution.
The Path to a Safer Climate and a Clean Energy Economy
The only way to build a sustainable clean energy economy and curb global warming is by creating a long-term demand for clean energy technologies. To build this demand, we need a “cap” on heat-trapping emissions, as well as a strong renewable electricity standard, efficiency requirements, and other complementary polices.
A cap program would limit global warming pollution, with deeper cuts required over time. Companies must purchase permits or "allowances" from the government to emit specified amounts of pollution. This creates a financial incentive for companies to pursue clean, efficient technologies, because they can save money by purchasing fewer allowances, or make money by reducing their own pollution and selling their allowances to other polluters. In this way, the real costs of burning coal, oil, and gasoline are accounted for in the marketplace.
A well-designed cap program will make clean technologies more affordable, help the United States transition to a clean energy economy, and achieve swift and deep reductions in global warming pollution.
Strong cap-and-trade legislation should:
* Set a Target for U.S. Emissions Reductions Based on the Best Available Science
To avoid the most damaging and costly effects of global warming, federal legislation should reduce U.S. global warming pollution by 35 percent below current levels by 2020 and at least 80 percent by 2050. This target assumes aggressive action by developing and other industrialized nations.
* Respond Rapidly to New Science
With climate science changing so rapidly, the reduction targets that experts recommend today may soon become outdated. That’s why U.S. climate policy must ensure a regular review of the latest global warming science. The policy should also ensure that the administration and Congress act quickly in response to the latest science to accelerate or deepen emissions reductions if necessary.
* Include a 25 percent by 2025 Renewable Electricity Standard (RES)
Requiring utilities to generate at least 25 percent of their electricity from clean, renewable sources will reduce the cost of achieving needed emissions reductions. An RES would:
- make emissions reductions more affordable by lowering the demand for and price of natural gas, saving consumers $64.3 billion on cumulative electricity and natural gas bills by 2025, or more than $67 per household annually;
- create 297,000 U.S. jobs in manufacturing, construction, installation, and maintenance of clean energy facilities;
- boost rural economies through $263.4 billion invested in clean energy projects and $13.5 billion in payments to rural landowners; and
- include only truly clean, renewable energy resources such as the sun, wind, heat from the planet’s interior, and plant and animal waste.
* Avoid Loopholes
Even with strong emission reduction targets, the inclusion of dangerous loopholes could undermine the effectiveness of the whole program. Two such loopholes are “unlimited offsets” and a “safety valve.”
- Unlimited Offsets - Offsets let polluters avoid making emissions cuts themselves by paying for pollution-reducing projects elsewhere. By allowing polluters to postpone any emissions cuts in their own facilities, unlimited offsets would delay much-needed technological advances and jeopardize the program’s long-term goals. As a result, offsets should be strictly limited and subject to rigorous standards to ensure that they provide real, permanent emissions reductions beyond what would happen in a business-as-usual scenario.
- Safety Valve - A “safety valve,” or a limit on the charge polluters must pay for their emissions, would undermine both the environmental and economic benefits of the program. By making it cheaper to buy pollution credits than actually reducing pollution, a safety valve makes it impossible to achieve the program’s reduction requirements. This would severely weaken the market certainty needed to encourage businesses to invest in new energy technologies.
* Protect Tropical Forests
Tropical forest trees, like all green plants, take in carbon dioxide and release oxygen during photosynthesis, storing some carbon in the process. When trees that are cut down rot or burn, they release the stored carbon into the air as carbon dioxide—the main heat-trapping gas causing global warming. Tropical deforestation produces more global warming pollution than the total emissions of every car, truck, plane, ship, and train on earth. It accounts for about 15 percent of the world’s emissions.
According to the Nobel Peace Prize-winning Intergovernmental Panel on Climate Change, slowing deforestation can make “a very significant contribution” to reducing global warming pollution. To cost-effectively prevent deforestation, the program should direct at least 5 percent of the revenue from the sale of emission allowances toward programs to protect tropical forests.
See additional UCS recommendations on the structure of a policy that caps global warming pollution.
We Also Need Complementary Energy and Transportation Policies
To make global warming pollution reductions more affordable, strong cap legislation should go hand in hand with additional policies to increase the efficiency of our vehicles, buildings, and appliances and ensure adequate electricity transmission capacity. Specifically, Congress should:
- enact a federal transportation bill that incorporates strong performance-based global warming pollution targets in the transportation planning process and invests in better public transportation, smarter growth, and land use planning;
- preserve state rights under the federal Clean Air Act to enact emissions standards on autos stronger than federal standards;
- enact policies that use sound science to promote truly low carbon fuels;
- enact an energy efficiency resource standard requiring retail electricity and natural gas providers to meet efficiency targets;
- establish performance standards and targeted incentives to speed deployment of more efficient appliances and buildings;
- provide significant funding for research and development of new energy efficiency and renewable electricity technologies; and
- expand the nation’s electric grid to transmit additional renewable energy generation from remote rural sources to urban demand centers.
The U.S. Should Play a Leadership Role in the International Arena
A U.S. cap-and-trade program should link with similar programs in other countries and any international effort. We can ensure deeper global reductions in emissions by committing to additional foreign assistance, outside the cap-and-trade auction revenue, to protect tropical forests. Such assistance, combined with congressional action on strong U.S. climate legislation, would position the United States to take a leadership role in the December 2009 international climate treaty negotiations in Copenhagen, Denmark.
