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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.

Currently, Congress is as close as it has ever been to adopting a comprehensive climate and energy bill. In June 2009, the U.S. House of Representatives passed the American Clean Energy and Security Act, and on May 12, 2010, Senators John Kerry (D-MA) and Joseph Lieberman (I-CT) released a draft Senate bill, the American Power Act. Both bills would put in place a nationwide plan to rein in global warming pollution, thereby reducing U.S. dependence on foreign oil, and creating new clean energy jobs.

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. At a minimum, a bill should reduce emissions 17 percent by 2020 to jump start the reduction of global warming pollution and set us on the path to the longer term emissions cuts that scientists tell us are needed.
  • 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.

    Learn more.

  • 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.

Learn more. 

  • 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,” which allows polluters to stop cutting their pollution if the price they would pay for their emissions goes above a certain limit, reduces both the environmental and economic benefits of the program. By making it cheaper to buy pollution credits than actually reducing pollution, a poorly designed safety valve makes it difficult to achieve the program’s reduction requirements. Proponents of a “safety valve” tout its cost containment and consumer protection benefits, but the inclusion of a poorly designed safety valve could severely weaken the market certainty needed to encourage businesses to invest in new energy technologies.  Any price limits on pollution that are set should remain high enough to ensure the existence of a vibrant carbon market and should not be tied to permission for polluters to stop cutting their emissions. 

Learn more.

  • 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.

    Reducing emissions from deforestation is one of the most inexpensive reductions we can make right away.  A climate policy should direct at least 5 percent of the revenue from the sale of emissions allowances toward programs to protect tropical forests. This amount of investment can reduce global warming emissions by an amount equivalent to 10 percent of U.S. emissions.

    Learn more.

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.

 Learn more.

The U.S. Should Play a Leadership Role in the International Arena
A U.S. climate program should complement similar programs in other countries and any international effort.  Moreover, we can ensure deeper commitments globally by honoring the promises made by the U.S. at the international climate negotiations in Copenhagen, Denmark in December 2009.  Specifically, the U.S. committed to provide funds to protect tropical forests, help with international adaptation, and support developing countries in deploying clean technology. We can also ensure deeper global reductions in emissions by committing to additional foreign assistance, outside the revenue generated by a climate policy, to protect tropical forests. Such assistance, combined with congressional action on strong U.S. climate and energy legislation, would allow the U.S. to remain relevant and to contribute meaningfully to continuing negotiations for an international climate agreement.

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