Insight Web Extra
In the first part of a two-part series, we take a look at prospects for federal climate change legislation in 2009. Next week, the series concludes with a look at the current international climate change regime and what it means for the nuclear energy industry. February 2009—After years of building pressure, this may prove to be a decisive year for climate change legislation. A new administration in Washington and a major United Nations climate conference this December will make climate change legislation a high priority this year. As a result, nuclear power, although not directly affected by a cap-and-trade system, could stand to benefit.
Climate Change Legislation—What Is It?
The need for climate change legislation is based on a scientific consensus that increasing, man-made greenhouse gas emissions (GHGs) are leading to higher temperatures worldwide. To counter the potential damaging effects of excessive global warming, many scientists and policymakers are pushing for some type of price on greenhouse gas emissions to reduce the use of fossil fuels.
“It is the increased cost of fossil fuels under a climate change agreement that stands to make low-carbon nuclear a much more attractive option,” said Paul Genoa, director of policy development at NEI.
The most likely mechanism for placing a price on GHG emissions is a “cap-and-trade” system in which large emitters of GHGs must obtain allowances that let them emit a certain amount of GHGs, the so-called “cap.” One allowance might be set to the equivalent of one ton of carbon dioxide.
The “trade” component is a key part of the cap-and-trade system. Emitters are allowed to sell or “trade” allowances to others who have reached their caps. The hope is that more efficient emitters (who are well-under their own caps) will sell their surplus allowances to less efficient emitters. As time goes on, the cap will shrink, fewer allowances will be issued and the price of carbon will rise as allowances become scarcer. The escalation in the cost of emitting GHGs will give inefficient emitters added incentive to develop more efficient technologies or switch to less carbon intensive fuels like nuclear.
The first international trading system for carbon dioxide emissions, the Emissions Trading System in Europe, has been in operation since 2005. In contrast, no U.S. federal cap-and-trade system for GHGs yet exists. Seven federal cap-and-trade proposals were introduced in the 110th Congress, and a regional cap-and-trade system organized by a group of states in the Northeast, the Regional Greenhouse Gas Initiative, began operating in 2008.
However, cap and trade would probably be only one of many mechanisms for controlling emissions. Corporate Average Fuel Economy standards for better fuel economy in vehicles, efficiency standards for consumer products and incentives for energy- efficient homes all would help reduce emissions.
Federal Initiatives—March to November
Ideally, an agreement on a federal cap-and-trade system would be reached this year in time for the U.N. climate conference this December in Copenhagen. Currently, the most concrete steps are being made by Rep. Edward J. Markey (D-Mass.), who chairs the Select Committee on Energy Independence and Global Warming in the U.S. House of Representatives. His goal is to have a climate change bill out of the committee by the end of May.
“Our goal is to produce legislation that would make it possible for President Obama to go to Copenhagen as the world leader,” Markey said in a recent interview with the Financial Times.
In contrast, the U.S. Senate appears to be looking at nearer-term energy objectives like a nationwide Renewable Portfolio Standard, which would mandate a certain percentage of electricity generation to come from renewable, low-carbon sources such as wind or solar.
Sen. Harry Reid (D-Nev.) has noted the need for climate change legislation, but he has yet to present any detailed plans or a timetable for introducing legislation.
“Later this year, hopefully late this summer [we’ll] do the global warming part of it,” he said in a recent interview with the Associated Press.
Next week, we continue the story with a look at the international climate change legislation process in 2009.
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