Yesterday evening, climate and energy reform died in the Senate. All that remains is a skeletal package that responds to the BP oil spill and provides a few minor incentives for conservation, energy-efficiency retrofits, and the development of natural-gas trucks. Neither an economy-wide cap-and-trade system nor a utilities-only compromise will be part of the legislation Reid plans to introduce. Even more stunning, a renewable-electricity standard, long considered the centerpiece of any compromise excluding cap-and-trade, has also been scrapped.
What to make of this? As David Roberts put it, it’s total and complete surrender. It also sounds like deficit politics played a role: Without the revenue-generating capacity of cap-and-trade, Reid had to jettison most everything else to keep the bill’s finances in the black.
The blow to the planet's long-term environmental health should be self-evident, but the extraordinary lack of foresight this turn of events demonstrates on the part of the legislation's centrist and conservative skeptics is equally galling. As if cued to the collapse of the Senate's legislative effort, China announced on Wednesday its own cap-and-trade system will be implemented from 2011 to 2015. It also already has its own equivalent of the renewable-electricity standard and energy-efficiency goals an earlier Senate package included. This should surprise no one. China is a signatory to the Kyoto protocol, and China’s meteoric development, based on the use of traditional fossil fuels, has left the country with levels of pollution unimaginable by American standards.
All this makes China a harbinger of things to come for the United States. Global population growth, combined with the demand for oil that will accompany the economic development of places like China and India, makes the world's shift off oil a structural inevitability. With these rules and structures already in place, China is positioning itself to ride that coming wave -- capital will flow into the country, long-term infrastructure will be laid down, jobs will be created, pollution will be reduced, and the country's standard of living will continue to rise.
This is where the magnitude of our political and civic failure to pass meaningful reform hits home. The technology we need to shift to a greener future will not simply arise out of the free-market ether the moment it's needed. For example, the low cost of oil within the American economy has been an outlier for a while now. And though coal remains cheap and abundant, China's pollution points to the practical limits of that fuel source as well. The reliance on cheap energy will last as long as the energy remains cheap. A study by the Government Accountability Office concluded that clean-coal technology won’t get off the ground in America without a price on carbon. The shift to non-fossil fuel energy sources won't likely happen without a price on carbon, either.
Private capital needs the right signals and incentives, and these have to come from the government. Companies and investors need to know that there will be long-term market stability for renewable energies – that the rules of the road won't change under their feet. “They want to know that there's some level of market certainty extended out 10 or 15 years,” Dave Foster, the executive director of the BlueGreen Alliance, says. “That's especially true with the secondary job creation in renewable energy, which is in the manufacturing sector. People don't want to make investments in factory capacity that'll take 15 to 30 years to recoup if the market for renewable electricity in the United States is so unstable that you can’t tell if installations are going to steadily increase over the next 10 years, or simply over the next one to two years.” A renewable-electricity standard would have provided that stability, as would have a cap-and-trade system. So without it, capital, and the innovation it could spur, will remain untapped.
Americans and their political leadership have a choice: Get out ahead of of the global shift to clean energy, or get dragged haphazardly behind it and lose out on opportunities for economic cooperation and expansion and the chance to take advantage of America's natural strengths. (And, of course, continuing to fall down on the job of not wrecking the global ecology.) For the moment, we seem to have chosen the latter course. And given politicians’ tendency to crow about the importance of America maintaining its global economic leadership – generally the same conservatives and centrists who just ran meaningful energy and climate reform into the ground – that’s an odd and shameful choice.
-- Jeff Spross
