McCain announces climate plan
Adam Stein | May 13, 2008
Speech is a political watershed, but proposed policy could go farther.
This week John McCain delivered a speech (full text here) on his long-awaited climate plan, the first of a series of talks on energy policy. The highlights:
- McCain favors a cap-and-trade program with roughly 15% reductions by 2020 and “at least” 60% by 2050.
- McCain will proposed giving allowances away for free, but over time an “increasing fraction” could be auctioned to raise revenue for infrastructure in the post-carbon economy.
- Regardless of what China and India do, “we still have an obligation to act.” McCain hopes to use “effective diplomacy” and technology transfer to motivate developing countries. (In the published version of the speech, McCain also alluded to trade restrictions on uncooperative countries, but he dropped those comments from the delivered version.)
- Heavy plug for nuclear energy, although — at least in this speech — no mention of subsidies. Instead, McCain just mentioned that carbon pricing will make the economics of nuclear energy more favorable. It’s unclear whether this represents a policy shift.
So, what to make of this? There are two very different ways to look at the speech: as a statement of principle or as a statement of policy.
As a statement of principle, the speech is watershed moment. McCain’s language was unequivocal:
We have many advantages in the fight against global warming, but time is not one of them. Instead of idly debating the precise extent of global warming, or the precise timeline of global warming, we need to deal with the central facts of rising temperatures, rising waters, and all the endless troubles that global warming will bring. We stand warned by serious and credible scientists across the world that time is short and the dangers are great. The most relevant question now is whether our own government is equal to the challenge.
The speech provided an urgent enumeration of the dangers of global warming and mapped out a clear and credible set of principles for addressing the problem. In both tone and content, it marked dramatic departure with the current administration, and signaled that our next president, whoever that might be, will take the issue seriously.
As policy, the proposal is…OK. Decent, but not in any way bold, and certainly not as good as Clinton or Obama’s plan:
- McCain’s long-term reduction target of at least 60% is well below the level scientists deem necessary, and also below his rivals’ proposed cuts of 80%. It bears mentioning, though, that this long-term target isn’t really the most important element of a climate plan. Over the next forty years, more data about the pace and consequences of global warming will come to light, and these long-term targets will undoubtedly be adjusted many times.
- The short term targets are roughly in line with what the other candidates have proposed. This is a much more important figure, because it affects near term infrastructure decisions.
- Clinton and Obama both propose auctioning 100% of allowances, which is quite a bit better than McCain’s 0% auction. This issue doesn’t effect the stringency of the cap, but it does mean that McCain is giving away a large pot of money to polluters that could be put to much better uses.
We’ll have more to say about all of this over the coming days.
Update: Much more policy detail here. Not all of this stuff is easy to decipher (there’s a lot of politician-speak), but two points of clarification: 1) McCain does like subsidies for nukes, he just opposes calling them subsidies; 2) the plan is actually very vague on the question of auctioning allowances. It clearly indicates that some auctioning will take place, but places final allocation decisions in the hands of a future commission.
Image by Bruce Ely.
The comments section is now closed.
McCain definitely wants subsidies for nuclear power, having threatened to vote agains Lieberman-Warner if they are not explicit.
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A few excerpts from my graduate candidacy paper entitled, "Emessions trading schemes: How they work, who they benefit, and who they hurt"
I find it to be apropos to the discussion of grandfathering of allowances, as McCain would have it. Without reviewing the whole paper, I discuss the evolution of the EU's emissions trading scheme and the events that have led to free emissions allowances to be eventually phased out. If anyone wants a copy of the whole thing, email me @ jeremy.epstein@gmail.com
....Indeed this sort of political agency is not unique to the United States, and is well documented amongst corporations in Europe that are now covered under the EU ETS. In phase I (2005-2007) of the EU ETS, emissions credits were allocated based on a “grandfathering” scheme, whereby the largest emitters where given the largest portion of emissions credits. Criticism of this allocation method was widespread, because this method has been to the benefit of energy producers, who, as a result of their historically high emissions levels, have been able to turn this free allocation into a windfall profit by passing the savings onto its consumers. Complaints regarding this process have particularly been sourced from other participating firms like chemical and pharmaceutical companies (Pinske & Kolk). According to Bruno Vanderborght, a European delegate representing a Swiss cement company at a Senate hearing before the committee on energy and natural resources regarding the EU ETS, in which several European delegates representing different aspects of their ETS shared insight from their experiences with the implementation of the EU ETS, a major impediment to an equitable ETS was this grandfathering system of emission allocations. “The counterproductive allocation method causes intense lobbying...and affects the credibility of the system.”
Beginning in 2013 at the outset of phase II of the EU ETS, emissions credits will be allocated on an auction basis, theoretically representing an end to grandfathering in the EU. Yet, in the US, given the power structure and intense lobbies in place, it remains to be seen whether emissions credits are auctioned or given on the basis of historical emissions. There are currently several bills sponsored by different US senators that are both for and against grandfathering, refer again to figure 1-3. This is a strategy that must be avoided in order to circumvent a federal ETS becoming a means of power consolidation and unfair competition, either proactively through CCX, or when a national policy is enacted.....-
- Because we have just begun to see the ways in which emissions trading will shape the world in which we live, it is difficult to forecast just how it will play out in terms of global equity. One major determining factor will be the implementation of an ETS in the United States, a nation that currently emits roughly 22% of the world’s CO2. Avoidance of repeating the mistakes of the EU through grandfathering of allowances, and the degree and manner in which the US takes part in CDM (clean development mechanism) style projects will be a crucial element to ensuring social equitability as this market grows in the future. Emissions trading surely represents what will soon be a global market enterprise designed by our planet’s most well off citizens. The degree to which it becomes a system that disproportionately benefits its designing class remains to be seen, but must be carefully considered if our planet is to sustainably make the GHG reductions necessary in order to avoid a catastrophic future.-
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and in the real paper, i spelled emissions correctly!
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I signed the petition to stop the gas tax moratorium because, in my state, there is a "Catch-22" in state law that the state tax will rise to offset any drop of the federal tax. In other words, it won't help the consumers in TN at all.
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Anything McCain is 4 more yrs. of Bush........no thanks!!
I don't care what he has to say, we can't afford another Republican in DC.
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It seems to me that giving the allowances away is more consistent with "Cap and Trade", assuming that the allowances are well distributed. Auctioning off all the allowances seems more like just "Cap", and would seem to discourage some beneficial market forces that might otherwise emerge.
For example, Climos is a company that seeks to stimulate plankton growth in the ocean via iron fertilization, (perhaps) resulting in CO2 reductions in the atmosphere. If they were given allowances that they could sell to polluters, then they could fund their work to reduce CO2 in the atmosphere. But if all of the allowances were just auctioned off directly to polluters, then Climos would not have this funding...
...I'm not arguing specifically for Climos or that technology -- I mention it as an example -- it may not even work. My point is that giving away the allowances may have beneficial effects that auctioning may not have. There could be CO2 reduction projects and/or efficiency projects that could thrive with a "Cap and Trade" policy but may not happen with just a "Cap" policy.
Market forces will end up being far more intelligent than government policies, and we should be helping this along.
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Hi Paul,
You're sort of mixing together the concept of allowances and offsets. A Climos-like company could still generate carbon revenue from offsets, even if allowances are auctioned. In fact, companies like Climos aren't affected by an auction one way or another.
- Adam
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