Energy and Climate Change Policy

Coral Davenport has covered energy and climate change policy for Congressional Quarterly since 2006. Before coming to CQ, she wrote for the Christian Science Monitor and the Daily Hampshire Gazette in Northampton, Massachusetts. Her work has also appeared in USA Today and The Atlanta Journal-Constitution.

This discussion is over, but please read the transcript below.

• Christian from Louisville: Hi Coral, Is $100 (or greater) the U.S. carbon price goal? That price has been benchmarked by the U.S. Depart of Energy's EIA (analysis shared with the market) to kill off coal-fired generation. If it's not, what does that say about cap-and-trade funding renewable energy?
• Coral Davenport:

  Under the cap-and-trade system, the market would determine the price of a ton of carbon.

   

  The goal would be to set up a market in which  the price stayed high enough to incent lowering carbon emissions, but low enough not  to harm the economy.

   

  Most experts say that's a pretty wide window -- anywhere from  $20 to $70 per ton, with the expectation that prices for carbon would  start at the lower end in the early years of a cap-and-trade scheme, and would rise as the years went on and the regulations were tightened. The Obama administration estimates that a cap-and-trade system could bring in about $646 billion over 10 years, of which $15 billion per year would go towards researching renewable energy, while the rest would be given back to consumers.

• Dan from Hudson, Wi.: How will EPA regulations of CO2 emissions affect possible legislation to do the same? If the EPA takes action, is Congress "off the hook" from setting reduction goals?
• Coral Davenport:

  Interesting question, Dan.

   

  Last week, the EPA took the first step towards federal regulation of greenhouse gases in its "proposed endangerment finding" saying that carbon dioxide threatens public health by causing climate change. It doesn't mean that the EPA regulates carbon emissions -- yet. But it sent a loud and clear message to Congress that if lawmakers don't act, the administration will.
  
   
  This really puts the screws on Congress to pass a climate bill -- even opponents in Congress of climate action would rather have a hand in crafting carbon regulation than in submitting to an executive order. And President Obama and EPA administrator Lisa Jackson have said they would prefer to see carbon controls come from Congress -- so the hope, from the White House, is that this move will give Congress a strong, speedy push in that direction.

• Dan from DC: How much bipartisan support will there be for each of these:
  
  a.) conservation measures
  
  b.) carbon cap-and-trade or any sort of carbon emission reductions
  
  3.) non-petroleum energy legislation?
  
  What do you think will become of the oil industry's past hold on Congress?
• Coral Davenport:

  The renewable energy and cap-and-trade legislation now coming together in the House and Senate could bring along some moderate Republicans, depending on the shape of the
  final provisions.

   

  In the Senate, for example, key Republicans like John McCain, Arlen Specter and Lisa Murkowski have in the past supported some form of climate and clean-energy legislation. But only a handful of Republicans may not be enough -- lawmakers still have to craft a bill that can hold on to support from another crucial group: Democrats  from coal and industrial manufacturing districts, whose local economies could be slammed by carbon controls.

   

  That dynamic gets to your last question: it's true that the oil industry has in the past had tremendous influence in Congress -- and that that may well be slipping.

   

  The oil industry has suffered a significant PR beating, compounded by the political demise of some of its most powerful allies. But with the decline of the oil-state Republican comes the rise of the coal-state Democrat -- including the one in the White House.

• John from Washington: Instead of carbon emissions reductions, why not carbon capture and reuse? Why not invest in research to convert carbon dioxide into methane for reuse?
• Coral Davenport:

  According to most experts (including these guys, from MIT: http://web.mit.edu/coal/), it's not so much that there's a choice between carbon emissions reduction and carbon capture, but rather that the former simply isn't possible without the latter.

   

  The authors of the MIT coal study say that acheiving the ability to capture and sequester CO2 from coal will be the most critical technology in determining whether we can actually meet our emission reduction goals -- while still keeping the lights on.

   

  But to date, carbon capture has never been widley tested -- it could well be a decade before we know if it's usable on a commercial scale.

   

  Beyond that, some visionary scientists may project a future in which carbon could be captured and reused, but it will be a while before we even get to that first step!

• Alan from Dallas: What are the real infrastructure challenges to building a national grid for rechargeable cars. (ie will gasoline station on each corner become rechargeable station on each corner?)
• Coral Davenport: In some ways, the infrastructure challenges for a large-scale transition to electric cars are much simpler than they would be for other forms of alternative transportation fuels (for example, a widescale conversion to ethanol-fuel cars might ultimately require construction of a whole new ethanol pipeline system). Since you already have electricity in your home, you should be able to just plug your car right into a standard wall socket, although automakers are also working to develop a standard "super-socket" that would be available at gas stations for a faster charge.
  
  
  But there are two bigger challenges: one is the demand that millions of new plug-in cars could put on the nation's already strained electric grid. Some studies are showing that the nation's demand for electricity, even without the new burden of electric cars, could come perilously close to outstripping supply in some regions of the country. Switching to from gasoline to electric cars won't do much to reduce carbon emissions if the cars are powered by coal-fired plants, which supply about half the nation's electricity.
  
  
  The House and Senate Energy Committees right now are trying to craft legislation to address those questions, by requiring a federal overhaul of the national grid, a renewable electricity standard that would dramatically increase generation of electricity from wind, solar and geothermal, and building a series of national "renewable electricity corridors."
  
• Pat from Bethesda:

  I understand that there is a plan to redistribute some money profits from cap and trade to consumers who are paying more for their electricity.

   

  How would that work? It seems that it would be an incredibly complex effort.

• Coral Davenport: As with any plan to give out billions in government dollars, it could well get complex, and it's already controversial!
  
  
  Let's start out with the White House plan, which is actually one of the simpler versions. The White House estimates that once a carbon cap is put in place, the federal government will collect $646 billion over the course of a decade, paid to it by carbon emitters who purchase "permits" to pollute.
  
  
  Then the question becomes, what to do with the money? The White House proposes spending $15 billion a year of that on renewable energy research -- a proposal that has broad support, since the idea is that the more low-carbon energy technology advances, the less consumers will pay to use energy, since producers will no longer pay to pollute.
  
  
  As for the rest of it: the White House proposes giving it back to consumers in the form of a payroll tax break. That break, called "Make Work Pay", was first created in the economic stimulus package, and was meant to last two years. The Obama plan would then extend that tax break for the next 10 years. It gives middle-class workers a tax break of about $450 per year, which, under a cap and trade scheme, would be meant to help pay higher energy bills.
  
  
  However, there are already dozens of other ideas floating around the Hill about how else to spend that money -- everything from healthcare to paying down the deficit!
  
• Bill from Northampton, MA:

  If carbon cap revenue is routed back into the states where it originated for clean energy investments and/or consumer rebates, will that be enough to win the support of coal/oil state Senate Dems?

   

  P.S. Gina-Louise says hi.

• Coral Davenport:

  Hi, Bill and G-L!

   

  That's the hope of those who are crafting the legislation.

   

  Among the industries hardest hit will be coal mining, steel, cement, and other industrial manufacturers -- much of the Midwest and Rust Belt.

   

  There's growing consensus among lawmakers in both parties that a greater share of the revenue must go back to those regions and industries. That will make the dollar formulas more complex, but will probably be necessary to winning those crucial coal-state Democrats.

• M from DC:

  What do you think the likelihood is of Congress passing climate change legislation, and when?

   

  If Congress does not pass a bill, how long before the EPA/Adminitration steps in and creates their own regulatory framework?

• Coral Davenport:

  In the House, there's already strong momentum on the main climate change bill.

   

  The House Energy and Commerce committee are holding hearings on the bill this week, and the expectation is the bill will be done and ready for the floor by late spring or early summer. And since the House has such a strong Democratic majority, the bill's chances of floor success are good.

   

  In the Senate, it's a much different story.

   

  Lawmakers are in the early stages of crafting a climate bill, and hearings may be months away. The political calculus is a lot more delicate, too, since there's a much slimmer majority. So getting agreement on a bill that can pass both chambers could well slip into next year -- if not later.

  
  The EPA could step in and make regulations at some point in that process, but both Obama and EPA administrator Lisa Jackson have said that while they have that authority, they'd still rather see the bill come from Congress. So if it appears that there is good-faith effort and movement, the EPA may hold off. But if the legislation gets stalled in a political logjam, the EPA could well step in.

• Dan from Illinois:

  Speaking of carbon capture/CO2 sequestration, are you hearing anything out of USDOE related to the "FutureGen" project?

   

  USDOE pulled back from awarding the project to Illinois last year, citing cost overruns, and saying that it wanted to try some smaller projects.

   

  With the change of Administrations, are you hearing anything new about FutureGen or related CO2 sequestration projects?

• Coral Davenport: Carbon sequestration and the FutureGen project, which was to have created a "clean coal" cabon capture pilot plant in Illinois, have a lot of friends in Washington, including President Obama and Senate Democratic whip Dick Durbin, of Illinois.
  
  
  While it's not clear if the FutureGen project, specifically, will go through, Durbin did help ensure that carbon capture research got $3.5 billion in funding in the economic stimulus package, and coal state lawmakers are looking to make sure that any climate change legislation includes plenty of funding and further opportunities for carbon capture plants.
• BS from LA:

  Can you explain what it means to allocate or auction credits and how exactly this would work?

  Can you offer an example?

  I work for a corporation and am trying to determine how this system would impact us. Thanks.

• Coral Davenport:

  Here's how it works: say the federal government sets a limit -- a cap -- on how many tons of carbon dioxide may be emitted in per year. It then creates a system of permits, or allowances, each equal to one ton of carbon. If you are a major emitter -- say, a coal-burning power plant -- you must purchase from the government, via auction, the number of credits you need that correspond to the number of tons of carbon you emit per year.

  However, major emitters say that jumping into that system right away could cripple them economically. Therefore, there is growing support for a system in which, in the first years,  a percentage of the permits would be given (allocated) out for free. That gives the emitters time to upgrade their technology, pursue low-carbon alternatives, etc. Over the years, the regulation would become tighter, and eventually shift to an all-auction system.
  
  There's one more level, too: the system would create a "carbon market" where owners of permits could buy and sell them -- so a low-emitting company (or a financial firm) could buy a number of government carbon permits and sell them on the carbon market to emitters who needed more permits than they have.
  
  It's complex stuff -- hope that makes it a little more clear!