issue: Energy & Environment

Increasing the Powers of the Nuclear Regulatory Commission

Posted on by The Progressive Policy Institute

We’re the good guys, right? The U.S. would never help other countries gain access to potentially dangerous nuclear technologies, would it? In general, that’s true. The United States has stringent export controls, and regularly sanctions companies that try to thwart these laws. Export control regulations, however, only cover technologies that have already been commercialized and are being sold for use in other countries. But what about new technologies for enriching uranium or separating plutonium? Should we be concerned about them even before they get built, especially if new technologies are smaller, more efficient, and could make it harder to detect cheating or covert plants?

I think so. After all, as Georgetown University physics professor Francis Slakey notes, “There’s been a number of different technologies to enrich uranium. Every single one of them — despite best efforts to keep secrets — every single one of them has proliferated.” The world’s most famous proliferator, AQ Khan, worked for the European company URENCO, a leading provider of nuclear fuel, in the 1970s. It is widely believed that he simply copied the blueprints for the enrichment technology — like gas centrifuges — that the company used at the time, and smuggled them out the front door, bit by bit. Later, in his native Pakistan, he led efforts to build centrifuges based on those designs and to improve them. Once he had mastered this technology, he offered both enrichment services and centrifuge designs to nearly anyone. Indeed, the International Atomic Energy Agency has reported that Iran’s centrifuges are based on the stolen URENCO designs.

So is there anything that we can do to prevent the next AQ Khan from stealing the latest and greatest new gadgets? One of our gatekeepers is the U.S. Nuclear Regulatory Commission. Created as an independent agency in 1974 by Congress to license the commercial nuclear power plants, the NRC also has oversight responsibility for all civilian uses of nuclear materials. Much of its jurisdiction predates the independent agency and is derived from the Atomic Energy Act of 1954 (when the NRC was part of the Atomic Energy Commission) and requires that the NRC evaluate whether the issuance of a license “would be inimical to the common defense and security or to the health and safety of the public.”

The Commission has a rigorous process in place to ensure that new nuclear power plants, enrichment facilities and storage depots — such as the now-in-limbo Yucca Mountain — all meet rigorous standards for safety and security. The NRC has not yet decided what role it can and should play in nonproliferation. Six members of the U.S. House of Representatives — both Democrats and Republicans — think that nonproliferation is already part of the NRC’s jurisdiction, and they’re recently written a letter to the NRC “expressing support for including a nonproliferation assessment as part of the process for evaluating license applications.”

The American Physical Society (APS), an organization I’m involved with, wants to go a step further. Based on information assembled in our recent report, Technical Steps to Support Nuclear Arsenal Downsizing, we noted that one way to ensure the peaceful use of fissile materials was to “elevate the priority of non-proliferation in the NRC licensing process.” Because of this, APS has filed a formal petition for an NRC rule change. If changes are made, nonproliferation would be an official part of the Standard Review Plan for the Review of a License Application for a Fuel Cycle Facility – Final Report (NUREG 1520 Revision 1).

What can NRC do? As part of the license application review process, NRC experts can determine if any of the technology is inherently dual-use or if technology is single-purpose. Single purpose technology — items that would only be used in this particular application — can be placed on export control lists and tightly constrained. For dual-use technologies, some may be placed on export controls lists as well. In addition, the NRC can require that no one — or at most, a very few highly trusted individuals — has access to the complete blueprints for these facilities. In other words, the NRC, in conjunction with other parts of the U.S. Government, can work to ensure that the particular components and ideas needed to make these facilities function properly don’t fall into the wrong hands.

So far, the U.S. has a stellar nonproliferation record. By including the Nuclear Regulatory Commission in nonproliferation efforts, we can better secure the country.

Photo Credit: Davi Sommerfeld’s Photostream

Death of Cap-and-Trade?

Posted on by The Progressive Policy Institute

When Sen. Lindsey Graham (R- S.C.) recently declared cap-and-trade “dead,” he may have been more right than he realized. Graham was referring to the political prospects for carbon pricing in this Congress, but cap-and-trade has been the tool of choice for limiting emissions of other pollutants — like sulfur dioxide and nitrous oxides — for almost 20 years. The EPA proposed a rule yesterday that could sharply limit the role of trading in markets for those pollutants.

The proposed “transport rule” would replace the existing Clean Air Interstate Rule (CAIR). Both are aimed at reducing emissions that affect air quality not locally, but in downwind areas (hence the “transport” and “interstate” in their names). CAIR was issued under the Bush administration but comprehensively rejected by the D.C. Circuit Court in North Carolina v. EPA. CAIR has been in effect since the ruling, but as a zombie regulation. The EPA needs to replace it with a new rule that fits the court’s view of the agency’s powers under the Clean Air Act. The transport rule released yesterday is the agency’s attempt to do this. The rule is massive — 1,300 pages — and reads like a long-form response to the court’s opinion.

So what does this have to do with cap-and-trade? Among the court’s major objections to CAIR was the inability of the EPA to guarantee each state would reduce its emissions sufficiently to prevent interference with air quality downwind. The emissions trading systems set up by CAIR was to reduce emissions overall, and prevent problematic transport of pollution generally, but the EPA couldn’t promise, as the court read the statute to require, that each and every state would reduce emissions sufficiently. The reason for this is interstate trading. CAIR would have allowed emissions sources in different states to trade with each other. This has obvious benefits, as a bigger market is generally more efficient, but it is impossible to know in advance where the emissions reductions will occur. If it is unexpectedly cheap to reduce NOx emissions in Ohio and unexpectedly expensive in Kentucky, trading will happen and Ohio will make deeper cuts. Knowing in advance where reductions will be cheaper is hard (this lack of information is the reason for having a market in the first place). Generally, this lack of foreknowledge is not a problem, since the overall cost of emissions reductions is lower. Under the court’s reading of the Clean Air Act, however, the agency has to know the outcome in advance, at least at the state level.

The transport rule addresses this by largely eliminating interstate trading. Intrastate trading is still allowed, but the rule would only allow interstate trading at the margin, within relatively narrow “variability limits.” The EPA seems to be doubtful that even this small amount of interstate trading will be permitted by the courts. The new rule lists alternative options that do not include interstate trading at all.

It looks like we’ll be lucky if the final version of the new rule includes any interstate trading. Without interstate trading, the emissions reductions achieved by the new rule will be more expensive than they otherwise would be — possibly a lot more (I look forward to analysis from economists on exactly how much). Since the transport rule would replace both of the major cap-and-trade programs currently in operation in the U.S., this would mean an end to interstate emissions trading, at least for the 31 states affected by the new rule. It’s only a slight overstatement to say that cap-and-trade as we now know it would end.

It’s hard to accuse the EPA of timidity or error here. The agency attempted in CAIR to create an interstate market and was (somewhat surprisingly) kicked in the teeth for it by the D.C. Circuit. Though I and many other lawyers disagree with the D.C. Circuit’s reading of the Clean Air Act that led it to reject CAIR, the reading isn’t unreasonable, so it’s hard to place all of the blame on the courts either. Congress ultimately has responsibility for either creating markets for pollution reduction, or giving the EPA sufficient tools to create them itself. The transport rule released yesterday makes it clear that the EPA does not have the tools it needs.

At least some in Congress are aware of this problem, however. The three-pollutant or “3P” bill written by Sens. Carper (D-DE) and Alexander (R-TN) would create new national cap-and-trade markets for SO2, NOx and mercury (a new EPA mercury rule was also rejected by courts). If this bill were passed, it would hopefully include a fourth “P,” carbon, but even without it, the EPA would have the tools it needs. Without it, the transport rule appears to be the best the agency can do. Twenty years after the 1990 Amendments to the Clean Air Act, that should be embarrassing.

This item is cross-posted at Weathervane.

Photo credit: Mhaithaca’s Photostream

A Nation of Pilot Projects?

Posted on by The Progressive Policy Institute

More news this weekend that the Obama administration continues to pursue its unheralded campaign to reverse retrograde Bush-era policies and put the nation on a more sustainable footing. The president announced that the Department of Energy will award $2 billion in conditional commitments from the Recovery Act to two solar companies for plants in Arizona, Colorado, and Indiana, which together will create over 5,000 jobs.

The president’s heart is clearly in this cause. In his address, he said, “Already, I’ve seen the payoff from these investments. I’ve seen once-shuttered factories humming with new workers who are building solar panels and wind turbines; rolling up their sleeves to help America win the race for the clean energy economy.”

However, as good as it is, the announcement leaves a lingering question: On cutting-edge infrastructure issues such as solar, will we continue to be a nation of pilot projects? Or will we take any quantum leaps and achieve actual national policy?

There’s nothing to quarrel with in the announcements themselves. Abengoa Solar will build the plant in Arizona, which, when complete, will provide enough clean energy to power 70,000 homes. Over 70 percent of the components and products used in construction will be manufactured here in the U.S.

Abound Solar Manufacturing is building the Colorado and Indiana plants, which will produce millions of state-of-the-art solar panels each year—in Indiana’s case, using an empty Chrysler factory.

In announcing the plants on July 4th weekend, the president said, “But what this weekend reminds us, more than any other, is that we are a nation that has always risen to the challenges before it. We are a nation that, 234 years ago, declared our independence from one of the greatest empires the world had ever known. We are a nation that mustered a sense of common purpose to overcome Depression and fear itself. . . I know America will write our own destiny once more.”

But the question is whether the scale, scope, and ambition of our solar policy rises to the level of the president’s language. The Recovery Act monies, and the policies underlying them, have been attacked left and right for failing to deliver on a set of clear national priorities. The stimulus dollars have been spread so wide and thin that they’ve been vulnerable to attacks both on pork and policy grounds.

That two solar plants are heralded as helping America “win the race for a clean economy” is the same pattern we’ve seen elsewhere in the collision between the clean economy campaign and today’s toxic budgetary and political environment. We saw the pattern in high-speed rail. As PPI’s Mark Reutter has noted, the administration announced $8 billion in stimulus funds that would go to a handful of projects. But without additional administration pressure, those funds are only being followed by $1 billion of congressional authorization. As 100 members of Congress wrote the president recently, “[G]iven budget constraints, we cannot continue to rely on general authorizations and appropriations to finance high-speed rail. We need to identify a dedicated revenue source for high-speed rail, and we need your help to do that.”

We have also seen the pattern in nuclear energy, where the administration took the bold step of announcing loan guarantees for two new nuclear plants in Georgia, the first built in a generation. However, the president’s language again made the actual commitment pale in comparison to the challenge. In announcing the guarantees, he cited the fact that there are, today, 56 nuclear reactors under construction around the world: 21 in China; six in South Korea, and five in India. He said, “Whether it’s nuclear energy or solar or wind energy, if we fail to invest in the technologies of tomorrow, then we’re going to be importing those technologies instead of exporting them.  We will fall behind. Jobs will be produced overseas instead of here in the United States of America. And that’s not a future that I accept.”

The ambitions are noble and the rhetoric stirring, but the question is whether we really are shaping a future here—or just a set of ambitious but singular pilot projects.

Yes, there is too little money in annual authorizations for serious infrastructure. But as infrastructure expert Norm Anderson has recently written for PPI, “The financing issue — not a surprise for anyone in the infrastructure business — is the number one problem facing the industry.”

This is all the more reason the administration should follow the stirring rhetoric about competitiveness and “writing our destiny” by creating a new institution, such as an infrastructure bank of the type proposed by Sen. Chris Dodd (D-CT) and Rep. Rosa DeLauro (D-CT) and supported by the president in the past, that would create a long-term funding source and the energy for true national policy.

Photo credit: Bilfinger Berger Group

Among Industry, Surprising Support for a Carbon Price

Posted on by The Progressive Policy Institute

In meetings I’ve had recently with folks representing industries from automobiles to energy to private equity, I’ve heard it over and over again. They want a price on carbon.

They want it because they want to make money through alternative energy. For that, they need predictability in supporting the companies that take risks and need capital to design and develop alternative fuel technologies.

They want it because they, their children, their grandchildren, their employees and their shareholders, like everyone on the planet, will suffer the externalities of a carbon-dependent economy.

And they want it because they’re good corporate citizens, and they want to do their part in easing the nation toward a lower-carbon future.

The question is whether carbon pricing will get any traction in the coming weeks from a White House that seems more intent on political calibration than on shaping the landscape itself.

Given the dynamism of the carbon-pricing movement, the twin mysteries today are, first, why the president didn’t press harder for what seems to be the consensus, industry-friendly position on carbon — a simple pricing mechanism — in his Oval Office speech last week, and second, whether he will do so in the coming weeks.

The politics of carbon have changed dramatically in recent weeks, as the nation continues to watch the spill billow in the Gulf. (If you haven’t yet done it yourself on your computer, click here for BP’s own mesmerizing and terrifying live feed). A recent, post-BP poll found that 63 percent of Americans support a bill with a carbon price, while only 29 percent oppose it. The environment has also improved for proposals like the “cap-and-dividend” bill recently offered by Sens. Susan Collins (R-ME) and Maria Cantwell (D-WA) (and explained here on P-Fix by Danny Morris), which would price carbon with a net-neutral return to the taxpayers in the form of checks.

Meanwhile, the nation’s leading corporations continue to support a price on carbon. In April, before the spill, three of the nation’s largest oil companies — Shell, ConocoPhillips, and BP (this is even pre-oil spill) — as well as the Edison Electric Institute, a consortium of utilities whose members provide the bulk of the nation’s electricity, all announced their support for the Kerry-Lieberman legislation with a “hard price collar” for the price of carbon (including both a floor and a ceiling).

The fact is that many private corporations want a price on carbon. They want it because they believe the future is headed in a direction where carbon-producing technologies will simply have to be reduced, and they’d rather build their businesses around that future quickly rather than slowly.

However, there was no such leadership last week from the Oval Office. Of the transition from carbon, the president said:

There are costs associated with this transition. And some believe we can’t afford those costs right now. I say we can’t afford not to change how we produce and use energy — because the long-term costs to our economy, our national security and our environment are far greater. So I am happy to look at other ideas and approaches from either party — as long they seriously tackle our addiction to fossil fuels.

This clinical framing scarcely captures the urgency of the task. There is a golden opportunity now finally to get business and clean energy on the same page. The question is whether it will billow by and disperse, like the oil we’re all watching in the Gulf.

Photo credit: Michael Caven’s Photostream

So Much for Market Mechanisms

Posted on by The Progressive Policy Institute

If, as appears likely, cap-and-trade legislation is not going to be enacted this year or any other time soon, it represents more than a setback for the Obama administration (or for the environment). It’s also another blow to the high concept of using market mechanisms rather than direct government control to address major public policy challenges.

Cap-and-trade was originally designed, after all, as an alternative to command-and-control environmental regulations, which is why it was once championed by Republicans, particularly during and after its successful use in reducing acid rain in the 1990s.

But as the New York Times‘ David Leonhardt (with an exclamation point from Jonathan Chait) explained this week, Republicans have abandoned cap-and-trade just when it might be most useful, with some former advocates, ironically, embracing command-and-control:

[T]he great economic strength of market systems like cap and trade also happens to be their political weakness. They set prices and allow people to react. In the process, market systems acknowledge that reducing pollution may actually cost a little bit of money.Politicians don’t like to admit this, because voters don’t like it. Accepting higher costs is especially hard when the economy is weak. So Congressional Democrats have been repackaging their energy bills to make them look less and less market-oriented. Senator John McCain, who supported a permit system for carbon as the Republican presidential nominee, no longer does. Senator Lindsey Graham, the South Carolina Republican, has reversed his position as well.

What does Mr. Graham now favor? A series of command-and-control regulations. He has introduced a bill with Senator Richard Lugar, an Indiana Republican, that would mandate specific standards for cars, trucks, homes and offices. It would also give the energy secretary the power to award loans to companies he thought could do a good job of setting up programs to retrofit buildings. State officials would do the same for factories. The bill, in short, puts more faith in government than the market.

Leonhardt clearly believes that the transparency of cap-and-trade when it comes to costs is its major political flaw. That’s definitely a factor, but I’d argue that something more fundamental is going on. Once Democrats embraced cap-and-trade, Republicans began retreating from it as a simple matter of politics. And this distancing effort has been immensely reinforced by the rightward trend in the GOP during the last few years, in which leaders who simply denied there was any climate change problem, and/or that government had any useful role to play on the issue, have been in the ascendancy. So “cap-and-tax” was demonized and essentially placed off-limits for Republican politicians, to the point where those like Sen. Lindsay Graham (R-S.C.) and Sen. Richard Lugar (R-IN) who weren’t quite in the “denialist” camp found it easier to just support direct federal regulation.

We saw a similar dynamic play out on health reform, where a market-based managed competition model long supported by Republicans, and championed quite recently by Mitt Romney, became toxic the moment it was fully advanced by Barack Obama. And even as they savaged ObamaCare as “socialized medicine,” Republicans saw little irony in posing as last-ditch defenders of Medicare, a relic of an earlier Democratic drive for a government-run single-payer system.

On both health care and climate change, it’s not surprising that many progressives are impatient with Obama’s determination to promote market-based approaches that the supposed party of market-based policy, the GOP, will no longer support. But nobody should for a moment mistake the identity of the prime mover in shifting the political ground away from the once-promising “centrist” convergence on using market mechanisms to address public sector challenges. The GOP could have declared partial victory and celebrated the Democratic Party’s abandonment of big government solutions, and then fought it out over the details. Instead, Republicans have burned down every structure on the potential common ground that Americans seem to crave. They may be able to succeed for a while in opportunistically deploring the inability of Democrats to get anything done. But if and when Republicans regain power, they may well discover that the GOP policy arsenal has been emptied by their own hands.

This item is cross-posted at The Democratic Strategist.

Photo credit: Magnera

Dealing With a Different Wheel

Posted on by The Progressive Policy Institute

As we await the next step on energy legislation in the Senate, Ezra Klein makes an extremely important if fairly obvious point about the Obama administration’s apparent determination to get something passed even if it doesn’t include a cap-and-trade system or some equivalent carbon pricing mechanism. If the Senate won’t pass such provisions now, it won’t pass them later, either:

There’s nothing magic about [a House-Senate] conference that allows controversial policies that couldn’t pass the Senate the first time around to pass on the second go. The advantage of a conference report is that it can’t be amended, which means you might be able to sneak in some small concessions to the House that aren’t important enough for anyone to sink the whole bill over. But it can be filibustered. So if you add anything major to the bill that would’ve killed it on the pre-conference vote, it’s a good bet that it’ll kill it on the post-conference vote as well.

Carbon pricing almost certainly falls into that category. It’s not a side policy or a bit of pork. It’s the core of a climate bill. If it doesn’t pass in the original Senate bill, that’s because it can’t pass the Senate. Adding it in during conference won’t change that. It’ll just mean the conference report can’t pass the Senate, either. I can’t see any permutation of this in which a conference strategy for carbon pricing makes any sense.

This doesn’t, of course, mean that Congress can’t pass worthwhile energy legislation this year. But it’s not going to magically become a real climate change bill somewhere down the road, particularly with Republicans now monolithically opposing a cap-and-trade approach they once championed.

It’s fine to wheel and deal on legislation, but sometimes the only deal available is one that turns the wheel to an entirely different outcome. That’s probably where things are headed on energy this year.

Photo credit: Rob Crawley’s Photostream

This item is cross-posted at The Democratic Strategist.

A Deafening Silence on Pricing Carbon

Posted on by The Progressive Policy Institute

The president had a gilt-edged opportunity last night to show leadership on energy and climate policy. Most everyone who has written about the speech agrees that he let it slip through his fingers.

The president started, of course, with a discussion of the Deepwater Horizon spill and cleanup efforts, only linking the spill to larger questions of energy, energy security and climate towards the end of the speech:

When I was a candidate for this office, I laid out a set of principles that would move our country towards energy independence.  Last year, the House of Representatives acted on these principles by passing a strong and comprehensive energy and climate bill—a bill that finally makes clean energy the profitable kind of energy for America’s businesses.

Now, there are costs associated with this transition. And some believe we can’t afford those costs right now. I say we can’t afford not to change how we produce and use energy—because the long-term costs to our economy, our national security, and our environment are far greater.

Great so far.  The president then added:

This is why I’m confirming the commitment I made as a candidate to securing America’s future by putting a price on carbon. Doing so would end our dependence on foreign oil, reduce the environmental risks of oil drilling, protect our children from the risk of climate change, and reduce the burden of debt we will pass on to them. Nothing else we can do as a nation would address so many critical problems. For too long we have allowed this policy to be written off because it is politically risky. That must end today. I am calling on the Senate to follow me, the House, and the American people in demanding action. Expedient half-measures will no longer do.

Except he didn’t actually say that, of course. Instead of ending his speech with the call to action it was crying out for, he punted, promising to look at “other ideas and approaches from either party” like new building efficiency and renewable energy standards.

Listening to ideas is a good thing, of course, but disregarding far and away the best one — pricing carbon — is not. The most striking difference between this speech and Obama’s “energy speech” before the 2008 election is the failure to mention a price mechanism for carbon. None of the measures Obama mentioned will do much to address any of the problems he raised, and to the extent they do anything, it will be more costly than achieving the same results with a carbon price. As Sen. Joe Lieberman (I-CT) said before the speech, trying to achieve climate and energy security results without a carbon price “would be the equivalent of President Kennedy launching our national effort to put a man on the moon without building a rocket.” (Side note: Whatever those on the left think about Lieberman, he deserves credit for the grunt work and political stand he has taken this year on climate).

I’m unsympathetic to the meme that the president’s reaction to the oil spill itself has been somehow weak — there is only so much he or anyone can do about the unfolding disaster. I do think, however, that he has shown a lack of political courage in passing up the opportunity to call for meaningful action on climate and energy. It’s likely that Rahm Emanuel, ever mindful of votes, simply does not think that there is enough support in the Senate for a real climate bill. He’s probably right, but the president’s failure to go out on a political limb for a carbon price ensures that support won’t materialize, since there’s a climate/energy leadership deficit in the Senate as well (looking at you, Sen. Harry Reid (D-NV) and Sen. Lindsey Graham (R-SC)). The bully pulpit is a powerful tool to move and shape debate. Emanuel should listen to his own advice here and not waste a crisis that presents such a resonant illustration of the value of reducing carbon emissions. This kind of opportunity may not come again.

However cynical it may appear, Emanuel is right that politics only really changes in response to crises. Climate is a slow problem that will generate obvious crises only when it is too late. The only crises we are going to get while there is still an opportunity to act are those that are indirectly related to climate change (like the oil spill) or illustrate its dangers (like Katrina). If even disasters of this scale are not enough to get us to move — and if even leaders of President Obama’s caliber are unwilling to use them as an opportunity to lead — then maybe we have already lost.

Photo credit: Roberthuffstutter’s Photostream

The War on Oil?

Posted on by The Progressive Policy Institute

President Obama firmly took charge of the Gulf oil disaster last night. That was something he needed to do. But am I the only one who found his martial tone off-putting?

There were even moments when I flashed back to his predecessor’s portentous declarations about the war on terror.

More than most of President Obama’s major speeches, this one seemed like a performance aimed at achieving a particular political result: belying a media narrative that says he’s lost control of the crisis. His histrionic address from the Oval Office suggested an actor who has read too many critical reviews.

It’s one thing to have the media whip itself into a frenzy over an oil spill that nobody seems to know how to stop. But it’s unnerving when this usually unflappable president loses his sense of proportion. The oil spill already has done immense ecological and economic damage, and it isn’t done yet. The president was right to mobilize his administration to mitigate the damage, and to put the onus on BP to make whole those whose livelihoods have been destroyed by its reckless disregard for safety.

But there really was no need for the president to sound like Churchill after the fall of France. The situation just isn’t that dire. The leaking well will be plugged, possibly in the next several weeks; nature will demonstrate its amazing resilience and self-healing properties once again; and the shrimpers, fishermen, and hospitality workers devastated by the spill will be compensated.

If his hyperbolic language seemed forced and unconvincing, the president at least drew the right lessons from the Deepwater Horizon disaster. He challenged Americans to embrace the tough measures necessary to reduce our dependence on cheap fossil fuels, which Obama rightly identified as the real nub of the problem. But when it came to specifics, the president was dismayingly vague. Unaccountably, he did not repeat and drive home the crucial point which he made last week: putting a price on carbon is the sine qua non of kicking our oil addiction.

The president made it amply clear last night that he will not let BP off the hook. But that’s the relatively easy part. Would that he had been as resolute with the U.S. Senate, which has been backpedalling furiously away from the comprehensive energy/climate bill the House passed last year. The smart money in Washington says that any kind of carbon cap or price can’t muster 60 votes in the Senate, and so is dead for this year. That likely means it’s dead for next year too, since Democrats will have, at best, reduced margins in the House and Senate.

Before a national audience, the president missed an opportunity to call out Republicans for their monolithic opposition to pricing carbon. Their stance, a noxious blend of scientific ignorance and anti-tax demagoguery, condemns America to even more abject reliance on fossil fuels, with all the risks that entails, including deep water drilling and a worsening energy trade balance. The president could also have used the occasion to stiffen Democratic spines to take a firm stand for clean energy, and to acknowledge that America will also need more nuclear power to meet rising energy demand without increasing carbon emissions.

Best of all, the president could have threatened to veto any bill that doesn’t include pricing carbon to more accurately capture the true economic and environmental costs of burning fossil fuels.

Fortunately, the game is far from over and the president will have other opportunities to make his stand. Despite all his talk of oil “invasion” and “siege,” kicking America’s oil habit isn’t the moral equivalent of war; nothing is. But as the Gulf calamity reminds us, it’s an urgent imperative for presidential leadership.

Photo credit: Marinephotobank’s Photostream

Climate Legislation in the Balance

Posted on by The Progressive Policy Institute

Expect stern words tomorrow when President Obama speaks to the nation about BP’s failure to stop the Gulf oil spill. He should also use the occasion to deliver a strong message to the U.S. Senate.

The world’s greatest deliberative body has been flailing around energy and climate legislation since the House passed the Waxman-Markey bill last year. You’d think that, with oil still gushing into the Gulf, senators would be moved to do something serious about America’s oil addiction. Instead, the Senate seems headed toward the path of least political resistance.

It’s easy to place sole blame on BP for the spill, but ultimately insatiable American demand for oil played a role in fouling the Gulf. The key to reducing U.S. dependence on oil, and fossil fuels in general, is to put a price on carbon. That would capture both the environmental and the security costs of our thirst for oil, and provide investors with the certainty they need to put money into developing clean fuel alternatives.

An economy-wide cap-and-trade bill at this point is clearly a bridge too far for the Senate. But President Obama made it clear last week that some kind of carbon pricing is still the sine qua none of a serious energy/climate bill.

Republicans, unembarrassed by their “drill-baby-drill” demands before the BP disaster, are standing foursquare for the petro-centric status quo. “We don’t think this is a great time to be socking a national energy tax to the American people,” Minority Leader Mitch McConnell said last week.

And even South Carolina Sen. Lindsey Graham (R-SC), poster boy for GOP reasonableness on capping carbon, now says: maybe next year. He’s talking up an “energy only” bill by Sen. Dick Lugar (R-IN) that includes subsidies for clean fuels but no carbon price to truly galvanize private investment in clean technology and energy.

Thus has the BP spill has not only done grave damage to the Gulf’s ecology and economy, it’s unraveled President Obama’s careful attempts to forge a grand bargain in which some Republicans support a carbon price in return for more support for nuclear power as well as offshore drilling (off the table, at least for now).

It would be a bitter irony if the political fallout from the BP spill wound up perpetuating America’s dependence on oil. To avert that tragedy, the president should make it clear tomorrow that he will accept no bill from the Senate that fails to put a price on carbon.

Photo credit: Valeshel’s Photostream

Did Nikki Haley Help Kill Cap-and-Trade?

Posted on by The Progressive Policy Institute

The big development in non-election news from Washington this week has been the collapse of bipartisan negotiations for cap-and-trade legislation, caused by Sen. Lindsey Graham’s defection. Said defection has been a long time in the making; earlier Graham broke off longstanding negotiations with Sens. Kerry and Lieberman on climate change, allegedly because he was angry with Harry Reid for hinting that immigration reform might come first in the Senate. Now that Reid’s backed off that idea, Graham’s been forced to more or less flip-flop entirely on climate change, and is now backing a far less ambitious bill introduced by Richard Lugar that would have no cap on carbon emissions.

The CW has suggested that Graham’s happy feet on climate change is the product of pressure from his Republican colleagues in Congress who don’t want any “cap-and-tax” bill and basically don’t want any cooperation with the Obama administration and congressional Democrats. But I think the problem may be a little closer to home for Graham.

Earlier this year, a couple of Republican county committees down in South Carolina raised eyebrows with censure resolutions aimed at Graham for his support for cap-and-trade, comprehensive immigration reform, and TARP. One of those committees was from Lexington County, which happens to be the residence of Nikki Haley, who then became the only gubernatorial candidate to embrace Graham’s censure for ideological heresy.

Now maybe it’s a coincidence that Graham threw in the towel on cap-and-trade the day after Haley became a national political rock star in the wake of her strong (49%) performance in the SC Republican gubernatorial primary, but maybe it’s not. Graham won’t be up for re-election until 2014, but as Bob Dylan once said (though not in the context of climate change): “You don’t need a weatherman to know which way the wind blows.”

I bring this up in part as a reminder to progressives who are naturally sympathetic to Haley as a woman and as a minority member who has been accused without much evidence of being a cheat and a liar, and called a “raghead” to boot. That’s all well and good, but don’t forget she is also a serious hard-core conservative who eagerly identifies herself with the Jim DeMint, take-no-prisoners wing of her party, and who may have just played a role in blowing up what was once a promising effort to deal with one of the most important challenges facing the country and the world. To be sure, she should be judged on her ideas and record and not subjected to gender-based double standards or sexual innuendo. But make no mistake, her “ideas” are really bad from any progressive point of view. She’s only a breath of fresh air in SC politics if you think, like she does, that the good ol’ boys who’ve been running things are dangerously liberal.

This item is cross-posted at The Democratic Strategist.

Photo credit: World Economic Forum’s Photostream

Cutting the Tether Webcast

Posted on by The Progressive Policy Institute

Cutting the Tether: Enhancing the U.S. Military’s Energy Performance

Event Webcast – May 13, 2010

Watch live streaming video from progressivepolicyinstitute at livestream.com

Featured Speakers:

Sen. John Warner (R-VA), Ret.
Rep. Tom Perriello (D-VA)

Panelists:

Vice Admiral Dennis McGinn, Ret., CEO, RemoteReality
Colonoel Paul E. Roege, Army Capabilities Integration Center
Richard Goffi, Principal, Booz Allen Hamilton
Chris Myers, Vice President of Government and Energy Programs, Lockheed Martin

Moderator:

James Morin, Esq., author, “Cutting the Tether”

Stop the Spill, Pass the Bill

Posted on by The Progressive Policy Institute

As diligently as cloistered monks, the commentariat is working hard to calibrate the exact amount of political damage the Deepwater Horizon oil spill is doing to the Obama presidency. Woeful analogies come fast and furious: the spill is Obama’s Katrina, or Obama’s hostage crisis, his Jimmy Carter moment.

All this would be comical if not for the media’s undoubted power to warp public perceptions by converting complex realities into political melodramas. What’s false about this one is its premise: President Obama could find a way to stop the leak if only he would “take charge” of the crisis.

Meanwhile, in the real world, the public doesn’t share the media’s apparently bottomless faith in the federal government’s problem-solving capacities. According to a recent Wall Street Journal/NBC News survey, only 25 percent of Americans trust the government to do the right thing most of the time. Nearly a third say they “almost never” trust the government to do the right thing.

But what’s really odd, as Jonathan Chait notes today, is the “assumption of presidential omnipotence” that informs the media’s assessment of Obama’s handling of the spill.

Today presidents are expected to take ultimate responsibility for every problem, natural or man-made, and to voice the nation’s emotional solidarity with victims of every disaster. In this vein, James Carville recently blasted Obama for failing to show up and emote in Louisiana as the oil spill threatens its shores.

Obama, always the calmest head in the room, has pointed out that since government doesn’t drill oil wells, it’s not likely to have superior experience and technical expertise when it comes to plugging oil leaks. What the administration can do is what it is doing: keeping pressure on BP to improvise a solution. Facing mounting clean-up costs and plummeting stock prices, the company has every incentive to do so.

The president’s proper role is not to play superhero or therapist-in-chief, but to draw from the crisis the right lessons for national policy. He did so yesterday, underscoring the need to pass energy/climate legislation that’s bogged down in the Senate. The bill, he said, would “accelerate the transition” to a clean energy economy. Crucially, it would for the first time put a price on carbon emissions, which would provide markets with a powerful signal to invest in alternative fuels.

If the spill galvanizes Obama into going all-in for a clean energy bill, as he did for health care, it could yet be turned to the nation’s advantage. But if the disaster leads progressives to vote against the bill, because it also contains incentives for more U.S. oil and gas exploration, the result will be a cruel irony: Congress’ failure to act on clean energy would leave America as addicted to oil as ever.

Photo credit: Deepwater Horizon Response’s Photostream

Top 10 Pragmatic Progressive Ideas from the National Security Strategy

Posted on by The Progressive Policy Institute

Since copies of the Obama administration’s new National Security Strategy began to circulate, there’s been a lot of cheering about how different from Bush’s it is. And true, it is. That’s made clear in the letter from the president on the document’s first page. And my hunch is that people stop there — you get your headline, and you run with it, not bothering to read the rest of the document.

Well, guess what? I just cozied up with a chicken sandwich, a Diet Coke and a bag of chips and read the whole enchilada.

It’s long and at times unwieldy. I understand, for example, that “spending taxpayer’s dollars wisely” is important, but not sure the White House should be compelled to include it in the strategy text. But that’s indicative of Obama’s style — when you seek input from everyone, you’ll tend to end up with a longer list.

But after digging through the document, it’s worth pointing out the specifics of how the strategy has a distinctly pragmatic progressive outlook. With that, here are the top 10 examples:

1. It reaffirms that America’s values are the source of its power, and that American exceptionalism endures:

[T]he work to build a stronger foundation for our leadership within our borders recognizes that the most effective way for the United States of America to promote our values is to live them. America’s commitment to democracy, human rights, and the rule of law are essential sources of our strength and influence in the world.  America has always been a beacon to the peoples of the world when we ensure that the light of America’s example burns bright.

2. It prioritizes terrorism, Iraq, and Afghanistan while weighing them in the context of the 21st century’s other threats:

[T]hese wars—and our global efforts to successfully counter violent extremism—are only one element of our strategic environment and cannot define America’s engagement with the world. Terrorism is one of many threats that are more consequential in a global age. The gravest danger to the American people and global security continues to come from weapons of mass destruction, particularly nuclear weapons. The space and cyberspace capabilities that power our daily lives and military operations are vulnerable to disruption and attack. Dependence upon fossil fuels constrains our options and pollutes our environment. Climate change and pandemic disease threaten the security of regions and the health and safety of the American people.

3. America will only be secure if all government agencies coordinate effectively:

To succeed, we must update, balance, and integrate all of the tools of American power and work with our allies and partners to do the same. … We are improving the integration of skills and capabilities within our military and civilian institutions, so they complement each other and operate seamlessly. We are also improving coordinated planning and policymaking and must build our capacity in key areas where we fall short.

4. It is comfortable with, but prudent about, the use of force:

While the use of force is sometimes necessary, we will exhaust other options before war whenever we can, and carefully weigh the costs and risks of action against the costs and risks of inaction. When force is necessary, we will continue to do so in a way that reflects our values and strengthens our legitimacy, and we will seek broad international support, working with such institutions as NATO and the U.N. Security Council.

5. It’s tough as nails on al Qaeda:

[W]e reject the notion that al-Qa’ida represents any religious authority. They are not religious leaders, they are killers; and neither Islam nor any other religion condones the slaughter of innocents.

6. It advocates the responsible, measured pursuit of a world without nuclear weapons:

As long as any nuclear weapons exist, the United States will sustain a safe, secure, and effective nuclear arsenal, both to deter potential adversaries and to assure U.S. allies and other security partners that they can count on America’s security commitments.

7. The Obama administration trusts the UN:

We are enhancing our coordination with the U.N. and its agencies. We need a U.N. capable of fulfilling its founding purpose — maintaining international peace and security, promoting global cooperation, and advancing human rights. To this end, we are paying our bills. We are intensifying efforts with partners on and outside the U.N. Security Council to ensure timely, robust, and credible Council action to address threats to peace and security.

8. “Democracy promotion” — a term that became identified with the Bush administration — isn’t a dirty phrase:

The United States supports the expansion of democracy and human rights abroad because governments that respect these values are more just, peaceful, and legitimate. We also do so because their success abroad fosters an environment that supports America’s national interests.

9. The United States’ security is closely linked to clean energy:

As long as we are dependent on fossil fuels, we need to ensure the security and free flow of global energy resources. But without significant and timely adjustments, our energy dependence will continue to undermine our security and prosperity. This will leave us vulnerable to energy supply disruptions and manipulation and to changes in the environment on an unprecedented scale.  The United States has a window of opportunity to lead in the development of clean energy technology.

10. It calls on politicians to stop being ridiculous and put country above politics:

Throughout the Cold War, even as there were intense disagreements about certain courses of action, there remained a belief that America’s political leaders shared common goals, even if they differed about how to reach them. In today’s political environment, due to the actions of both parties that sense of common purpose is at times lacking in our national security dialogue. This division places the United States at a strategic disadvantage.

How Does Kerry-Lieberman Stack Up Under the Cheat Sheet

Posted on by The Progressive Policy Institute

Factory Pollution Over the past few weeks, we’ve written a series of posts here detailing the issues that make up climate policy. The result is a climate policy cheat sheet of sorts: a list of these issues, divided into categories based on our view of their importance. Now that the Kerry-Lieberman draft bill has been released, we can use the list of issues to analyze it. Other summaries of the bill are out there, but we hope this one is simple and accessible enough to be useful to non-experts (this is the same goal we had for the cheat sheet itself). While we clearly have a policy preference—the greatest emissions reduction at the lowest cost—we don’t want to analyze or criticize the bill here; we just want to describe it. Other than the preferences and opinions implicit in our issue categories, we’re just giving you the facts here. We hope that sparks debate (even if it’s unlikely to convince you to tackle reading the 1000-page bill itself).

The Kerry-Lieberman Cheat Sheet

Category I Issues: What’s Essential for a Good Climate Bill

1. Does it create a price on carbon?
In short, yes. Kerry-Lieberman creates a cap-and-trade system that effectively sets a price on carbon emissions — but not all emissions are subject to the price, and those that are may not be included immediately.

2. How much of US emissions are covered by that price?

Initially, in 2013, the bill includes only the electricity and refining sectors within the cap-and-trade system. Transportation is included under the cap as well, but allowances must be bought by producers and importers — they aren’t auctioned. Large industrial facilities are included after 2016. Agricultural emissions aren’t included, but some reductions there can qualify as offsets.

In total, around 80 percent of U.S. greenhouse gas emissions are capped, but different sectors are treated differently. Not all sectors are part of the same market.

3. What is the path of emissions reduction set by the cap?

The emissions cap in the bill would decline over time, and would result in emissions reductions of 4.75 percent by 2013, 17 percent by 2020, 42 percent by 2030, and 83 percent by 2050.

Category II Issues:  What’s Important for a Good Climate Bill

1. How are emissions allowances allocated?

Allowances are allocated by a mixture of gratis allocation and auctions. In the first years of the program, the majority of allocations are given away to industries and various research efforts, while some allowances are auctioned and the revenue generated is used to compensate consumers. By 2030, auctions are used to distribute 75 percent of allowances. A full breakdown of the allowance allocations is available here.

2. How are the public revenues from climate policy spent?

Revenues from auctions will be spent to benefit the public in a number of ways. Kerry-Lieberman directs the majority of auction revenues towards assisting low-income consumers, supporting the Highway Trust Fund, and rebating all consumers, though those provisions do not kick in until later years of the program. In the short term, allowances are given away to local electric and gas utilities with the requirement that the revenues generated be used to reduce the impact of the carbon price on consumers.

3. Are banking and borrowing allowed?

The bill allows for both banking and borrowing. Firms can bank an unlimited amount of allowances. There is also no limit when borrowing allowances from the next calendar year’s allocations. If firms want to borrow from future years, they may do so up to five years ahead, but they can only borrow up to 15 percent of their total allocation for the year in which they are borrowing. Additionally, any borrowed allowances accrue 8 percent interest.

Category III Issues: What’s Negotiable for a Good Climate Bill

1. Is there a price collar?

Yes. The price floor is set at $12 and increases annually at 3 percent above inflation as measured by the Consumer Price Index. The price ceiling is initially set at $25 and increases annually at 5 percent above inflation.

2. Are offsets allowed?

Offset are allowed. Similar to Waxman-Markey, regulated parties may use up to 2 billion offset credits to be in compliance. At the outset of the program, 75 percent of offset credits must come from domestic sources and up to 25 percent can come from international sources. If regulators determine the supply of domestic offsets is not enough to meet initial proportions, then international offsets may increase up to 50 percent of the total supply. After 2018, 1.25 actual international offset credits are equal to 1 emission allowance. The US Department of Agriculture has primary oversight of domestic offsets.

3. What are the effects on international negotiations and trade-vulnerable industries?

The bill maintains the United States’ previously stated commitment to reduce its emissions by 17 percent of 2005 levels by 2020 and 83 percent by 2050. It includes some funding provisions in the form of allowance allocations for international adaptation efforts. Trade-vulnerable industries’ entry under the cap is delayed until 2016 and they are given rebates in the form of 15 percent of all allowances from 2016 to 2025. The bill also expands current clean energy manufacturing tax credit programs by $5 billion and it establishes a WTO-compatible border adjustment to be instituted sometime after 2020, dependent on presidential and congressional findings.

Category IV Issues: What’s Not Important for a Good Climate Bill

1. Is a renewable portfolio standard set?

No. There is no federal standard, though states are permitted to keep or implement them.

2. Is existing EPA authority to regulate GHGs preempted?

Generally, yes. The Clean Air Act authority that the EPA currently has to regulate stationary sources is preempted. The EPA would keep its authority to regulate vehicles, the only part of its authority it has used to date for greenhouse gases. The EPA could still set performance standards for industrial sources not included under the cap, but to date the EPA has shown no interest in regulating these smaller sources.

3. Are state GHG regulations preempted?

State cap-and-trade programs would be preempted by the bill, though states with such programs and emitters subject to them would receive credit. Other state-level regulations are not preempted. In principle, states could implement renewable portfolio standards, performance standards, or even a carbon tax.

4. Are allowance markets closed to Wall Street?

The allowance trading market would be regulated by the Commodity Futures Trading Commission, and the regulatory restrictions in the bill are extensive. Markets are, however, open in principle to parties other than emitters themselves if they are “necessary for a liquid and well-functioning market”. Carbon derivatives are allowed but tightly regulated. Short-selling of allowances is prohibited.

5. Does the bill promote energy security?

The bill would increase investment in new nuclear power plants with loan guarantees and an expedited regulatory review process.

The bill would also create incentives to expand offshore oil and gas drilling, with 37.5 percent of royalty revenues directed to states that permit drilling. States would, however, retain veto rights over drilling within 75 miles of their coast and in other circumstances where they can show they would be significantly affected.

Photo credit: Uwe Hermann / CC BY-NC 2.0

The Other NPT

Posted on by The Progressive Policy Institute

Nuclear Controlled AreaThis month 189 countries are gathered at the United Nations in New York for a review of the Treaty on the Non-Proliferation of Nuclear Weapons. This review, which has occurred every five years since the treaty was indefinitely extended in 1995, is designed to give the member states the opportunity to discuss how the goals of the treaty are being met — or not. In broad terms, the treaty obliges those members with nuclear weapons to get rid of them and those members without nuclear weapons to never seek them, while promoting peaceful use of the atom by all.

The NPT, as the treaty is informally known, has been highly successful to date: a slow but steady global spread of nuclear power has occurred, while at the same time, many countries have elected to halt nuclear weapons programs and join the treaty regime; three countries — Israel, India and Pakistan — have never ratified the treaty and are either known or believed to have nuclear weapons; only one country — North Korea — has abandoned the regime and developed weapons; and only one country — Iran — is currently believed to be developing a nuclear weapons program while still notionally adhering to the treaty. One of the reasons the NPT has been so successful in promoting nuclear power while damping the spread of nuclear weapons are the guidelines created by the Nuclear Suppliers Group, NSG, a consortium of the countries that build and supply the vast majority of the materials required to build and maintain a nuclear power or nuclear medicine program. These guidelines exist “to ensure that nuclear trade for peaceful purposes does not contribute to the proliferation of nuclear weapons or other nuclear explosive devices which would not hinder international trade and cooperation in the nuclear field.”

It is time, however, to consider a different NPT, namely, a Non-Proliferation Tax. This NPT is the indirect price everyone pays for keeping dangerous nuclear materials and nuclear technologies out of the hands of those who might use it for nefarious purposes. But don’t worry — this isn’t a new tax up for debate.  Rather, it’s part of the current taxes individuals and businesses already pay.

Some of what we get out of this tax is obvious: funding U.S. diplomats and technical experts to work on these issues at the United Nations and other international bodies such as the International Atomic Energy Agency, and to coordinate U.S. work with the NSG. Other efforts are well known, such as those led by the U.S. Departments of State and Energy collectively known as the Cooperative Threat Reduction Program — or Nunn-Lugar Program, for the Senators most responsible for writing the 1992 legislation that created the program. These programs have helped to secure Russian nuclear weapons and fissile materials and to provide Russian and other former Soviet weapons scientists with the training to find work in non-weapons fields; they are being expanded to cover other topics, such as the life sciences, and other parts of the world, such as South and Southeast Asia.

Other efforts that are funded by this non-proliferation tax include the Proliferation Security Initiative, PSI, and the Second Line of Defense, SLD, program. The PSI is a program, started under the G.W. Bush administration and is a collaboration among some 95 countries to intercept illicit shipments of nuclear equipment and materials. The SLD program, also started under the G.W. Bush administration, is installing radiation portal monitors at border crossings and major seaports all over the world in an effort to detect smuggled fissile materials and improvised and stolen nuclear weapons.

Some of these programs are expensive — the SLD program will cost billions of dollars, and the U.S. has spent many more billions over the past 15 years — but the importance of the programs is also irrefutable. Some have calculated that this cost is $50 per month for every household in the U.S.

The problem, though, is that the cost of nuclear proliferation isn’t always obvious to the people, companies, and industries that directly benefit from the nuclear power sources that this money safeguards.  After all, the programs are run by the U.S. government and funded by U.S. taxpayers, not by ratepayers or by the nuclear industry. The goal, then, should be to ensure that nuclear power spreads in a way that doesn’t require a significant growth in the non-proliferation tax. This requires careful examination of new enrichment and reprocessing technologies, to make sure that development and commercialization of these new technologies will not make it harder to safeguard the facilities that use them or to detect covert programs. It also requires the broad industry-wide information sharing program suggested in my last column.

This is not an insurmountable problem, but requires that a holistic view of the costs of the proliferation of nuclear technologies be taken as we see an expansion of nuclear power.