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Response to "The End of Magical Thinking"

I was surprised to learn from Nordhaus and Shellenberger’s recent piece in Foreign Policy that WRI has magical powers. In that piece the authors write:

Green groups insisted that the bill would reduce emissions and pointed reporters and green donors to allegedly independent analyses by the World Resources Institute (WRI). But the WRI, a major party to the cap-and-trade agreement negotiated by the EDF and NRDC with energy companies, simply used a magic accounting trick that was visible in plain sight: counting carbon offsets as real reductions of U.S. emissions.

Offsets typically fund activities such as tree planting and methane capture from landfills, and have proven over the last decade to be extremely unreliable, when they have not been outright fraudulent. The extensive offsets in Waxman-Markey would have allowed U.S. emissions to rise at business-as-usual rates over the next decade rather than declining to 17 percent below 2005 levels, as proponents of the bill claimed. Nevertheless, the WRI created graphs showing U.S. emissions magically going down 17 percent by 2020 and nearly 80 percent by 2050; the New York Times duly reprinted them; and partisans on both sides of the debate tacitly agreed to pretend as if proponents' farcical claims about the bill's mandated emissions reductions were true.

The authors' claim that WRI is overselling the merits of climate legislation in Congress and that the analysis is "allegedly independent" is way off the mark.

While WRI is a member of the US Climate Action Partnership, the analysis in question is our own. Beyond the facts that our analysis is independent, non-partisan and is the product of a rigorous review process, it is clear that neither Nordhaus nor Shellenberger had actually read my analysis where it’s clearly stated that:

If the environmental integrity of offsets were not completely real, permanent, and additional then the emission reduction estimates included in this analysis would be diminished proportionately.

The quality of offsets is a critical component of the environmental effectiveness of any emission reduction program that incorporates them. WRI’s principal focus is on environmental integrity. A critical component of WRI’s climate strategy is working to ensure that any offsets allowed in a U.S. program are indeed real, verifiable, permanent and additional. This is reflected both in WRI’s published analyses and in conversations with congressional staff.

The suggestion that the integrity of WRI’s analysis was undermined for political gain or compromised due to on-going associations with private sector and civil society partners, or the philanthropic community that supports our work, is incorrect. Even more unfortunate is the suggestion that WRI fed this analysis to the press to aid passage of the bill. Their odd reading of the facts turns on its head a major tenet of WRI research by suggesting that it is a bad thing to share our research publicly. In fact, our research is not proprietary and always publicly available.

Second, the article suggests that Nordhaus and Shellenberger lack a fundamental understanding of the Waxman-Markey bill itself. They assert that the bill invests almost nothing in new clean energy technology:

The green giants in Washington -- the Environmental Defense Fund (EDF), the Natural Resources Defense Council (NRDC), and the Center for American Progress (CAP) -- claimed that cap and trade would constitute a breakthrough, and Chu dutifully defended the legislation, expecting it would include his $15 billion for R&D.

But Waxman and Markey ended up using virtually all of the money raised from carbon auctions to buy off fossil fuel interests, leaving virtually nothing for technology innovation… In the end, Waxman-Markey would give R&D $1.1 billion a year, less than a third of current levels, and would give coal and utility companies $32 billion.

This is hardly the case. Here’s a brief and hardly exhaustive list of the investments and new requirements for clean energy technology the bill requires that they missed (more details are here):

  • About $4.5 billion a year for state renewable energy and energy efficiency deployment programs,
  • $1.5 billion a year for clean vehicle manufacturing ,
  • Half a billion dollars a year for state home heating oil and propane efficiency programs,
  • Half a billion dollars a year for international clean technology deployment,
  • $2 billion dollars a year for natural gas efficiency programs,
  • $2 billion per year for clean coal technology deployment,
  • Plus new, strict appliance standards,
  • New federal building codes with carrots to get states to adopt them,
  • GHG emissions standards for new coal fired power plants,
  • Requirements for renewable energy and energy efficiency deployment,
  • GHG emissions standards on non-fossil fuel sources such as landfills and coal mines,
  • $1 billion a year for clean coal R&D, and
  • plenty more including billions to help our country and the world adapt to unavoidable climate change impacts.

All of this is above and beyond the billion dollars for R&D that they reference in their article. It is unclear what legislation Nordhaus and Shellenberger are referring to: the version of Waxman-Markey that the House of Representatives passed in June represents an impressive investment that will do a lot to get the U.S. onto a completely new path to a clean energy future. Waxman-Markey is not a magic trick – it represents a major commitment to the kinds of technology-forcing that Nordhaus and Shellenberger say they want.

Finally, asserting that WRI would ruin its reputation by conjuring up numbers to sell a bill that does nothing goes directly against our mission. WRI exists to solve the most pressing environmental problems facing the world, including climate change, and will continue to examine policy issues with our independent, analytic approach. No wands, just empirical evidence.

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