Here is why WRI supports the USCAP Blueprint, which provides a framework to shift the U.S. to a low carbon economy, and a more secure energy future.
WRI signed the USCAP Blueprint for Legislative Action launched January 15, 2009. The USCAP blueprint is the product of two years of rigorous work by a unique partnership of big business and non governmental organizations committed to urgently enacting climate legislation in 2009.
WRI believes that USCAP has outlined an environmentally-sound, workable, and cost-effective framework to reduce U.S. emissions contributing to global climate change. Taken together, its provisions will facilitate the transformational change required to shift our nation toward a low carbon economy and a more energy secure future.
Here is why WRI supports the recommendations in the USCAP blueprint:
Moving to a low carbon future will require changes in business practices, consumer products energy standards, energy production technologies, and transportation systems. USCAP’s 2020 target for reducing greenhouse gas emissions is workable, realistic, and will create real incentives to change business as usual. President Obama’s target is included in the range proposed by US CAP – his target as articulated in November 2008 would put the US at 86% of today’s levels in 2020. USCAP proposes reduction of greenhouse gases from both capped sources (such as the power sectors) and the U.S. economy as a whole, to 80-86% of 2005 levels (a 14-20% reduction).
USCAP and WRI propose a well-crafted, economy-wide cap-and-trade program that places specified limits on GHG emissions. To be effective, we recommend that such a program should incorporate cost-containment measures, complementary policies, and a fully funded federal technology research, development, demonstration, and deployment program for climate-friendly technologies. Properly designed, we believe such legislation will have multiple benefits. It will encourage innovation, enhance America’s energy security, foster economic growth, improve our balance of trade, and provide critically needed U.S. leadership on this vital global challenge.
Cap-and-trade programs create a flexible, market oriented regulatory structure. Cap and trade provides a clear environmental outcome – limits are set on emissions and those limits must remain intact. Regulated companies then compete to reduce emissions faster and more efficiently. This lowers costs for consumers. While taxes do get discussed as an alternative to cap-and-trade, a tax does not guarantee the environment is protected, and taxes also require difficult decisions. Tax code drafting is no less difficult than cap and trade design.
The costs of implementing such a system must be manageable to ensure a smooth transition. The USCAP blueprint therefore argues the government should provide an initial significant allocation of allowances to regulated companies for free. Allowances provided to regulated companies should be given for purposes of buffering consumer impacts. For example, in the electricity sector, allowances should be given to load serving distribution companies on behalf of consumers – regulators such as the state Public Utility Commissions (PUCs) can then work with those companies so that rate increases are manageable for consumers. These free allowances should be phased out over time.
There are two sources of funding for cap and trade – allowances provided for free have economic value, and those allowances auctioned to emitters will generate revenue for the government. These are combined by USCAP into a category called “allowance value.” USCAP’s blueprint calls for the allowance value from the cap-and-trade program to be used to help with economic recovery and support job creation initiated under a stimulus program. Specifically, we urge use of such revenue to “train the workforce needed to facilitate a wide-scale transformation to low-carbon technologies and provide opportunities for all Americans in the new energy economy.”
The blueprint also recommends that allowance value be used to support climate adaptation efforts for vulnerable ecosystems and communities in the US and around the world. This includes, for example, support for technology deployment and for efforts to slow and stop deforestation.
The impacts of global warming are occurring sooner than anticipated. As coal will continue to provide the biggest slice of U.S. energy supplies for the near term, it is therefore critical that coal’s GHG emissions are reduced. To this end, USCAP’s blueprint urges aggressive development and implementation of carbon capture and storage (CCS) systems at coal plants, and the implementation of measures to address legal and regulatory barriers to their deployment. The blueprint also requires national CO2 emission performance standards for coal plants to encourage uptake of CCS technology once demonstration projects and regulations are in place.