Thursday, February 7, 2008

Confronting the "Polluter Giveaway" MYTH

Yesterday, I laid forth my disgust at what Friends of the Earth and Greenpreach -- oh I mean Greenpeace are doing to shut down the only bi-partisan climate bill with both environmental integrity and a real political shot of passing any time soon. I received a comment from Friends of the Earth - which I encourage you to read. One of their responses was the same old tired refrain I've heard from a lot of groups: the bill "gives away trillions of dollars to polluters."

As a criticism, this is worth discussing -- so lets look at what the bill actually calls for (a refreshing change from the Exxon-FOE-Greenpeace mantra on this issue).

One man’s “giveaway to polluters” is another man’s “transition assistance.” The Lieberman-Warner bill (S.2191) devotes 8% of the cumulative value of allowances from enactment though 2050 to transition assistance (“giveaways to polluters”). The remaining 92% goes to state governments, energy consumers, wildlife adaptation, farmers and foresters, etc. The attached chart (also posted here: shows three snapshots of the allocation system over time (2012, 2022, and 2031).

By 2031, polluters are not receiving any free allowances. The economic modeling shows that if you do not provide regulated entities with a substantial amount of free allowances in the early years of the program, before the advanced energy technologies have had a chance to deploy widely, then the program will be substantially more expensive for energy consumers and others.

Another good perspective can be found from a blog comment left by Anthony Kriendler of Environmental Defense (below). You can Click Here to see the whole string of discussion.

As passed by committee, the bill only allocates 49 percent of allowances to regulated entities, and we get to full auction by 2031. There are a lot of good arguments for increasing the rate at which CSA moves to 100 percent auction, and there are a lot of good arguments for why that might not be achievable politically. In the end though, without a cap on emissions, there are no allocations to make, no auctions to have, and no greenhouse gas reductions. And that's what we're all working for here: reducing emissions. -- Environmental Defense

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