Carbon smoke and mirrors

Todd Darling produced and directed "A Snow Mobile for George," a documentary that examines the effect of environmental deregulation on individuals. He can be reached at

George W. Bush fought global warming policy all the way to the Supreme Court. And he lost. Despite this judicial rebuke, he opposed climate-change legislation to the end. Now, with President Obama, White House views on global warming finally are in line with scientific data. But this doesn’t mean that politics can’t still trump science.

Congressional response to the climate crisis has taken shape in the Waxman-Markey American Clean Energy and Security Act. The bill has a lot to like. It sets efficiency standards, encourages alternative energy and establishes emissions ceilings on vehicles, industries and power companies by 2020.

However, key provisions of Waxman-Markey resemble earlier European efforts, and Europe’s experience raises serious questions about the ability of this legislation to adequately cut emissions or fund green solutions.


The Waxman-Markey bill proposes a market-based “carbon trading” plan that mirrors a European system initiated in 2005. This plan requires polluters to obtain government-issued “carbon credits,” which then allow them to pollute above the agreed-on limit.

Think of these pollution credits like a golf handicap. You’d like to shoot 72 on 18 holes, but you rack up 108 on your score card. So just as the hapless golfer would use his handicap to cover the 36-stroke deficit, polluters would use pollution credits to cover their extra emissions. What if a polluter doesn’t have 36 credits? Then it must buy them on the open market or pay a penalty. The penalties are expensive, and so the polluter is motivated to find either a solution or more credits.

In theory, money generated by this “carbon market” will jump-start investment in clean technology.

In a recent conference call to climate activists, Rep. Henry Waxman (D-Beverly Hills) stated that his bill’s carbon-trading plan “is based on work by the USCAP.” USCAP, or the United States Climate Action Partnership, is a coalition of environmental groups, including the Natural Resources Defense Council, the Nature Conservancy and a couple dozen A-list corporations, including General Electric; Duke Energy; oil companies Shell, ConocoPhillips and BP America; chemical companies DuPont and Dow; as well as numerous utilities.

USCAP’s carbon-trading plan, which became part of the Waxman-Markey plan, shares key details of the European system -- most importantly, it gives 85% of the pollution credits to the biggest polluters for free.

The European experience shows the critical weakness of this plan. In Europe, the distribution of free pollution credits to industries failed to establish a strong carbon market. In turn, the weak market in carbon credits failed to generate the money needed to fund new technology. And because there was a glut of free credits, polluters that went over the emissions limit could buy the necessary credits cheaply. So important states, such as Britain, continue to exceed the pollution limits.


Faced with disappointing results, Europe began auctioning off more of the credits in 2006. But the damage was done. The arrival of the recession caused the “carbon price” to plummet further. Critics point at companies that cut back their production 20% -- and therefore pollute 20% less because of the recession -- and now sell their unused pollution credits to prop up their bottom line. Money that was supposed to be generated from pollution credits to fund clean technology goes elsewhere.

The complex European trading scheme, started with free pollution credits, has not produced dramatic cuts in pollution or dramatic developments in technology or a robust market in carbon credits. The Financial Times of London was blunt: “Carbon markets leave much room for unverifiable manipulation. [Carbon] taxes are better, partly because they are less vulnerable to such improprieties.”

Unfortunately, global warming and its solutions are complicated, but we have very little time for mistakes.

A recent scientific report from the Intergovernmental Panel on Climate Change warns that a 2-degree Celsius warming of our atmosphere has a 90% chance of undoing the conditions on Earth that allowed and supported the development of human civilization.

Scientists from Oxford University, using this report, calculate that we can avoid this potentially catastrophic 2-degree warming if we limit our emissions between 2000 and 2050 to 1 trillion metric tons of carbon. They note that we’ve already burned 25% of that limit since 2000.

In response to criticism of the Waxman-Markey bill, the NRDC’s Dan Lashof told National Public Radio’s Warren Olney: “This is the best bill that can actually get through committee.” Other supporters of the bill frequently cite Bismarck’s line: “Politics is the art of the possible.”


But which “possible” do they see? The 2007 corporate gauge of the best possible deal? Or the 2009 update of broad populist sentiment that favors coherent action over special interests?

Controlling pollution will require incentives. But does that mean giving away 85% of the credits for free, possibly setting up yet another questionable Wall Street “market”?

We need this bill to pass, but in a strengthened form: Put the emissions cap in line with the trillion-ton limit, cut back the freebies to fund innovation and green jobs and protect poor families from utility rate spikes.

In the face of clear scientific warnings, we have broad popular support for climate legislation. Don’t let Congress waste this crisis on a historic miscalculation of what is possible. Talk to your representatives this week.