FAIL: The Energy & Commerce Committee

So maybe it's not an epic fail, but negotiations in the Energy & Commerce Committee have severely limited the potential impact of Reps Waxman and Markey's cap and trade legislation. The agreement, which will enter the markup phase on Monday, calls for a 17% carbon emissions reduction below 2005 levels by 2020, which isn't bad (it tops the 14% President Obama campaigned for) but it is a reduction in the original plan, which called for 20% reductions.

However, that's a mole hill compared to the mountain of a concession Waxman and Markey have made in deciding to give away about half of the pollution permits for free to utilities and endangered industries. Under their agreement, the bill would allow for 35% of permits to be given away free to power distribution companies and 15% to be given free to power intensive industries, like steel and cement production. Also 1-5% could be given away to petroleum refiners.

Don't get me wrong - this bill is still very important for clean energy supporters. It will begin to price dirty energy in realistic terms and it will present the US's commitment to renewable energy before international climate negotiations in Copenhagen this winter. But at the same time these concessions present two types of problems...

1. Economic: We're kind of in a budget deficit. And we kind of will be for a few years, according to President Obama's proposed budget. That same budget also accounts for hundreds of billions in revenues from carbon permit sales. Well, you can't earn revenue if you're giving them away free, can you? This loss in government revenue threatens to be enough to hurt the President's promise of a middle class tax cut, something that kinda sorta mighta won him the election...

2. Environmental: The EU's cap and trade plan gave away all of the permits for free initially, and subsequently their carbon emissions increased over the first few years of their plan. That probably won't happen in the US - we're learning at least something from the Old World's mistakes - but it is pretty obvious that auctioning all of the permits would do a much better job of cutting emissions and encouraging the switch to a clean energy future.

I'll try to continue updating Renewable Energy Turns Me On on the cap and trade bill's progress this summer. It's expected to get out of committee by Memorial Day, then it's onto the floor. That's when it'll get really fun - a recent poll showed only 24% of Americans even know that "cap and trade" is a term that refers to environmental issues...