Roses are red, violets are blue, here’s a climate change bill for you.
On Valentine’s Day, Senators Boxer and Sanders introduced S. 332, the Climate Protection Act of 2013. Senator Sanders also introduced his Sustainable Energy Act. The outlook for the package isn’t exactly rosy. The bills will have a tough time passing the Senate and would be pretty much DOA in the House.
Still, any sign of movement in Congress is welcome for those of us who care about development, since poor countries will suffer the effects of climate change first and worst, and lack of major action in the United States, historically the world’s biggest emitter of greenhouse gases, has been one of the impediments to a global agreement.
And just as exciting as its existence is its content—the Climate Protection Act includes a provision for raising money to help poor countries deal with the climate disruptions already in the pipeline. More about that in a bit.
It’s worth noting that the bills are part of a resurgence in political activity that suggests some policymakers have recovered from the 2010 defeat of cap-and-trade. President Obama’s appeal for climate action in his second inaugural address, a follow-up promise in his SOTU speech to use his executive power if necessary, new congressional task forces and clearinghouses, and pledged floor speeches point to a growing sense that US government action is necessary, despite political realities.
In this context, it’s useful that the proposed legislative package gives us a sense of what US climate legislation could look like.
There’s a lot to like, starting with a price on carbon ($20 per ton, rising at 5.6 percent over a ten-year period), applicable to the largest fossil fuel polluters. The summary of the Climate Protection Act says the fee would apply to 2,869 large fossil fuel facilities responsible for 85 percent of US greenhouse gas emissions.
Of the resulting revenue, 60 percent would go to a residential environmental rebate program, modeled on Alaska’s oil dividend, that would provide a monthly payment to US residents. The remaining 40 percent would be applied to a pollution reduction trust fund, and then to debt reduction.
For those who have followed CGD policy research on climate, the rebate might sound familiar. CGD senior fellow emeritus David Wheeler ran some interesting calculations back in 2008 showing how such rebates could help to win Senate approval for a climate bill. Though the exact numbers (and Senators) have changed, the political calculus remains instructive.
Some lessons on how to get a carbon dividend fund up and running might also be drawn from a new CGD book edited by Todd Moss, The Governor’s Solution, which includes the first-person account of the creation of the Alaska fund by former Governor Jay Hammond.
But what really made me want to send Senators Boxer and Sanders sustainable roses is the acknowledgement that the United States should be helping to mobilize funding to help poor countries cope with the impacts of climate change.
The Climate Protection Act specifies that money collected from a “carbon equivalency fee” (read: carbon tariff) imposed on carbon pollution-intensive imports could be used “as a secondary purpose, to meet international commitments made by the United States to assist with climate change adaptation.”
“Secondary purpose” revenue out of a carbon import fee isn’t exactly a jackpot for the Green Climate Fund or other international adaptation efforts. It’s an easy bet that most of the money collected would go to the “primary purpose” of providing state and local programs for adaptation, resilience, and environmental protection.
Still, the idea of recycling part of the proceeds of a carbon tariff back to developing countries is an interesting one, particularly in light of a new CGD book by Arvind Subramanian and Aaditya Matyoo, Greenprint: A New Approach to Cooperation on Climate Change that argues developing countries should accept such tariffs as part of a new grand bargain.
It’s all hypothetical for now, of course, given that we won’t be seeing a climate bill love letter from Congress anytime soon. The best hope for near-term action continues to be that President Obama follows through on his SOTU pledge to use his executive authority. Nonetheless, in a field where hope is scarce, it’s encouraging to know that those pushing for action in the US Senate have recognized that the United States has a role to play in helping poor countries to cope with the changes ahead.