Environmental Policy: Cap and Trade

Introduction  Environmental policy in US is adversarial  Federal standards, state and local governments can require lower standards  People involved: businesses, lawyers, government inspectors  Entrepreneurial politics - birth of environmental movement  1970s - Environmental Protection Agency, Clean Air Act, Water Quality Improvement Act, Endangered Species Act  Who benefits? Society (clean air, clean water). Who pays the price? Industry (regulations)  4 main topics: agricultural pesticides pollution from automobiles global warming acid rain

Agricultural Pesticides  Client politics - small group (farmers), large group (society)  Farmers want to use pesticides on their crops  Rachel Carson “Silent Spring” (1972) - DDT  Hard for EPA to regulate pesticides - money, 50,000 varieties  Farmers represented in Congress  Environmental Protection Agency (1970): regulatory agency created by Nixon to protect the health of American people and environment. Problems.

Pollution from Automobiles  Majoritarian politics  Majority of people benefit (clean air, less smog) and majority of people have cost (use cars less, higher cost of energy efficient cars, less horsepower, antismog regulation hurts industry)  Clean Air Act of 1970: tough restrictions on the amount of pollutants coming out of automobile tailpipes Required parking bans, carpools, and gas rationing esp. in big cities – failed Public wanted action, but wasn’t willing to make the sacrifice

Global Warming  Gases produced by burning fossil fuels trapped in atmosphere - cause earth’s temperature to rise Polar ice caps melt, rise in sea levels, violent weather, spread of diseases, animal extinction  Entrepreneurial politics - industry pays the price for clean environment  Criticism - natural causes?  Scare tactics to raise money  Endangered Species Act (1973): prohibits the sale of endangered plants and animals. Government labels species as endangered when likely to become extinct. Can’t harm habitats – federal regulations  Kyoto Protocol: International pledge to lower GHG emissions by 7% from 1991 levels. Opposed by Bush. Emissions trading (EU ETS) Clean development mechanisms Joint implementation

Acid Rain  Increasing acidity of precipitation caused by pollutants released into the atmosphere  Interest Group Politics in 1970s - Midwest steel mills and power plants vs. Eastern states  Low-sulfur coal, high-sulfur coal, scrubbers  Clean Air Act of 1977: scrubbers on all new coal-burning plants  Clean Air Act of 1990: Phase One: sulfur emissions reduced by 1995, method of choice Phase Two: sulfur emissions reduced by 2000, plants probably have to use scrubbers ***System of tradeable sulfur dioxide allowances put in place, flexibility, companies could buy and sell allowances*** Lowered sulfur levels in atmosphere by 10 million tons ahead of schedule - successful

Cap and Trade  Cap and Trade: Limit carbon emissions and the lowest cost nationwide. Market of carbon allowances. Companies who emit more than the limit can purchase allowances from companies that emit less than the limit. Flexibility. Innovation. Investment.  American Clean Energy and Security Act (2009): aka Waxman- Markey Bill “to create clean energy jobs, achieve energy independence, reduce global warming pollution, and transition to a clean energy economy.” Cap and trade system. Government sets a limit on total amount of greenhouse gases that can be emitted in a year. Companies can then buy and sell permits to emit GHGs. Targets carbon dioxide, methane, and other GHGs 20% electricity from renewable energy resources, 5% from efficiency savings 17% decrease GHGs by % decrease GHGs by 2050  European Union Emission Trading Scheme: largest GHG emissions cap and trade system. Companies are given set amounts of allowances. At end of each year companies must report their total emissions and surrender enough allowances to pay for its emissions. Heavy fines. Can buy and sell to make up the difference. Save for later.

Pro Cap and Trade  Representatives Henry Waxman (D) of California (chairman of Energy and Commerce Committee) and Edward Markey (D) of Massachusetts (chairman of Energy and Environment Subcommittee of the Energy and Commerce Committee).  Environmental Defense Fund: cap and trade most environmentally and economically sensible solution to limit GHGs and reduce global warming. Investment, innovation, and job creation stimulate economy From wiki: acid rain chart Acid Rain under cap and trade system (E

Pro Cap and Trade  Representatives Henry Waxman (D) of California (chairman of Energy and Commerce Committee) and Edward Markey (D) of Massachusetts (chairman of Energy and Environment Subcommittee of the Energy and Commerce Committee).  Environmental Defense Fund: cap and trade most environmentally and economically sensible solution to limit GHGs and reduce global warming. Investment, innovation, and job creation stimulate economy From wiki: acid rain chart Acid Rain under cap and trade system

Con Cap and Trade Americans for Tax Reform: A cap and trade bill would hurt consumers and is politically motivated. Consumers and businesses will still pay the price – will have to pay more to buy new technology to comply with the new technology. Not what America needs during a recession. The Heritage Foundation: Predicts that the American Clean Energy and Security Act would result in 1.9 million fewer jobs in 2012, a $9.4 trillion loss in economic growth from 2012 to 2035, and a 90% increase in the price of electricity by The environmental impact would be small and would only result in more government control over the economy. age.org/Multime dia/InfoGraphic/ Cap-and-trade-- blows-roof-off- spending age.org/static/re portimages/B07 729BF84DAAA 4D2801AF5FCF F2628D.gif