Climate Change Policy Options Reading List

Confused about the Climate Bill? Check out the following reports from the Congressional Research Service on the relative impacts of the options being discussed.

Leggett, Jane A. (2009). Climate Change: Current Issues and Policy Tools (March 6, 2009). Washington, DC : Congressional Research Service (Online at http://assets.opencrs.com/rpts/RL34513_20090306.pdf)
Abstract: On June 2, 2008, the Senate agreed to consider a bill (S. 3036) to control greenhouse gas emissions in the United States. In the 111th Congress, leadership in both chambers have announced their intentions to pass bills in 2009 to reduce greenhouse gas emissions. These actions are indicative of the pressures Members of Congress increasingly face on whether and how to address human-induced climate change. Contentious debates scrutinize issues of science, economics, values, geopolitics and a host of other concerns. Deliberations also weigh the appropriateness of alternative policy tools and program designs. The economic stakes are potentially largewith both the costs of controls and the costs of inaction ranging, by some estimates, into trillions of dollars over several decades. A major international assessment released in 2007 concluded that the Earths climate had warmed unequivocally over the past century, and that elevated levels of so-called greenhouse gases (GHG) were likely responsible for a major portion of the observed warming. Elevated concentrations of GHG in the atmosphere are due mostly to human activities, especially emissions from use of fossil fuels, clearing of land, and some industrial processes. Continued population and economic growth, with dependence on fossil fuels and needs for expanding agricultural lands, are expected to drive GHG emissions and induced climate change over the 21st Century to levels never experienced by human civilizations. While benefits may accrue to some people who may experience a limited amount of climate change, the aggregate effects are expected to become increasingly adverse, with people living in dry regions or along low-lying coasts, and people with low incomes, expected to be especially vulnerable. Adaptations can moderate the impacts and expand opportunities, but at a cost. Besides the overall costs of climate change, key concerns include the distributional effects within and across generations, how to value ecological impacts, and the potential for abrupt and irreversible changes. While important uncertainties remain concerning future climate change and its impacts, many experts are convinced that the evidence calls for U.S. action to abate GHG emissions. Others argue that mandatory controls would be premature, unnecessary or too costly. For decision-makers considering actions to address climate change, an assortment of policy instruments is available; studies suggest that a combination could be most effective in achieving various climate policy objectives. Current policy attention has focused on cap and trade strategies to reduce GHG emissions, with additional policy tools aimed at promoting the technology development considered necessary to slow climate change significantly. In parallel, growing attention is being given to supporting adaptations to expected future changes, as well as to strategies to gain effective international engagement in reducing GHG. One significant obstacle to consensus is concern about the potential costs of abating GHG emissions, since deep reductions would require extraordinary changes in energy use and technologies. Studies suggest that efficiently designed programs could moderate the costs of reducing GHG emissions; technically and politically, though, an efficiently designed program may not be realistic. Policy options can ease the adjustments required and modify the distribution of costsor potential wealth embodied in distribution of emission allowancesacross specific sectors or populations. A core challenge of policy design, then, is balancing the climate effectiveness of a policy, the economic costs, and its distributional effects.

Parker, Larry and John Blodgett (2008). Global Climate Change: Three Policy Perspectives (November 26, 2008). Washington, DC : Congressional Research Service. (Online at http://assets.opencrs.com/rpts/98-738_20081126.pdf)
Abstract:
The 1992 U.N. Framework Convention on Climate Change requires that signatories, including the United States, establish policies for constraining future emission levels of greenhouse gases, including carbon dioxide (CO2). The George H. W. Bush, Clinton, and George W. Bush Administrations each drafted action plans in response to requirements of the convention. These plans have raised significant controversy and debate. This debate intensified following the 1997 Kyoto Agreement, which, had it been ratified by the United States, would have committed the United States to reduce greenhouse gases by 7% over a five-year period (2008-2012) from specified baseline years. Controversy is inherent, in part, because of uncertainties about the likelihood and magnitude of possible future climate change, the consequences for human well being, and the costs and benefits of minimizing or adapting to possible climate change. Controversy also is driven by differences in how competing policy communities view the assumptions underlying approaches to this complex issue. This paper examines three starting points from which a U.S. response to the convention is being framed. These starting points, or policy “lenses,” lead to divergent perceptions of the issue with respect to uncertainty, urgency, costs, and government roles. They also imply differing but overlapping processes and actions for possible implementation, thus shaping recommendations of policy advocates concerning the federal government’s role in reducing greenhouse gases. A technological lens views environmental problems as the result of inappropriate or misused technologies. The solutions to the problems lie in improving or correcting technology. The implied governmental role would be to provide leadership and incentives for technological development. An economic lens views environmental problems as the result of inappropriate or misleading market signals (prices). The solutions to the problems lie in ensuring that the prices of goods and services reflect their total costs, including environmental damages. The implied governmental role would be to improve the functions of the market to include environmental costs, so the private sector can respond efficiently. An ecological lens views environmental problems as the result of indifference to or disregard for the planet’s ecosystem on which all life depends. The solutions to the problems lie in developing an understanding of and a respect for that ecosystem, and providing people with mechanisms to express that understanding in their daily choices. The implied governmental role would be to support ecologically based education and values, as well as to promote “green” products and processes, for example through procurement policies, efficiency standards, and regulations. Some initiatives are underway; all the perspectives are relevant in evaluating them and possible further policies. The purpose here is not to suggest that one lens is “better” than another, but rather to articulate the implications of the differing perspectives in order to clarify terms of debate among diverse policy communities.

Parker, Larry and Brent D. Yaccobucci (2009). Climate Change: Costs and Benefits of the Cap-and-Trade Provisions of H.R. 2454 (September 14, 2009). Washington, DC : Congressional Research Service. (Online at http://assets.opencrs.com/rpts/R40809_20090914.pdf)
Abstract: This report examines seven studies that project the costs of H.R. 2454 to 2030 or beyond. It is difficult (and some would consider it unwise) to project costs up to the year 2030, much less beyond. The already tenuous assumption that current regulatory standards will remain constant becomes more unrealistic as time goes forward, and other unforeseen events (such as technological breakthroughs) loom as critical issues which cannot be modeled. Hence, long-term cost projections are at best speculative, and should be viewed with attentive skepticism. The finer and more detailed the estimate presented, the greater the skepticism should be. In the words of the late Dr. Lincoln Moses, the first Administrator of the Energy Information Administration: “There are no facts about the future.” But if models cannot reliably predict the future, they can indicate the sensitivity of a program’s provisions to varying economic, technological, and behavioral assumptions that may assist policymakers in designing a greenhouse gas reduction strategy. The various cases examined here do provide some important insights on the costs and benefits of H.R. 2454 and its many provisions. • If enacted, the ultimate cost of H.R. 2454 would be determined by the response of the economy to the technological challenges presented by the bill. • The allocation of allowance value under H.R. 2454 will determine who ultimately bears the cost of the program. • The cases generally indicate that the availability of offsets (particularly international offsets) is potentially the key factor in determining the cost of H.R. 2454. • The interplay between nuclear power, renewables, natural gas, and coal-fired capacity with carbon capture and storage technology among the cases emphasizes the need for a low-carbon source of electric generating capacity in the mid- to long-term. A considerable amount of low-carbon generation will have to be built under H.R. 2454 in order to meet the emission reduction requirement. • Attempts to estimate household effects (or other fine-grained analyses) are fraught with numerous difficulties that reflect more on the philosophies and assumptions of the cases reviewed than on any credible future effect. Finally, H.R. 2454’s climate-related environmental benefit should be considered in a global context and the desire to engage the developing world in the reduction effort. When the United States and other developed countries ratified the 1992 United Nations Framework Convention on Climate Change (UNFCCC), they agreed both to reduce their own emissions to help stabilize atmospheric concentrations of greenhouse gases and to take the lead in reducing greenhouse gases. This global scope raises two issues for H.R. 2454: (1) whether the bill’s greenhouse gas reduction program and other provisions would be considered sufficiently credible by developing countries so that schemes for including them in future international agreements become more likely, and (2) whether the bill’s reductions meet U.S. commitments to stabilization of atmospheric greenhouse gas concentrations under the UNFCCC, and whether those reductions occur in a timely fashion so that global concentrations are stabilized at an acceptable level

Ramseur, Jonathan L., Larry Parker, and Brent D. Yaccobucci (2009). Market-Based Greenhouse Gas Control: Selected Proposals in the 111th Congress (May 27, 2009). Washington, DC : Congressional Research Service. (Online at http://assets.opencrs.com/rpts/R40556_20090527.pdf)
Abstract:
As of the date of this report, Members in the 111th Congress have introduced seven stand-alone proposals that would control greenhouse gas (GHG) emissions. The proposals offered to date would employ market-based approaches—either a cap-and-trade or carbon tax system, or some combination thereof—to reduce GHG emissions. The legislative proposals are varied in their overall approaches in controlling GHG emissions. Some control emissions by setting a quantity (or cap); others control emissions by setting a price (or tax/fee). In addition, the proposals differ in their inclusion of particular design elements, such as whether or not to allow offsets (emission reduction opportunities from economic sectors not directly addressed by the primary approach). H.R. 2454 (Waxman/Markey) has been the primary energy and climate change legislative proposal in the 111th Congress. It was introduced May 15, 2009, and subsequently modified and offered as a “Manager’s Amendment” (May 18, 2009) for markup in the House Committee on Energy and Commerce. After making several amendments to the bill (most relating to the bill’s energy provisions), the committee ordered the bill reported May 21, 2009. H.R. 2454 (Waxman/Markey) and H.R. 1862 (Van Hollen) would establish cap-and-trade programs, but they would differ in their implementation. For example, the latter would not allow offsets to be used for compliance purposes, while the former would allow covered entities to satisfy an increasing percentage (approximately 30% in 2012) of their compliance obligation with offsets. H.R. 1666 (Doggett) would also create a cap-and-trade system, but in the early years of the program, the number of emission allowances distributed would be based on achieving a specified allowance price. Three of the proposals—H.R. 594 (Stark), H.R. 1337 (Larson), and H.R. 2380 (Inglis)—would use a carbon tax approach to address carbon dioxide (CO2) emissions from fossil fuel combustion. H.R. 1683 (McDermott) would establish a program that may be described as a dynamic carbon tax: its tax rate would be linked with annual emission allocations (or caps). A key element in GHG emission reduction bills is how, to whom, and for what purpose the value of emission allowances or carbon tax revenue would be distributed. The distribution strategy is a critical policy decision, because it would affect (1) the overall cost of the program and (2) how program costs are distributed throughout the economy. In the early years of the program, H.R. 2454 would distribute allowances at no cost to both covered and non-covered entities to support various policy objectives. In addition, an increasing percentage (approximately 18% in 2016) of the allowances would be sold through auction. As with the distribution of no-cost allowances, auction revenues would be used to further various policy objectives.

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