Can the proposed U.S. climate change legislation actually reduce carbon emissions? Not according to utility industry advocates worried about certain provisions in the American Clean Energy and Security Act (a.k.a. Waxman-Markey), which narrowly passed the House of Representatives in June. The concern is that carbon offsets—financial instruments each representing one tonne of carbon dioxide (CO2) which emitting companies can buy from other organizations that have demonstrably reduced CO2 emissions—are in such short supply that CO2 will be prohibitively expensive. Expensive carbon means expensive coal- or gas-fired electricity.
Why are offsets so scarce? To be blunt, because the projects that are eligible to create them in the U.S. are mainly in the agriculture, forestry, and “renewable energy” sectors. The first two sectors are not huge emitters to begin with. And renewables—which means electricity created with wind, solar, micro-hydro, and biomass as well as liquid biofuels for transportation—produce energy in paltry amounts.
This contradicts assumptions by government bodies in the U.S., notably the Environmental Protection Agency (EPA), Energy Information Administration (EIA), and Congressional Budget Office (CBO). All officially assume the above sectors and technologies will produce enough offsets to keep carbon cheap, and that Waxman-Markey will really lead to major carbon emission reductions.
The international situation is no better. Though the EPA, EIA, and CBO assume the bulk of offsets for use in the U.S. will originate offshore, nobody knows how or whether an international agreement can emerge in time for Waxman-Markey, which begins in 2012.
And if one does, there’s no guarantee that it will do any better at generating offset credits than Waxman-Markey. In fact, there is every indication that the international market will absolutely not produce offsets in any appreciable quantity. This is because nuclear energy was explicitly taken out of the list of offset-eligible projects under the Clean Development Mechanism, a provision under the Kyoto Protocol that was intended to encourage rich countries to invest in carbon reduction projects in poor countries. At the Kyoto conference in Bonn in 2001, anti-nuclear activists successfully knocked nuclear projects out of the CDM. A collection of NGOs reiterated their opposition to including nuclear in CDM-eligible projects in 2008.
And here we are, with strong pressure to get countries like India and China to join an international effort to reduce carbon emissions, and the so-called environmentalist crowd is still opposing the biggest carbon reduction technology out there. Do the greens want India and China to power their burgeoning economies with coal? Go figure.