Block’s Indicator of Sustainable Growth

by Ray Block

There are three energy and climate bill currently before the US Senate. These are:

• The American Power Act.

• The American Clean Energy Leadership Act.

• Lugar Practical Energy and Climate Plan.

The first of these-  the American Power Act proposed by Senators Kerry and Lieberman, which is the Senate version of the House’s Waxman- Markey Bill passed last year would mandate a cap and trade system and require a 17 per cent reduction in greenhouse gases from 2005 levels by 2020.

The second bill emerged from the Senate Committee on Energy and Natural Resources in June 2009, sponsored jointly by Democrat chairman Jeff Bingaman and Ranking Republican Lisa Markowski is a bipartisan measure designed to accelerate clean energy technologies in the US, including clean energy project financing, a renewable electricity standard, and a robust and secure national electricity transmission highway.

The bill which is yet to go to the floor of the Senate would also require increased energy efficiency in buildings.

The third measure, Lugar Practical Energy and Climate Plan S 3464 by Republicans Senators Richard Lugar and Lindsay Graham is a “possible bipartisan framework for making progress on energy driven national security, economic, and environmental concerns.”

The Plan would reduce by over 40 per cent the need for foreign oil; cut energy use by 11 per cent; cut greenhouse gas emissions by more than 20 per cent over “business as usual” by 2030. This climate savings trajectory meets nearly half of President Obama’s 2020 climate goal.

Barack Obama’s (June 15 2010) powerful speech from the Oval Office to the American people, at a time when the BP oil spill disaster in the Gulf is a blow to the American psyche deliberately made no mention of the Kerry-Lieberman bill.

The problem is that the Republicans won’t swallow the  carbon cap and trade  measure.. Democrats would like it,, but they can’t secure the support of 60 Senators for passing such a requirement. But in a design to secure wavering Republican support for some meaningful legislation, Obama mentioned the other two proposals before the Senate.

Obama said in part: “ Last year, the House of Representatives passed a strong and comprehensive energy and climate bill- a bill that finally makes clean energy the profitable kind of energy for America’s businesses. Now, there are costs associated with this transition. And there are some who believe that we can’t afford not to change how we produce and use energy- because the long term costs to our economy, our national security, and our environment are far greater.”

“ So, I’m happy to look at other ideas and approaches from either party – as long as they seriously tackle our addiction to fossil fuels. Some have suggested raising efficiency standards in our buildings like we did in our cars and trucks. Some believe we should set standards to ensure that more of our electricity comes from wind and solar power. Others wonder why the energy industry only spends a fraction of what the high tech industry does on research and development- and want to rapidly boost our investments in such research and development.”

“All of these approaches have merit, and deserve a fair hearing in the months ahead. But the one approach I will not accept is inaction.”

The excellent  online newsletter on Congress, Politico.com (June 17 2010), said that the Senate Democrats held a special caucus meeting on the three bills. But there was no consensus, on which bill was likely to gather sufficient support for a bipartisan energy and climate bill could emerge on the floor of the Senate,  before the August recess. The November elections is expected to hand ccntrol of both Huses back to the Republicans, so time is short. Another caucus meeting is tentatively scheduled for next week.

The Democrat Majority would like to get through the floor of the Senate a climate and energy bill that puts a price on carbon, but they lack the numbers to execute such a plan.

What is likely to happen in a consensus measure, is one which  cobbles together pieces from all three bills. No cap and trade for the US economy as a whole,. But possibly some measure which includes  a mandated reuirement for power plants to use less hydrocarbons and more renewables. This would be accompanied by large tax benefits for the energy utilities to dramatically increase their renewable energy facilities in wind and solar power.Also a ban on new coal fired power plants. That would be a big advance to the bits and pieces the US has now.

After all, seven of the largest electric utilities- AES, Duke Energy, Exelon, NextEra Energy, NRG, PG&E, PNM Resources are members of the US Climate Action Partnership, which says “we are committed to a pathway that will slow, stop and reverse the growth in US emissions, while expanding the US economy.”

Other large greenhouse gas polluting companies in the Climat Action  group  include DuPont, Dow Chemical, Alcoa, Shell Oil, Rio Tinto, General Motors, Ford and Chrysler, which share the same passion with some leading environmental organisations, who are also members of the partnership.

by Ray Block

When China paraded its energy efficiency qualifications at the Copenhagen climate change conference, many observers were cynical, believing that Chinese statistics were regularly fudged.

Even when McKinsey consultants on assignment in China regularly reported that the Chinese were junking obsolete energy intensive plant and equipment and replacing them with energy efficient, low carbon equipment, the too smart western observers refused to believe them.

Xiong Yan, chairman of the China Beijing Environment Exchange and China  Beijing Equity Exchange at the Eight Transnational Corporations China Forum (China.org.cn March 2 2010) said that China’s decision to reduce the intensity of carbon dioxide emissions per unit of GDP by 40 to 45 per cent by 2010, compared with the levels of 2005, will require changes to the law and policy, and cause improvement of the development of technology.

“It will transform the structures of economy, industry and energy, including the area of renewable energy, energy efficient, forest carbon sinks, low carbon transportation and pattern of consumption,” Xiong said. The Chinese energy efficiency drive is on top of a “reduction of carbon emissions per unit of GDP by 47 per cent from 1990 to 2005, and I believe it is practicable to achieve its goal for 2020.”

Chinese Premier Wen Jinbao, in addressing a State Council meeting of conserving energy and cutting emissions in Beijing on May 5 2010, called for more efforts to cut emissions and conserve energy to meet the country’s targets set by the 11th Five Year Plan, (China Daily china.org.cn).

New targets to shut down outdated 10GW capacity of small coal-power plants, 25 million tonnes of small iron smelting, 6 million tonnes of steel production, 50 million tonnes of cement, 330,000 tonnes of aluminum, 6 million containers of glass sheets and 530,000 tonnes of paper production within this year.

All these closures are being achieved by administrative measures, with the “new targets distributed to local governments and enterprises by the end of May. The enterprises involved are expected to be closed down by the end of September. Local officials and executives of enterprises will be taken to task if their specific energy efficiency targets are not met by the end of the year.”

The environmental costs in the transformation to a fast growth economy have been very high, resulting in unacceptable levels of atmospheric pollution, and in water pollution.

by Ray Block

Having won the fight over national health insurance, followed up by financial reform bills now in the conference stage to be reconciled between the House and Senate, to achieve the trifecta with a climate and energy act in 2010 would be a tremendous achievement for President Obama and the Democratic Party.

Every step of the way to legislative reform in the US Congress has been bitterly fought over, with the Republicans fighting rear guard action much in the way of military campaigns, with few defecting to the other side.

There is still a long way to go before the climate and energy bills become law, but some headway is being made. Here are some road signs:

* Bloomberg (May 28 2010) reports that China will likely set up a domestic market for trading carbon emissions by 2014. Polluting companies would have “half mandatory” targets for their greenhouse gases. Feng Shengbo, deputy director of the China Clean Development Mechanism Management Centre said this in an interview.

The market would be run by trade associations overseen by the government. “From the government point of view, an absolute reduction is not realistic for China at the current stage.” Feng said that he didn’t think the targets would be “very hard.”

* The E&E group which publishes a number of excellent newsletters on climate and energy policy issues reported on May 28 2010 that Senator Lindsay Graham, leader of the moderate faction of the Senate Republicans, said that “we do need to price carbon to make nuclear power and the wind and solar and some alternative technologies economically viable.”

“The electric utility industry is most in need of a market signal for pricing greenhouse gases, while other major industries could be left out of a new US carbon market, especially if it means finding enough votes to pass a bill in the Senate.”

The Greenwire unit of the E&E publishing group says “Graham maybe on to something.”

It went on to say that “Beyond Graham, several other Senate Republicans seen as critical for passing a climate bill have also expressed an interest in a less sweeping plan for controlling greenhouse gases including Senators Judd Gregg of New Hampshire, Lamar Alexander of Tennessee, George Voinovich of Ohio and Richard Lugar of Indiana.”