House Committee on Energy and Commerce white paper calls for ambitious legislative goals, indicates possible cap-and-trade consensus.

On October 3, 2007, the House Committee on Energy and Commerce, chaired by Rep. John D. Dingell (D-MI), released the first in a series of white papers on the subject of global climate change legislation. Future white papers will address cap levels and timetables, allowance allocation, offsets and credits, developing countries cost containment and carbon sequestration. In this first white paper, entitled "Scope of a Cap-and-Trade Program," Chairman Dingell and the House Committee make three noteworthy conclusions:

  • The United States must reduce its greenhouse gas emissions by 60 to 80 percent by 2050 in order to participate meaningfully in international efforts to address climate change.

  • A mandatory, economy-wide cap-and-trade program is the most effective means of achieving the required emissions reductions.

  • A cap-and-trade program will be the central component of forthcoming, comprehensive climate change legislation.

The House Committee’s white paper is significant in large part because Chairman Dingell has long been a vocal critic of exchange-based climate change proposals, preferring instead a "carbon tax" as a potential alternative to a cap-and-trade system. Dingell made his ambivalence public during a July 8, 2007, C-SPAN interview, in which he said, "I sincerely doubt that the American people are willing to pay what [global climate change legislation] is really going to cost them." He added, "I will be introducing . . . a carbon tax bill, just to sort of see how people really feel about this."

Despite Chairman Dingell’s earlier statements, he and the House Committee now both appear to be committed to pursuing an aggressive cap-and-trade approach to global climate change. One indication of this shift appeared as recently as September 27, 2007, when Chairman Dingell released a summary of his proposed carbon tax legislation through his website and acknowledged that a tax-based solution would necessarily be only one part of a "multi-pronged approach" centered upon "an economy-wide cap-and-trade program." Arguably, the House Committee now goes even further, stating that "[w]e start with a strong presumption that all U.S. greenhouse gas emissions should be covered by the cap-and-trade program." Although the white paper acknowledges that "[e]ven with a broad-based cap-and-trade program, complementary measures (such as a carbon tax or other tax-based incentives . . . ) will also be needed," Chairman Dingell’s support for an aggressive cap-and-trade system as the foundation of any new climate change legislation is now on the record in unambiguous terms.

Further, the House Committee’s white paper suggests that Congress (or at least a critical constituency within the House of Representatives) currently favors an aggressive, economy-wide solution to global climate change, as opposed to a more limited, targeted approach. Some recent climate change proposals have suggested regulating only certain sectors of the economy, namely the electricity generation facilities that currently account for roughly one-third of the nation’s total greenhouse gas production. The white paper dismisses any such limited approach as incapable of achieving the "dramatic emissions reductions" necessary in order for a global climate change program to succeed.

The Emerging Legislative Approach

The approach outlined in the House Committee white paper calls for ambitious legislative goals in the three areas most critical to any comprehensive climate change program. These "three Cs" of climate change legislation are the emissions covered, the entities capped and the target concentration of atmospheric greenhouse gases ultimately sought.

Coverage
Noting the potentially severe impact of greenhouse gases other than carbon dioxide, the white paper calls for federal regulation of methane, nitrous oxide and fluorinated gases, as well as carbon dioxide.

Cap
The white paper also calls for a mandatory, economy-wide emissions cap designed to account for all greenhouse gas emissions, regardless of size or source. To balance the need to have a "workable program" with the goal of total coverage, the white paper explains that although all sources would be covered, different sectors of the economy could be regulated differently. For example, the greenhouse gas emissions of electricity generators, which are already accustomed to the Acid Rain Program created by the 1990 Clean Air Act Amendments, likely would be regulated through a similar site-specific, allowance-based permit system. In contrast, emissions from the transportation sector, which account for more than a quarter of all U.S. greenhouse gas emissions, would likely be regulated "upstream" through petroleum refiners and importers.

Concentration
Most significantly, the white paper calls for an overall stabilization of the atmospheric concentration of greenhouse gases at a level of between 450 and 550 parts per million. Aside from setting an objective numeric standard that could be readily imported into the next generation of international climate change agreements, the concentration limit embraced by the white paper commits Congress to a cap-and-trade approach. Although a carbon tax, such as the one recently outlined by Chairman Dingell, may reduce the amount of greenhouse gas emissions by forcing sources to more accurately account for the environmental cost of their activities, only a cap-and-trade system can guarantee the attainment of a specific emissions goal.

The House Committee white paper may prove to be a milestone in Congress’ effort to enact global climate change legislation. It marks the culmination of more than a year of lawmaking that included six bills and 17 hearings in the House Committee on Energy and Commerce alone. It also possibly marks an emerging consensus among House leaders on a cap-and-trade approach to climate regulation. Future white papers from the House Committee and guidance from key lawmakers, such as Chairman Dingell, will reveal whether this nascent cap-and-trade consensus is real.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.