Report Takes Aim at Climate Bill’s Giant Carbon Polluter Loophole

Red Flag Warning

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A detailed analysis released today by two environmental organizations raises a red flag on the carbon offsetting provisions of the leading climate bill now moving through Congress.

The report from International Rivers and the Rainforest Action Network calls for removing giant carbon pollution loopholes from the Waxman-Markey bill, also known as the American Clean Energy and Security Act of 2009 (ACES). Otherwise, the report warns, the carbon cap will fall far short of hitting its targets.

The report says:

Unfortunately the “firm” caps exist only on paper. In reality, the caps will be blown to pieces by allowing polluters to meet their emission reduction responsibilities through buying offset credits rather than reducing their emissions.

The draft legislation allows for what the report calls "stunningly high levels of offsets" – 2 billion tons annually, the equivalent of about a third of current U.S. emissions.

It means the offsets would allow polluting companies to keep pumping carbon into the atmosphere by paying others to reduce emissions instead, a practice analagous to trying to lose weight by paying someone else to go on a diet.

Proponents of the bill argue that the atmosphere is a single "body," and so the offset mechanism can be used to reduce the level of global carbon concentrations as a whole. But the new report provides strong evidence that offsets are notoriously unreliable.

Mostly, it says, offsets are fake, and it will prove close to impossible for the EPA to police carbon dieting both at home and around the world to assure that emissions reductions are delivered. The result of the offsets would be the creation of a "sub-prime carbon industry" that undermines reductions goals.

Two billion tons of carbon dioxide is greater than the reductions from 2005 emission levels required each year through to 2026. Using this quantity of offsets would allow capped emitters as a whole to increase their emissions by 38% by 2012. These major polluters would not have to cut their emissions back to 2005 levels for another 17 years from today.

If all eligible offsets were used, the 20% reduction supposed to happen by 2020 would not actually be reached until 2036. The reduction in 2050 would be only 50% rather than the stated 83%.

The offset provisions of the bill have been among the most difficult for many green groups to swallow, but public criticism has been muted as the push to pass climate legislation through the House faces a short and narrow window, with leaders hoping to move the bill by Memorial Day.

"I can understand why green groups are reluctant to criticize the bill. It’s an excellent start, and there’s a lot to like," Mike Brune, Executive Director of the Rainforest Action Network, told SolveClimate. "The problem is the bad parts undermine the good parts and can lead to significant increases in emissions for the next couple of decades, and that’s just unacceptable."

Under the Kyoto Protocol, the European Union has been operating a carbon cap-and-trade scheme that has relied on offsets. Between 2008-2012, it is expected that 300 million tons of offsets will be needed to supply the demand each year, but most observers acknowledge that even that number of real offsets will be hard to find. The Waxman-Markey bill would create an eightfold demand on top of the existing market whose offset quality is already of questionable value.

High quality credits means a cumbersome bureaucracy to weed out all the business-as-usual projects, which means few credits entering the market. If the market were to meet potential U.S. demand, however, it would mean a speedy approvals process and a relatively open door for the cheats.

"We tried to be even-handed, but somebody has got to point out there are huge holes in the bill," Brune said. "And it will delay investments in the clean energy economy that the Obama administration wants."

Earlier this week at Georgetown University, the president spoke about the clean energy economy as a pillar of the economic recovery that the administration is trying to create.

"The only way to truly spark this transformation is through a gradual, market-based cap on carbon pollution, so that clean energy is the profitable kind of energy." Obama said. "If businesses and entrepreneurs know today that we are closing this carbon pollution loophole, they will start investing in clean energy now.

"And pretty soon, we’ll see more companies constructing solar panels, and workers building wind turbines, and car companies manufacturing fuel-efficient cars. Investors will put some money into a new energy technology, and a small business will open to start selling it. That’s how we can grow this economy, enhance our security, and protect our planet at the same time."

Up to now, the Obama administration has let leaders in the House guide the conversation of federal climate legislation, playing a quiet, behind-the-scenes supporting role. Now, as the draft bill heads for public hearings and back room deals in the coming weeks, and as the Major Economies Forum convenes in Washington at the end of April, the details of proposed U.S. action will be put under a microscope.

The report warns:

Allowing the offsets provisions in ACES to stand would be a disaster for the credibility and effectiveness of action on climate in the U.S. It would also send a very unfortunate message to other major emitters, especially the EU and China, that the U.S. considers it acceptable to respond to pressure for climate action through fake emissions reductions.

Prepare for the gloves to come off as Congress ends its recess and reconvenes next week.