America 2021: What Next on Climate?

The effort to address climate change stumbled with the failure to pass cap-and-trade. What should happen now? Five experts discuss the future of U.S. climate and energy policy.

Walsh: At the same time, we’ve heard a lot of this before, in 2009 and 2010, during the effort to get cap-and-trade legislation passed. But despite a fairly positive legislative makeup that we’re not likely to see again any time soon, cap-and-trade did not succeed. Without getting into the magic of the filibuster, was cap-and-trade’s failure attributable to our politics, or was it indicative of something about that policy that needs to be changed?

Roy: A couple big things happened. One is that we had a terrible economy. It’s very tough to pass major environmental legislation in a bad economy. And the other thing is, frankly, it’s tough to pass major environmental legislation under a Democratic president, because the moderates of either party tend to run from their president when their president is in office. That tends to be true when Republicans are in office, which is why almost all of our major environmental laws—the Clean Air Act, the Clean Water Act, our hazardous waste laws—were passed under Republican presidents. And it has been true when Democrats are in office, which is why we rarely pass tough environmental legislation under Democratic presidents.

Shultz: You said that it was a really favorable political climate. I would argue that maybe wasn’t the case. This is an issue that is about party, clearly, but regional politics come into play. We have these very entrenched interests in some regions, like in the Midwest and Appalachia, where coal is dominant, or in the South, where oil is king. It is no secret that the Southern Company, the dominant electric utility in the Southeast, was lobbying delegations in its region hard to oppose any kind of constructive proposal on carbon. This made it extremely difficult to pass any kind of climate policy. It’s going to take awhile to get past some of those regional barriers.

Laskey: I think it was about not having constructed quite the right policy. These things are intertwined, of course, but it was the policy that went off track. We couldn’t get something passed because people like Arkansas Senator Blanche Lincoln couldn’t vote for the bill that was in front of them. But Arkansas just passed at the state level an energy efficiency resource standard. All the utilities in Arkansas are fully on board with achieving certain efficiency targets. Is the standard as high as it could have been or will be? No, but they’re on board.

While we should be offering a big vision, this is an incremental fight. We need to move the ball down the field, step by step, and there was too little willingness to do that.

Walsh: Joe, you were obviously a player in this arena. What’s your feeling on this?

Aldy: I agree that the politics are complicated by regional differences and interests. One of the things we learned in 2009 and 2010 is that there is growing distaste for big, complex federal legislation. If you were at the back of the line, as cap-and-trade was, it was going to be harder to get enough people to vote on something that was going be a tough vote for them. One of the lessons is that a simpler approach to drive new investment in clean energy would be more politically palatable.

Arroyo: Cap-and-trade was an idea that a lot of people really embraced. The left eventually embraced it, the companies said they wanted it, the Republicans said they were the fathers of it. And yet, when you got to the climate vote, people ran away from it. It might be that while theoretically it’s the most efficient way to solve the problem, such a piece of legislation ends up being very big and complicated. We had conversations back when I was at Pew with members of Congress who told us: “This is big and complicated. I like simple and sectoral, and something that I can see and get my arms around.”

Roy: This illustrates an important issue. We all talked about how complicated this cap-and-trade bill was, and how there’s a big aversion to passing big and complicated legislation. But the House just passed a continuing resolution, H.R. 1, that was unbelievably complicated, hundreds and hundreds of pages long. No one could possibly tell you the effect of that bill on the U.S. economy. It was probably one of the most complicated pieces of legislation ever passed by the House, driven by a Republican Party that has an aversion to big complicated government legislation. So it’s more the perception of complication than the actual complication that’s the problem.

Arroyo: But the allocation scheme in cap-and-trade, you have to admit, was complicated.

Roy: Definitely. But the EPA now has to come up with command-and-control power-plant standards as mandated by the Supreme Court in Massachusetts v. EPA. I bet they will be subcategorizing by fuel, by boiler type, by turbine type—that’s going to be an incredibly complicated standard. People don’t really understand how byzantine the EPA rulemaking process is. Also what people don’t focus on is that the EPA process does not give us incentives for new technology and innovation. You go into a factory today, and they’re using the same pollution-control technology the EPA based their standards on 20, 30 years ago.

Aldy: Manik, I don’t think we’re ever going to see a final power-plant rule from the EPA on greenhouse-gas emissions, so we’re not going to have to worry about how ugly and complex they are. At the end of the day, either because of some deal among Democrats and Republicans, or because the Democrats aren’t going to keep fighting to protect EPA authority, the rule will be modified or delayed or changed, one way or another. I just don’t think the politics are sustainable to maintain EPA authority.

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