Tuesday, February 24, 2009

President Obama's Energy & Climate Bills Should Include

President Obama's energy and global warming bills should complement each other by placing a mandatory cap on carbon dioxide (CO2) and other greenhouse gas emissions and raise automobile fuel economy standards to 42 miles per gallon. We support a cap-and-trade program but do not support auctioning the initial allowances that are the 'currency' of the program. Auctioning the initial allowances to the utilities instead of allocating them free is a back door tax because the expense will just be passed on to ratepayers by the utilities. It makes the program too complex to have the allowance funds to go to the federal government to then be used for renewables projects and paying the energy bills of low-income households. The Obama administration should copy the EPA Acid Rain Program. Botched electricity utility deregulation is already increasing prices for customers.

The Obama administration also appears to be backing off of using the Clean Air Act to regulate CO2 through EPA promulgation, preferring instead to rely on specific Congressional legislation to address climate change mitigation. We agree with this approach. The 42 m.p.g fuel standard in an energy bill will cover transportation global warming mitigation and will also cover EPA's waiver request from California, which wants to implement its own standard that would exceed the Energy Policy Act of 2005's 35 m.p.g. Such legislation will also cover the northeastern states' Regional Greenhouse Gas Initiative (RGGI) and such initiatives in other areas of the country.

Finally, we need an international climate change treaty that includes China and India as a precursor to our own climate change legislation. If we do not have cooperation from these countries, it will not matter what we do to curb greenhouse gas emissions. Such a treaty should also be harmonized with Kyoto II that will be considered in Copenhagen later this year.

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