House Committee Releases New Climate Change White Paper

May 27: As the Senate prepares for its historic vote on the Climate Security Act (S. 2191), scheduled for June 2 [See WIMS 5/21/08], the House Committee on Energy and Commerce and its Subcommittee on Energy and Air Quality, are issuing another in a series of Climate Change Legislative Design White Papers as their next step toward enactment of an economy-wide climate change program. The fourth White Paper, is entitled “Getting the Most Greenhouse Gas Reductions for Our Money.”

The White Paper discusses ways to keep costs as low as possible while still achieving environmental goals. In a brief memo to Committee members, full Committee Chair Representative John Dingell (D-MI), and Subcommittee Chair Representative Rick Boucher (D-VA) encouraged members to review the papers and share their views and suggestions "regarding the potential methods for limiting the cost and maximizing the efficiency of a mandatory, comprehensive, climate change program." They said they would be holding hearings on the papers.

According to the latest paper if the climate change program is structured properly, significant cost reductions can be achieved by economically beneficial measures. "In large part, these measures are improvement in energy efficiency and productivity. The decision to have a cap-and-trade regulatory program as the cornerstone of a mandatory climate change program is driven in large part by the ability of such a program to reduce greenhouse gas emissions to a specified level [i.e. 60-80% by 2050] at the lowest possible overall cost to society and to lower the cost for regulated entities. As compared to more traditional forms of regulation, a well designed cap-and-trade program generally should achieve the same environmental results at a lower cost because it provides flexibility to emitters, creates incentives for sources to use low-cost compliance strategies, and provides incentives for technological advances."

The White Paper indicates that, the cap-and-trade program will include two important features to help reduce costs: (1) Regulated entities and other market participants will be able to "bank allowances" for later use; and (2) Regulated entities will also be able to use "offsets," provided they are real, verifiable, additional, and permanent. The paper also suggest that the Committee should consider a number of other optional features of cap-and-trade programs to help reduce costs including: "firm-level borrowing;" "compliance period longer than a year;" "a special cost containment mechanism to release additional allowances;" and, "setting a floor for allowance prices."

Access the Memo to Committee members (click here). Access the complete 43-page fourth White Paper (click here). Access the Committee's Climate Change website for links to all papers, letters, releases and related information (click here). Access WIMS-eNewsUSA blog posts on the White Papers (click here). [*Climate]