By Sherry Listgarten
"One of the biggest failures in 50 years of energy policy"Uploaded: Feb 20, 2022
Stanford recently invited John Deutch, a Professor Emeritus at MIT with decades of experience in energy policy and energy security, to do a short series of lectures on 50 Years of Energy Policy -- Lessons for the Future. The lectures are live streamed for the public, so I was happy to watch the first two, and something caught my attention.
Deutch seems like a pretty low-key guy, but he got agitated when talking about the failure of the Waxman-Markey bill during the first years of the Obama administration. He called it “one of the most flagrant mistakes by a president” and “one of the biggest failures in 50 years of energy policy”. I am embarrassed to say that I had no idea what it was, so I read up on it and thought it would be interesting to consider in this blog what lessons we should take away from its failure.
The Waxman-Markey bill was developed in 2009 by Representatives Henry Waxman (D-CA) and Edward Markey (D-MA). It was an ambitious piece of legislation (1000+ pages!) designed to rein in greenhouse gases. It contained critical support for reducing emissions and easing the energy transition, including a progressive cap on emissions covering 85% of the economy, a renewable electricity requirement, and funding for energy efficiency, EVs, the grid, job transitions, equity, adaptation, and innovation. Billions of dollars were set aside for carbon capture and storage. Funds were allocated to help other countries preserve forests and adapt to climate change. The bill also called for the expansion of offshore oil drilling, natural gas production, and nuclear energy.
Deutch referred to it as a “Christmas tree bill,” with a little something for everyone. This was by design to get enough votes and votes from key people. For example, the cap-and-trade structure was chosen in part to appeal to Republicans. (They supported a similar market mechanism in 1990 to cap the sulfur dioxide emissions that were causing acid rain.) The bill’s funding for carbon capture helped win over representatives from coal-dependent states, and expanded offshore oil drilling sweetened the deal for representatives of the gulf states and Alaska. Companies including PG&E, Shell Oil, General Electric, and Ford were supportive of it, as were some unions, including the United Mine Workers and the United Auto Workers. Union of Concerned Scientist representative Liz Martin Perera approved: “Henry Waxman and Ed Markey did a masterful job getting this bill through a very tough Energy and Commerce Committee that includes climate science contrarians and members of Congress who are sympathetic to coal and oil interests.”
The bill passed the full House on June 26, 2009 with a vote of 219-212. (44 Democrats voted against it and 8 Republicans supported it.) But after that it ran into headwinds, and the bill died in the Senate on July 22, 2010 when Senate Majority Leader Harry Reid refused to take it up because the votes just weren’t there, despite a Democratic majority of 59 Senators. What happened?
Some of the complaints about the bill
There were a variety of complaints about the bill. Representatives for the oil and gas industry called it “draconian” and said it would “trigger destructive change in America’s economic climate.” The Tea Party and Fox News referred to it as a “gas tax” and a “jobs killer”, a bill that would start a trade war and take money from the American people while China and India continued to pollute.
At the same time, representatives for some environmental organizations said it was too weak. The emissions caps were too generous, there were far too many free allocations in the cap-and-trade scheme, and in a major giveaway to the coal industry, the bill stripped the EPA of its authority to regulate carbon dioxide emissions via the Clean Air Act. (1) The concern was that the bill was too generous to industry, and in particular to the biggest corporate polluters, while doing relatively little for the general public to reduce emissions or prepare for the energy transition.
In between these far-right and far-green opponents of the bill were most Democrats, some Republicans, and the remaining environmental organizations. Their sense was that the bill was as good as we could get and it would be a fine starting point with programs that could be adjusted over time. As David Jenkins of the Republicans for Environmental Protection said: “The Waxman-Markey bill is an imperfect product of the legislative sausage factory and contains plenty of unsavory political byproducts, but lawmakers — Republican and Democrat alike — should work constructively to improve and pass it. Every year that we fail to enact legislation to reduce carbon emissions, climate change becomes more difficult and costly to address. The responsible, and conservative, course is to act now.”
In retrospect, that seems pretty on the nose. Although the bill was indeed weak in some respects -- we have already reduced our emissions 22% below 2005 levels without the bill, which called for a 17% reduction -- many states continue to lag on renewable electricity, we have no mechanism to ratchet up emissions reductions, and funding for innovation, the grid, and EV infrastructure has been anemic while China has leapt ahead.
Why did Waxman-Markey fail in the Senate?
There was a lot of analysis after the bill died in the Senate. Critics cited the usual structural problems with the Senate: two-party polarization, obstructionism, and the need for a super-majority amidst many thinly-populated fossil-dependent states.
Senator Joe Manchin (D-WV) promised to “take dead aim at the cap-and-trade bill”. Source: Joe Manchin on YouTube
There was also the undue influence of lobbyists. Lee Wasserman wrote in a New York Times op-ed: “If President Obama and Congress had announced that no financial reform legislation would pass unless Goldman Sachs agreed to the bill, we would conclude our leaders had been standing in the Washington sun too long. Yet when it came to addressing climate change, that is precisely the course the president and Congress took.” One study by the Energy Policy Institute at the University of Chicago estimated that lobbying decreased the bill’s chance of passing from 55% to 42%. The resulting complexity of the bill made it more susceptible to attacks because people couldn’t understand it. The weakened economy at the time (the Great Recession spawned by the mortgage crisis) didn’t help either, with job and financial insecurity raising fears about the impacts of such a wide-ranging bill.
But most of the blame seemed to be directed at (a) Obama and (b) the general public. Yes, you and me.
Many critics blamed President Obama’s hands-off approach for the bill’s failure. While Obama dove into the negotiations over the bank bailouts, healthcare legislation, and Wall Street reform, helping to craft compromises and move the legislation ahead, he stayed “above the fray” with climate change and largely delegated it to Congress. Journalist Andrew Revkin documented his lack of assertiveness in an op-ed for the New York Times, saying his middle-of-the-road stance meant he did little to challenge misinformation, he didn’t bring in experts to educate his staff, and he didn’t give speeches about the dangers of climate change once in office. When the administration did talk about Waxman-Markey, it was more about creating jobs and less about addressing the threat of global warming.
Obama may well have chosen that approach because the public showed little interest in climate change. An in-depth analysis in The New Yorker pointed out that a Pew Research Center poll done in January 2010 ranked climate change dead last in importance of 21 issues.
Top priorities of the public for 2010. Source: Pew Research Center
Instead, the main influence on Senators were the vested interests (e.g., the American Petroleum Institute) who stridently opposed the bill because they had the most to lose. Paul Saunders, who at the time was Executive Director of the Nixon Center, summed it up as follows: “Who killed the climate-change bill? Lots of people. At a tactical level, Senate Republicans, with help from coal-state Senate Democrats. At a strategic level, President Barack Obama, who decided to make health-care reform his No. 1 priority. At the most fundamental level, however, the American people killed the bill.” Lee Wasserman agreed: “The loudest voices insisted that leaders in Washington do nothing. They obliged.”
Can a carbon price ever be successful?
What lessons do we take away from this? Can another attempt have a different outcome? More people seem to care now about climate change, but we still seem to have many more pressing issues.
Top priorities of the public for 2022. Source: Pew Research Center
The Senate is no different than it was ten years ago, and neither party is close to a 60-person majority. But there are differences. Financial institutions and big corporations are increasingly aware of the financial and economic risks of climate change, and people are less trusting of what the big oil companies have to say. More people are directly experiencing the effects of our changing climate. And there is much more information about climate change in the media. So I believe there is hope.
My lessons learned from the failure of Waxman-Markey would be:
1. The President needs to lead, with more attention to the financial and economic impact of climate change on states, some of which we are already seeing. Tout the opportunity for workers, residents, and industry of a green transition. The cost of doing little is high, and the benefits of a well-funded transition are many.
2. The bill must be substantially bi-partisan, not only to pass but also to persist through subsequent administrations. Focus on benefits that matter to both parties, such as well-paying jobs, the economy, and innovation. (2)
3. Small and simple is better than big and complex. People can better understand, trust and support a simpler bill, and built-in checks and ratchets can ensure it has teeth over time. It is better to start somewhere and get people pulling in the same direction than to not start at all. (But then we need to keep a lid on the concessions.)
4. The public must speak up, especially in rural and fossil-dominated states, to counteract the moneyed fossil interests. Economist James Boyce says: “Fossil capital is likely to oppose any policies that would sweep its assets into the dustbin of history. The only way to overcome this opposition is to build a broad and deep alliance among everyone who puts the long-term well-being of our children, our grandchildren, and humankind ahead of the short-term greed of those who profit in the fossil-fuel status quo.”
5. The bill should include substantial funding for R&D in negative emissions. Any bill that passes will be too weak and too slow, so our reliance on this is only increasing.
What do you think? Is it possible to get some form of lasting, effective (over time) climate legislation through Congress? If so, what will it take, and when is the right time?
Notes and References
1. Sadly, this is an authority the EPA now may soon lose, with nothing to trade for it.
2. The economy is currently an example of such an issue, as are jobs and competition with China.
Partisan gaps for different 2022 priorities. Source: Pew Research Center
Current Climate Data (December 2021)
Global impacts, US impacts, CO2 metric, Climate dashboard
How can the US lead on climate when this inequality is so glaring? I think it has to be through innovation. Source: CarbonBrief
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