With Democrats taking control over the House of Representatives and its agenda, climate change is back as legislative priority. It’s been more than a decade since the last major debate and vote on a climate bill. While some of the proposals, debate and actions will be déjà vu for those who remember the climate debate a decade ago, one factor has changed: public opinion. Whether you’re a climate zealot, climate denier or somewhere in between, there appears to be recognition that consumers need to be more energy efficient and that new technologies will play a role in how we transport people and products.
To prepare for the next phase in the climate change debate, let’s look at the potential proposals that will be considered and what may happen in Congress.
Climate Change Goals
The primary objective of climate change policy is to eliminate all fossil fuel-powered electricity, ban fossil fuels and reduce greenhouse gas emissions from manufacturing, agricultural and transportation sectors of the economy. Policymakers can use either the stick or the carrot approach to achieve their objectives. They can employ mandates and use the tax code to make it difficult and expensive to produce, sell and use fossil fuels, or they can use incentives and subsidies and provide preferential treatment to clean energy technologies. Or, they can use a combination.
Mandates and Subsidies
As part of the “Green New Deal,” several members of Congress are pushing for a specific date to end domestic oil, gas and coal production, along with mandating net zero greenhouse gas emissions by 2030. They also support 100% renewable electricity within 10 years and mandating more stringent energy efficiency standards for buildings and appliances. Others in Congress are seeking to use the regulatory process to give preferential treatment over certain alternative technologies, such as electric vehicles, to meet the Corporate Average Fuel Economy (CAFÉ) standards.
Supporters of a Green New Deal bill hope to introduce legislation soon, but legislation had not been introduced as of February. Several key stakeholders support including the goal of net zero greenhouse gas emissions by 2030, but object to including a specific date for ending fossil fuels (coal, oil and gas).
Cap and Trade
Cap and trade is a market-based system where the government caps the amount of greenhouse gas emissions and creates a trading system where companies can buy and sell credits of emissions to comply. Supporters of a cap-and-trade system believe it can lower emissions while providing more flexibility to manage costs. Opponents believe a cap-and-trade system is costly and creates more uncertainty in the true cost of reducing greenhouse gas emissions.
In a close vote, the House passed cap-and-trade legislation a decade ago, but it died in the Senate where it was defeated by a bipartisan vote. Speaker Pelosi has said she might revive this legislation, but there is little momentum to revisit this proposal.
Several bills with bipartisan support have been introduced imposing a carbon tax and include a consumer rebate.
Carbon Tax
A carbon tax is a government-imposed fee on fossil fuels to reduce the emission of carbon dioxide; companies that burn coal, oil or gas would pay this tax. Supporters of a carbon tax believe that making fossil fuels more expensive encourages utilities, businesses and individuals to reduce consumption and increase energy efficiency and would also make alternative energy more cost-competitive with cheaper fuels such as oil, gas and coal. Many policymakers who support a carbon tax recognize that it will increase the costs of energy and consumer goods and would like to see a consumer dividend or rebate included in any legislation. Opponents of a carbon tax are concerned with the increase in costs of energy and all goods and services, how the revenue generated by a carbon tax would be spent, and that this is just another tax on top of the numerous and expensive taxes and fees already placed on individuals and businesses.
Recently, several bills with some bipartisan support have been introduced imposing a carbon tax and include a consumer rebate. These proposals have been gaining support by economists, some business groups—including energy companies—and some environmental groups. If support is gained by a diverse group of stakeholders, a carbon tax will receive serious consideration by policymakers.
What’s Next?
Most of the activity and attention on climate change will take place in the House of Representatives. In January, House Speaker Nancy Pelosi announced the formation of the House Select Committee on the Climate Crisis, with Rep. Kathy Castor (D-FL) chairing the new select committee. Though the committee has no legislative or subpoena authority, it will be conducting hearings and making recommendations to standing House Committees on climate change.
In addition, many diverse bills will be introduced to ensure all ideas and proposals are in the mix for the long-term climate debate. House committees beyond the Select Committee on the Climate Crisis will hold hearings. Democrats are looking well beyond traditional committees with jurisdiction over the environment—they view this as a national security issue, a public health and safety issue and an economic issue. With respect to the Senate, it is unlikely that broad climate change legislation will move in this Congress. However, there may be efforts to move or add smaller or more narrow items in other bills, such as a highway and infrastructure package.
While unlikely that a large climate bill will make it through the entire legislative process this Congress, it is important to be prepared for all scenarios and possibilities and engage from the beginning of the process. Large energy and environmental laws took multiple Congresses until they finally became law. Because policy affecting energy and transportation is critical to the convenience and fuel retailing industry, NACS will continue to oversee and engage throughout this process.