Energy Innovation Act: Strong and comprehensive
Here is a bold claim, but one worth making: the Energy Innovation and Carbon Dividend Act (H.R. 7173) may be the strongest and most comprehensive climate bill ever submitted to Congress.
The strongest, because it sets emissions reduction targets of 90% below 2015 levels by 2050, and the most comprehensive because it addresses all fossil fuel combustion in the U.S., plus super-pollutants like fluorinated gases. Previous bills have set overall targets of 80% emission reductions, or set targets of 100% reductions but only for certain sectors, such as electricity or transportation.
But we also want to be clear: the Energy Innovation and Carbon Dividend Act alone will not solve climate change. It can forge a clear path and do a huge chunk of the work, but no one should expect any single policy to solve climate change by itself.
There is a growing consensus, including from the Intergovernmental Panel on Climate Change (IPCC), that establishing a strong price on carbon is an essential piece of meeting our emission reduction goals. This policy would do just that with a carbon fee starting at $15 and rising steadily by at least $10/year. Even more, the policy has strong environmental integrity mechanisms, with specific emissions reduction targets set for each year through 2050. If those targets are not met, the carbon price is increased by $15/year instead of $10/year.
And these targets are far better than what the U.S. pledged in Paris (26-28% reduction from 2005 levels by 2025), or what was expected from the Clean Power Plan (32% reduction in electricity sector by 2030). They are even stronger than the targets set by California for its cap and trade system (80% reduction from 1990 levels by 2050). The targets in H.R. 7173 were written to meet the goal of staying below 2 degrees Celsius temperature rise set by the IPCC before Paris and are in line with some, though not all, of the recently released IPCC suggestions for staying below 1.5 degrees Celsius temperature rise.
Some may be concerned that the carbon price is not high enough, given that some models included in the IPCC 1.5 degree report showed a need for much higher prices. But economic modeling often underestimates innovation, especially 20 or 30 years out. For instance, projections have consistently underestimated the drop in solar prices and the extent of solar deployment, even when predicting just five years in the future. Given the power of American ingenuity and innovation, we are likely to see emissions reductions respond faster to a steadily rising carbon price than economic models would predict. Plus some of those models assumed that the carbon price was the only policy in place, which is not the world we expect.
But what then about the limits on regulations? This policy would limit EPA regulations on greenhouse gases covered by the carbon price, as long as emissions targets are being met. If, after 10 years, targets are not being met, the policy calls for the EPA to implement additional regulations to meet those emission reduction targets. This gives clear direction to the EPA from Congress that would prevent the type of court challenges that have hampered policies based on the current authority of the Clean Air Act — policies that have yet to be enacted almost 10 years after that authority was confirmed by the Supreme Court.
Plus the policy provides for continued authority for the EPA to keep our air and water clean and healthy, and allows the continuation of vehicle mileage standards. Even more, it explicitly preserves the rights of states and municipalities to regulate greenhouse gas emissions, or to enact whatever climate initiatives they like.
And, of course, Congress can always enact further legislation addressing climate change as it sees fit (or, more likely, as the public demands it). If you would like to see incentives for building soil carbon, tax incentives for energy efficiency, funding for infrastructure like grid modernization, job programs for highly impacted industries like coal, adaptation for those affected by rising seas, or funding for research, development, and deployment — all of those tools remain available to Congress.
Even more remarkable is that this bill, possibly the strongest climate bill yet, might also have the best chance of passage, as no other in the last 10 years has been introduced with the bipartisan support needed in our current politics.