Michael Levi at the Council on Foreign Relations has commented on our new discussion paper “US Status on Climate Change Mitigation” where we find, somewhat surprisingly, that the country is on course to achieve reductions in greenhouse gas emissions commensurate with President Obama’s pledge in Copenhagen. That pledge called for reductions in the range of 17 percent from 2005 levels. With the failure of Congress to adopt comprehensive climate legislation in 2010, the feasibility of the pledge was put in doubt. However, we find that the United States is reaching this goal; currently, the country is on course to achieve reductions of 16.3 percent from 2005 levels in 2020.
Another point we make is that domestic emissions over the next 8 years are probably less than would have occurred if the Waxman-Markey cap-and-trade proposal had become law in 2010. This is due to a number of factors described in the paper (and which we’ll describe here in a future post), including trends in natural gas prices and cuts due to carbon regulations under the Clean Air Act. But the most important of these is the prominent role for offsets that would have been available under cap and trade—cheap offsets would have made relatively expensive domestic emissions cuts less attractive. Levi does a fair job of describing our view and finds grounds to differ.
But there is one issue where we must be emphatic in agreeing with Levi. Focusing on 2020 can be misleading. Even if the US is on course to achieve its goals for 2020 and if emissions reductions here in the U.S. are greater than would have occurred with cap and trade, the climate is not better off than if cap and trade had passed. To achieve the kind of emissions reductions that are called for beyond 2020 requires a price on carbon because that would help achieve emissions reductions in a cost effective way across the economy and provide the incentive for innovation that will be necessary to achieve long run emissions reduction goals. Our simple main point is just this: so far the U.S. has not lost ground with respect to mitigation goals compared to the president’s pledge in Copenhagen.
That doesn’t mean that passing cap-and-trade would have been a mistake, or that we can afford to continue indefinitely without a real carbon price. But it is an interesting and surprising result that gives some insight into the complex interactions between energy trends, emissions, and policy—interactions we will have to keep in mind for future policy decisions.
UPDATE (ed.): Brad Plumer at the Washington Post summarizes the paper's findings and some critiques here.