As events unfold over the next few weeks, here are a few things to keep in mind:

40 Percent to Consumers. A group of key swing Democrats have requested that 40 percent of the allowances initially be given for free to the utility sector as proposed by the U.S Climate Action Partnership. It’s important to note that this is not a free allocation to the polluters – i.e. electricity generators. Instead, this approach essentially puts the allowance value in consumers’ pockets by distributing permits at no charge to the local utilities that provide electricity and natural gas to American households. Those “local distribution companies” (LDCs) are regulated by public utility commissions, who would be able to ensure that the utilities pass the value along to consumers. Consumer advocates like Sonny Popowsky, the Consumer Advocate for Pennsylvania and a founding member of the National Association of State Utility Consumer Advocates, see the merits of this approach. At the bottom of this post is a must-read excerpt from his testimony to the Energy and Commerce Committee a few weeks ago. An excellent explanation of the LDC approach is also available on USCAP’s website .

It’s About the Value – Not the Mechanism. The total number of allowances represents trillions of dollars in value over the life of a cap and trade program. That’s true regardless of whether the permits are auctioned or allocated for free. Permits that are auctioned generate revenue that the government can distribute to ease the transition to a low-carbon economy, and permits that are distributed for free are an asset that can be used to ease the transition just the same. Either way, Congress can and should ensure that a sufficient amount of that allowance value is used to protect consumers and help manage transition costs.

About Dime a Day. A well-designed cap and trade system that gives a percentage of allowance value to consumers can be implemented at a low cost to American households. How low? According to a new EPA analysis of the Waxman-Markey climate bill (the American Clean Energy and Security Act), an ambitious cap on carbon pollution can be met for as little as $98 per household per year – or about a dime a day per person.

In the early years the costs are even lower: Before 2012 it is zero — because the bill won’t have taken affect. By 2015, the costs “skyrocket” to 2 cents per person. Anyone who claims that now is the wrong time to cap carbon is engaging in scare tactics. EPA’s analysis sets the gold standard by using two of the most credible, transparent, and peer-reviewed economic models available. It’s not a crystal ball, but it shows clearly that household costs will be modest if a percentage allowance value is returned to consumers. That’s the same message that emerges from a range of objective economic studies of a cap on carbon, as we found in a report last year assessing the best analyses from government and academia.

So why do some opponents keep saying it will cost thousands? Either they are ignoring every credible analysis of cap and trade legislation, or they’re very bad at math. If they cite a study claiming astronomical costs, be sure to check: (1) who funded the study, (2) if the authors actually agree with the claims about their study – one MIT study was distorted by a factor of 30, according to its authors, and (3) if it was a study of the current bill.

Here’s the excerpt from Sonny Popowsky’s testimony to the House Energy and Commerce Committee: “This discussion brings me back to the NASUCA 2007 Resolution, which supports Congressional action to reduce carbon emissions, but urges that it be done in a manner that minimizes the cost to consumers and does not produce windfall gains to electric generators. The key to approaching these goals is to ensure that emission allowances are allocated properly and that proceeds from any sale of these allowances should be flowed back to the benefit of the electric consumers who are bearing the cost of this program.

“First, it should be clear that allowances must not be allocated at no cost to deregulated generators, who will turn around and charge us for them anyway. To the extent that allowances are to be given at no cost to any segment of the utility industry, those allowances should be given to the regulated local distribution companies, or LDCs. To the extent that LDCs are paid by generators for the purchase of those allowances, then, in my view, the proceeds must be flowed back to ratepayers through such means as customer rebates, energy efficiency programs, and low-income energy assistance. Just as it would be inappropriate to give unregulated generators the proceeds from the sale or use of free allowances, so too would it be inappropriate to provide this money to electric distribution utilities for purposes other than to benefit their respective ratepayers. The key point is that all electric distribution utilities in the United States are either regulated by state commissions (in the case of investor-owned utilities), or are customer-or publicly owned (in the case of co-ops and municipal and public power companies). As a result, there are reasonable mechanisms in place to ensure that the benefits of any free allowances will go to consumers.”

First the good news: Congressional leaders have announced they will move forward with broad energy and climate legislation that will include a cap on global warming pollution — the single most important step we can take to fight climate change.

The bad news: with Congress on the cusp of action, opponents are once again circulating analyses suggesting that a cap on carbon will hurt the economy and overburden consumers with higher energy costs. The latest making the media rounds comes from the George Marshall Institute.

Like several similar studies we saw during last year’s debate over the Climate Security Act, the Marshall Institute analysis consistently misrepresents economic modeling results, painting an inaccurate picture of the estimated costs of climate policy. Here’s why:

• Cherry picking numbers is a sour approach. The Marshall Institute’s study claims to be a meta-analysis, looking at economic studies of the Lieberman Warner bill (S.2191) by MIT, ACCF/NAM, CRA, CDA, EPA, EIA and CATF.¹ However, when the Institute makes conclusions about the impact of climate policy on employment and household consumption, it omits the most credible studies from its analysis, namely those by EPA, MIT and EIA.
• Household consumption. The Marshall Institute writes that “every study we examined predicts huge welfare costs in terms of consumption.” However, the Institute does not include the findings of EPA, MIT and EIA, which found the loss in consumption for 2015 to be only around 0.4 percent, less than half of Marshall’s estimate of 0.8 percent-1 percent. The Institute also cherry picks numbers by using 1 percent — the high end of its already inflated range of 0.8 percent-1 percent — to make its calculation.
• Impacts on jobs. The Marshall Institute’s conclusion that job losses will be on the order of hundreds of thousands to millions is based only on the work of ACCF/NAM, CDA and CRA. Careful examination of these studies finds them to impose artificial constraints on the economy’s ability to reduce emissions and rely on draconian assumptions that often ignore important provisions of proposed legislation. For example, the ACCF/NAM scenarios excluded banking, limited the use of offsets to 20 percent instead of 30 percent, artificially constrained CCS and assumed unreasonably high fuel prices. The scenarios were manipulated to create the desired model output. The Marshall Institute simply reuses these flawed studies to paint a false picture of mass unemployment. EDF is a fan of recycling, but not when it’s bad information that’s getting recycled.
• Questionable modeling methods give fishy answers. The Marshall Institute’s calculation of household consumption has a bizarre start date. It calculated the effect S.2191 would have on consumption starting in 2008 — four years before the Lieberman Warner bill would even have been implemented. By calculating this imaginary impact, the Institute adds an extra four years of loss in consumption, further inflating its estimate.
• Failing to consider the costs of inaction tells only half the story. The Marshall study, like most analyses of economic forecasting models, looks at the costs of reducing emissions, but fails to consider the costs of inaction. Temperatures are already rising around the world. If we do nothing to mitigate climate change, there will be costs to the economy as we deal with damaged infrastructure from rising sea levels, more frequent wildfires, and the multitude of costs from more severe tropical storms. The IPCC writes that by not acting, “global mean losses could be 1-5 percent GDP for 4°C of warming.” And, as Former Federal Reserve Chairman Paul Volcker said, “If we don’t take action on climate change, you can be sure that our economies will go down the drain in the next 30 years …”

The true story is this: When looking at unbiased sources, it becomes clear that climate policy is affordable and climate costs are modest.

According to a range of credible government and academic studies, the impacts of a well-designed cap-and-trade program on the U.S. economy and American households will be minimal. The median projected impact on GDP is just 0.58 percent in the year 2030, by which time the U.S. economy will have nearly doubled in size relative to 2005 levels. To put it another way, if U.S. GDP is projected to reach $26 trillion without a carbon cap in January of 2030, the economy would hit that same mark by April of 2030 with a carbon cap. Additionally, the estimated impact on household consumption is well under a penny per dollar of household income.

Even these credible models are likely to overstate costs, since they cannot predict the technological innovation that a cap-and-trade policy will spur – just as past cost estimates of environmental regulations have consistently overshot the mark. As Time magazine recently reported in a story on the economics of climate change:

The skeptics’ models tended to assume, quietly, that the pace of technological advance for renewable energy would be sluggish — significantly raising the costs of trying to cap carbon emissions. The models from the green side — led by the Environmental Defense Fund — tended to be fairer, projecting a range of possible economic impacts from cap-and-trade.²

Lastly, as noted above, none of these figures take into account the far higher costs of inaction — the costs that would result from the catastrophic impacts of unchecked global warming.

Here’s the bottom line: The United States can enjoy robust economic growth over the next several decades while making ambitious reductions in greenhouse gas emissions. And, in the long run, the coming low-carbon economy can provide the foundation for sustained American economic growth and prosperity.

For the real story on what the economic models say, see our report: “What Will It Cost to Protect Ourselves from Global Warming?“

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1. Massachusetts Institute of Technology (MIT), American Council for Capital Formation/National Association of Manufacturers (ACCF/NAM), Charles River Association (CRA), Heritage Center for Data Analysis (CDA), Environmental Protection Agency (EPA), Energy Information Agency (EIA) and Clean Air Task Force (CATF)

2. Is the Press Misreporting the Environment Story? Bryan Walsh in Time, March 1, 2009.

As a consensus document, it won’t satisfy everyone’s design for the perfect climate bill. Instead, it bridges the gap on the most important issues in the legislative debate, giving members of Congress clear guidelines for legislation that are environmentally effective, economically smart, and politically achievable.

It’s an attempt to find the “sweet spot” that can move the U.S. forward on climate change, in real, practical terms, toward a strong domestic emissions cap that reduces pollution at home and enables the U.S. to lead an effective global emissions reduction effort.

Any U.S. climate proposal needs to be examined in that context. After all, even the strongest U.S. legislation alone won’t secure enough global emissions reductions to solve climate change. What we need right now is strong domestic action that drives international action and contributes effectively to a global emissions reduction path that can avert the worst impacts of climate change.

The two-degree threshold

Scientific experts say that our emissions path must keep global warming within 2° of pre-industrial levels. Beyond that, the chances of catastrophic climate impacts increase dramatically. Would the USCAP blueprint as a whole contribute effectively to the global emissions reductions we need? The chart below shows that it would.

The black line on this chart represents a global emissions pathway that provides a greater than 80 percent likelihood of avoiding a long-term warming of 2°C above the pre-industrial level. This is a concentration “peaking” pathway that brings greenhouse gas concentrations back down toward current levels after peaking at a higher level, unlike the conventional “stabilization” pathways that hold concentrations at an elevated level indefinitely into the future. Thus, this pathway allows for higher emissions in the near-term for the same temperature goal, but requires greater reductions in the long-term.

Further details can be found in EDF’s in-depth analysis document [PDF].

The “layer cake” below the black line shows one way of allocating emissions reduction responsibility among countries and regions to meet the 2° constraint. Along with the aggressive end of the USCAP targets for the U.S., we assumed a reduction of 60 percent below 1990 level by 2050 for the E.U. (in line with recent announcements) and a comparable target for Russia. We also assumed that tropical forest nations will take action to reduce their deforestation emissions. Then we divided up the remaining atmospheric space among developing countries, based on an attempt to bring per capita emissions to a roughly uniform level across all countries of the world by 2050.

The allocation of emissions depicted in this chart is not the only scenario that gets us to 2°. But it does show how the USCAP targets fit into a global effort that limits warming below 2°, while allowing developing countries room to grow.

The U.S. needs to lead

The single most important thing the U.S. can do to drive international action is to adopt a mandatory cap on emissions, with targets and timetable consistent with an effective global effort to avoid 2° of warming.

USCAP passes the test on both counts: It helps unlock the door for Congress and the Obama administration to act quickly and with confidence that a well-designed cap-and-trade program will be environmentally strong and economically sound; and the emissions reductions it would achieve support a global effort to avoid dangerous warming.

To quote from the blueprint itself: “U.S. leadership is essential for establishing an equitable and effective international policy framework for robust action by all major emitting countries. USCAP believes that adoption of mandatory U.S. climate policy is an essential precondition for a full and effective international framework.”

The blueprint for legislative action is a huge step toward that goal. USCAP’s members have united around this nonpartisan plan because of the urgent need for climate action — by this Congress — and because an effective, economy-wide cap-and-trade program will position the U.S. to lead a global solution.

Obama said that will “start” with a federal cap and trade system to reduce global warming pollution, an approach that could create millions of jobs in the U.S.

If you’re wondering what those jobs are, how will they be created, and who will get them, check out a just-released report from Duke University that for the first time pinpoints the direct link between climate change solutions and U.S. workers.

The report was sponsored by Environmental Defense Fund, along with the Building and Construction Trades Department (AFL-CIO), Industrial Union Council (AFL-CIO), International Brotherhood of Boilermakers, and United Association of Plumbers and Pipefitters.

In short, it officially ends the "green jobs" guessing game. Until now, there was no tangible evidence of what green jobs are and what they mean for U.S. companies. By analyzing the supply chains that provide the parts and labor for climate change solutions like advanced lighting, high-efficiency windows, even trucking, Duke has identified the real opportunities for job creation in the heart of U.S. manufacturing.

To put the supply chains behind clean energy technologies in perspective, a single wind turbine has more than 8,000 parts: cement, steel, ball bearings, copper wiring, and more. Demand for clean energy instantly creates new markets, new customers and new jobs for the companies and workers who make them.

It’s clear evidence that a federal cap and trade system, which will spur large-scale development of clean energy technologies, can revitalize American manufacturing and the U.S. economy. President-elect Obama had it exactly right when he said America’s leadership will begin with cap and trade, and dealing with our economic, energy, and environmental problems together makes perfect sense.

The decisions the next President and Congress make in the first crucial months of next year will determine the course of U.S. leadership for decades to come. Those that lead in inventing and deploying clean-energy technologies will be the great powers of the 21st century.

The United States has already dropped to fifth place in solar-cell manufacturing, behind Japan, Germany and most recently China, which tripled production last year. Nine of the world’s 10 largest photovoltaic manufacturers are in Europe or Asia.

It’s time for the U.S. to get back in the race.

But we part ways when it comes to how we’re going to get there. Ward suggests that EDF’s support for the Lieberman-Warner Climate Security Act can’t be reconciled with a stabilization target below 450 ppm, because the bill as written wouldn’t drive sufficient emissions reductions. In fact, there’s nothing incompatible about the two. Here’s why:

First, the climate effects that we are seeing at today’s concentration levels are only going to get worse as emissions rise unabated. We shouldn’t agree to a weak proposal, but delaying action until we get a bill that achieves all the necessary reductions in one fell swoop may simply condemn us to more pollution and increasingly dangerous climate change. In addition, getting back to today’s concentration levels (or below) will mean managing unchecked emissions growth not only in the U.S., but in the large emitting countries that are waiting for us to act before stepping forward. We need to act — before its too late.

Second, aggressive short-term pollution reduction targets like those in the Climate Security Act are an indispensible part of the equation for deeper long-term reductions. A strong 2020 target tells companies to start cutting pollution now and investing in low-carbon technologies. When the early reductions are achieved at lower-than expected costs — and the technology to produce cleaner energy is scaled up — legislators will have the assurances they need to set even stronger goals.

Congress will undoubtedly revisit the targets and timetables for U.S. climate policy over the next four decades, and any bill should require that based on science. What we need now is strong action — to begin making the pollution cuts we urgently need to stabilize greenhouse gas concentrations at or below today’s levels, and to give Congress the confidence that tighter long-term limits are both achievable and cost-effective. Delay only means steeper cuts, higher costs, and lower chances to achieve either of those goals.

There’s the obvious marker of a majority of the Senate — 54 senators in all — voicing support for moving forward with the bill. Forty-eight voted for cloture, and another six offered written statements of support. Only 36 voted against.

But there’s another important part of progress that’s less obvious, what a colleague of mine calls “clearing the underbrush” — many in Congress don’t focus on the finer details of legislation until it is set for a vote.

In the past few weeks, Senate offices that never before explored the weeds of climate policy took a very deep dive.

The raw numbers bode well for action in the next Congress. But the process itself can’t be overlooked, and we won’t get quick action in 2009 unless senators and members of the House of Representatives continue to dig into the details and figure out what works, what doesn’t, and what it all means for their constituents.

It’s encouraging that the House isn’t waiting: Just this week, Energy and Commerce Committee Chairman John Dingell announced a series of legislative hearings and Rep. Ed Markey introduced a bill that looks to be the most comprehensive proposal yet in the House.

Given that the sponsors of the Climate Security Act plan to bring up the bill next year, the House looks to be moving, and the presumptive nominees of both parties say they plan to act on climate change, a post-mortem may not even be in order, even one as short as this.

Once the dust settles, I’ll be back with a closer look at the Senate vote and what it means for what’s to come.

Over the past few months, I’ve made the case for passing climate legislation in 2008: We don’t want to squander the current momentum, we simply can’t afford to wait, and while we do, we only prolong a dangerous catch-22.

Now we’re finally on the doorstep of Senate action on a comprehensive climate change bill. Floor debate over the Climate Security Act (S. 3036) will begin Monday, June 2.

If opponents of meaningful action have their way, the debate will be nothing more than a short, partisan fight over gas prices. You can already hear the predictable scare tactics: “Why would we want to raise gas prices now, when working Americans are already suffering at the pump?”

That’s a phony argument — but it brings me to another reason for passing a climate bill in 2008: It’s time to kick our oil habit, and the best way to do that is with a cap-and-trade policy that reduces our dependence on fossil fuels.

Gas prices are at a record high because of growing demand from China and other developing nations. That’s not going to change. The only solution is to end our addiction to oil.

Price volatility dwarfs climate policy costs

A bevy of analyses by the Energy Information Administration, the Environmental Protection Agency, and researchers at the Massachusetts Institute of Technology have found that the overall costs to the economy from capping emissions will be very small — less than one percent of GDP twenty years from now, and less than a penny on the dollar in terms of household consumption. More on that here.

But what do they say about gas prices? Pretty much the same: As the figure below shows, climate policy is projected to raise gasoline prices by a modest amount — 8-14 percent, or 26-40 cents per gallon. To be specific, EIA’s study of the Climate Security Act projects that an emissions cap would add about 42 cents a gallon (in 2005 terms) to the price of gasoline in 2030. That’s much less than the rise in prices in the spring of 2007, when gasoline prices soared $1.10:

But wait: All of these models project gasoline prices that are lower than today’s prices, in real terms — even with ambitious cuts in greenhouse-gas emissions.

That simply underscores how much volatility and uncertainty already exists in energy markets. A recurring consequence of relying on imported oil is price fluctuations due to supply bottlenecks and Mideast politics — and they dwarf the projected impacts of climate policy.

S. 3036 will help break the addiction

While the EIA, EPA, and MIT analyses predict that oil prices will return to historical levels below today’s prices, others are not so sure. Industry experts now talk of prices going beyond $4 this summer, with some analysts predicting prices as high $7 a gallon within a few years under “business as usual.”

Those projections do not consider climate policy at all. What drives their dire forecasts is the prospect of booming global demand for crude oil, especially in China and India, along with stagnant supply as existing production slows down and new production fails to keep pace.

That suggests what really need to worry about is not a predicted 40-cent increase over twenty years if we enact climate policy, but the possibility of a $4 dollar increase due to supply and demand conditions. The only way out of that fix is to reduce our dependence on hydrocarbon fuels.

S. 3036 would do just that. This last figure shows projected U.S. petroleum consumption in 2030, under the Climate Security Act and business-as-usual. The EIA and EPA analyses project only modest declines in consumption (5 to 10 percent), but the MIT numbers are eye-opening, with petroleum consumption falling nearly in half.

Under the MIT forecasts, the United States would spend $20 billion less on foreign oil in the year 2020, and $81 billion less in 2030:

By passing climate legislation this year, Congress can finally answer the American public’s call for a solution to rising gas prices and our dangerous oil addiction — instead of hiding behind phony arguments about energy costs.

Why push for a climate bill in 2008? I’ve already offered some reasons in my previous posts: the politics will be much the same in 2009 (Okay, David offered that one), we don’t want to squander the current momentum, and in any case, we simply can’t afford to wait.

But if those aren’t reason enough, here’s another: The world is waiting for us to act. To solve the global warming problem, China and other developing countries also must cap their emissions, and they won’t do this until our own cap is in place.

From a New York Times report:

“China is not going to act in any sort of mandatory-control way until the United States does first,” said Joseph Kruger, policy director for the National Commission on Energy Policy, a bipartisan group in Washington.

Along with India and other large developing countries, China has long maintained that the established industrial powers need to act first because they built their wealth largely by burning fossil fuels and adding to the atmosphere’s blanket of greenhouse gases.

If the U.S. — the wealthiest country on Earth — won’t establish a cap, how can we expect developing countries to do it?

Global negotiations happening now

Negotiations are already underway for a successor to the Kyoto Protocol (the international treaty to cap greenhouse gas emissions). All current Kyoto commitments expire in 2012. Some 190 countries met last December in Bali to begin the discussions. The plan is to approve a post-Kyoto framework at the 2009 meeting in Copenhagen. This gives countries the time needed to ratify and adopt implementing policies by 2012, so there’s no gap between the agreements.

The level of commitment that both developed and developing countries will agree to in Copenhagen depends heavily on the level of U.S. commitment, as reflected in our domestic policy. If the U.S. hasn’t adopted its own mandatory cap before the 2009 framework meeting, it could seriously hamper negotiations and jeopardize the chance for a global agreement in 2012.

Opportunities for U.S. companies

A U.S. cap-and-trade system could provide developing countries with more than just incentive. The economic opportunities it would create for U.S. firms could help developing countries meet mandatory targets. It’s a win-win. There are two main avenues by which U.S. firms could profit:

• Purchase low-cost emissions offsets in developing countries.
• Sell clean energy technology to developing countries.

The U.S. has a longstanding advantage in world markets for products and services that require high-technology, high-value-added, and complex engineering and industrial processes. These are exactly the types of energy efficiency and emissions reducing technologies needed to meet the challenge of a mandatory carbon cap. We can help developing countries leapfrog to a clean energy future.

But to remain at the forefront of these fields and sell into these markets, we need our own firm cap to spark the necessary innovation.

Research by Carnegie Mellon University showed that SO2-related patent filings spiked after the Clean Air Act [PDF], though the government had been supporting research long before that. The report concludes, “The existence of national government regulation stimulated inventive activity more than government research support alone.”

Why is this so? A firm cap with no “safety valve,” as in the Lieberman-Warner Climate Security Act of 2008, informs the market of the size of demand for emissions reductions and offsets, and informs potential investors of the likely demand for new technologies, alternative fuel sources, and offset projects. An unpredictably varying emissions target increases uncertainty for investors and could adversely affect their access to investment capital.

Our taking the lead isn’t just about avoiding catastrophe; it’s also about significant economic opportunity. But to take advantage of the opportunity, we must act quickly. If we wait too long to enact climate legislation and spur the innovative power of our markets, we may find ourselves as buyers rather than sellers.

In my next and last post in this series, I’ll talk more about the huge commercial opportunity in the transition to clean energy technology, and what it would mean to win (or lose) this race.

We’ve covered two reasons Environmental Defense is pushing for passage of climate legislation in 2008 — the politics will be very much the same in 2009, and we don’t want to gamble away a good bill on the chance of a perfect one someday.

Today I’ll look at a third reason: The price of waiting, even a year or two, is simply too high. Carbon dioxide concentrations are higher today than they’ve been in 650,000 years, and our emissions rate is increasing. It’s crucial that we start aggressively cutting emissions as soon as possible.

Here’s the math.

Source: the national allowance account for the years 2012-2020 from the S.2191 as reported out of the EPW Committee. The emissions growth from 2005 to 2013 is assumed to be 1.1 percent (an average of the 2004 and 2005 rate reported by the EPA [PDF]).

Scenario one: The Climate Security Act is passed into law this year, and takes effect in 2012. To comply with the emissions cap, covered sources would have to cut annual emissions by roughly 2 percent per year. By 2020, they would be emitting at 15 percent below the starting point in 2012.

Scenario two: We delay enacting legislation by two years, holding everything else constant. We pass a cap-and-trade bill in 2010, and it takes effect in 2014. To meet the same cumulative emissions cuts, emissions would have to fall by 4.3 percent per year — over twice as quickly — and we’d have to do it year after year until 2020, just to get to the same place. By 2020, emissions from covered sources would have to be cut 23 percent below the starting point in 2014.

Why is there a four-year gap between when the bill is enacted and when it’s implemented? It’s to allow time for the Environmental Protection Agency to get its rule-making done — a massive effort — and to give regulated industry formal notice of required changes. Passage of legislation will affect all manner of planning and action, including new accounting systems and more. The country can’t turn on a dime. It takes time to implement this level of change.

If a bill legislating mandatory caps is enacted later, odds are it will be implemented later, and deeper cuts will be required.

Inaction is the most expensive option

Deeper cuts mean a deeper impact on our economy. Study after study shows that inaction is the most expensive option:

• A recent report by the University of Maryland found that "negative climate impacts will outweigh benefits for most sectors that provide essential goods and services to society." For example, "New York State’s agricultural yield may be reduced by as much as 40 percent, resulting in $1.2 billion in annual damages."
• A more detailed study of Florida reached similar conclusions. Economic damage to just three sectors — tourism, electric utilities, and real estate — combined with hurricane damage would shrink the state’s gross domestic product by more than 5 percent by the end of this century.
• A study by McKinsey & Company also warns about the high cost of delay. Greenhouse-gas abatement can be highly affordable, but won’t remain so forever. From the executive summary: “Many of the most economically attractive abatement options we analyzed are ‘time perishable’: every year we delay producing energy-efficient commercial buildings, houses, motor vehicles, and so forth, the more negative-cost options we lose.”

The science is unforgiving

As the Earth warms, we approach a “tipping point” of no return, after which large destructive changes become inevitable. The most immediate potential catastrophe is the melting of the Greenland ice sheet, which would cause a drastic rise in sea levels. Scientists estimate this could occur when temperatures reach 2°C above pre-industrial times.

If we pass the tipping point, economic and social costs will be astronomical. How much will it cost to deal with a 20-foot rise in sea levels that puts Wall Street under water? Oceans won’t rise this high immediately, but the tipping point — the point after which it’s inevitable — is close at hand. Once we pass the tipping point, it’s just a matter of time. We may not see the worst of the damage in our lifetimes, but our descendants will.

Who wants to play chicken with the Greenland ice sheet? We’re pushing for a bill now.

The cost of delay

The long-term target in the Lieberman-Warner Climate Security Act is not at the level that the best science recommends, but its near-term cap is aggressive — more aggressive than any other proposal currently filed with Congress.

As I wrote earlier, long-term targets aren’t etched in stone. We have time to make them stronger. But short-term targets are critical because the science is unforgiving. The longer we wait to get started, the deeper the cuts must be to avoid environmental catastrophe.

Source: Environmental Defense analysis using the MAGICC climate model.

The worst thing we can do for our economy and our environment is to pass no legislation at all. The second worst thing we can do is delay — by even two years. If we start now and decrease emissions slowly, we can minimize the pain of shifting to a low-carbon economy. If we delay, we won’t have the luxury of gradual change. And at some point, if we continue to delay, it will become impossible to cut emissions quickly enough to avoid the tipping point.

Stay tuned for my next post, which will discuss why the importance of America’s role in international negotiations toward a successor to the Kyoto Protocol makes it more important than ever that we pass a bill this year.

We agree that the political landscape in 2009 will be much like today’s as far as climate change legislation goes: we’ll have the same interest groups, a similar Senate line-up, and a crowded national agenda that threatens to divert politicians’ attention. David outlined these challenges nicely a couple weeks ago, and we see things pretty much the same way.

So where do we part ways? The bill in play right now, the Climate Security Act, isn’t perfect. Many think that if we wait until after the election, we can do better.

Or maybe not. We’ve been here before.

First, let’s look at an issue where the perfect bill never came along and the country missed a chance at a pretty good one: healthcare.

This goes back beyond the debate in the 1990s. According to the Journal of the American Medical Association (PDF), the U.S. has tried five times to institute national health insurance. The first attempt was in 1915, but the AMA opposed it. It came up again in 1945 under President Truman, and again the AMA opposed it. In 1965 we got Medicare and Medicaid under President Johnson, but it was never expanded to cover all Americans. We almost got national health care in the 1970s, but for Congressional delays and distractions (like Watergate). We again came close in the 1990s, but it was defeated by opposition campaigns.

Now Clinton, Obama, and Edwards are again proposing national healthcare plans. What did we gain from these nearly 100 years of fighting? Imagine how much farther along we’d be now if we’d adopted Nixon’s plan in the 1970s and worked over the years to improve it.

Some people say, though, that once a bill becomes law, it’s too hard to change it, so we’re stuck with it. But it doesn’t have to be that way, and the Clean Air Act illustrates how a law can get stronger once it’s passed.

The Clean Air Act became law in 1967, then was revised and strengthened over decades. In 1970, Congress added criteria pollutants and started the phase-out of leaded gasoline. In 1977, a new form of review was added to strengthen regulation of pollution from older facilities. In 1990, the Act was amended again to deal with acid rain.

The Clean Air Act wasn’t perfect in 1967. But think of the tons and tons of lead and sulfur dioxide that would have been pumped into our air over those decades if we had waited for the perfect political climate so we could pass the perfect bill.

Legislation isn’t static — it’s an evolving political product that can be strengthened (Clean Air Act), weakened (Endangered Species Act), reauthorized (Farm Bill), or allowed to expire (Assault Weapons Bill). The important thing is to start with a strong — if less than perfect — bill, set benchmarks, prove we can make progress, and make it stronger.

I hope to be back in the coming days to look more closely at the price of waiting: we have to start cutting emissions now, or we’ll have to cut a lot more later. The Climate Security Act’s short-term targets give us the start we need.