The Waxman-Markey energy and climate bill is certainly not “da bomb.”  At best, it’s a B+.

Then again, it is not a total bomb, as some think.  So you don’t have to be Dr. Strangelove — or the bill’s mother — to love it.  You just have to compare it to the alternative (i.e. utter failure and business as usual emissions).

Few people, I think, realize everything that is in it or what it might accomplish.  The most thorough analysis that I’ve seen is by the World Resources Institute (see their bill summary here, quantitative analysis here).

WRI has an interesting projection of what would be achieved by the Waxman-Markey discussion Draft (WM-DD) released on March 31, 2009 [click to enlarge]:

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I hadn’t blogged on this sooner because WRI’s explanation of the methods and assumptions (here) are a tad opaque, but here are the (fairly credible) Key Findings:

  1. The pollution caps proposed in the WM-DD would reduce total GHG emissions 17 percent below 2005 levels by 2020 and 73 percent below 2005 levels by 2050.
  2. When all complementary requirements of the WM-DD are considered in addition to the caps, GHG emissions would be reduced 31 percent below 2005 levels by 2020 and 76 percent below 2005 levels by 2050.
  3. When additional potential emission reductions are considered, the WM-DD could achieve maximum reductions of up to 38 percent below 2005 levels by 2020 and up to 83 percent below 2005 levels by 2050. The actual amount of reductions will depend on the quantity of offsets used for compliance.

If I’m reading this right, what gets WRI from #1 to #2, from a 17% cut in 2020 (which is the 20% WM-DD target applied to the 85% of covered emissions in 2020) to a 31% cut in 2020 is:

  • partly WRI assumptions that EPA’s standards for the non-covered emissions will reduce them by 50%
  • mostly WM-DD requiring “the program administrator to use allowances from the cap to fund international forestry projects to achieve 720 million tons of additional emission reductions in 2020″

Personally, I think WRI is mixing apples and oranges here just a bit — hence the asterisk (*) in the headline.  But it is a tough problem to resolve:  How do you quantitatively credit realistic emissions reductions achieved in other countries funded directly by WM-DD?  Most every other country in the world would, I believe, simply take direct credit for such reductions, as WRI does.  While I’m not sure I’d plot such savings on the same graph as domestic emissions reductions, I don’t have an obvious alternative at this point, though, so I’m not criticizing them.  Their methodology is pretty transparent — if you read it a few times.

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Certainly, among the highest priority actions for the rich countries is to develop and fund a national-accounting-based method for enacting and verifying efforts to slow, stop, and reverse deforestation.  That’s why forestry actions comprise 2 of the 12 to 14 wedges in the core strategy for stabilizing at 350 to 450 ppm: The full global warming solution (updated).  The UN is working on Reducing Emissions from Deforestation in Developing countries (REDD).  If REDD or something like it is successful, then the United States must put in serious dollars — and that emission reduction needs to be credited to us.

And it bears noting that stopping deforestation is a (slightly) more time urgent activity than almost anything else in the climate arena, since it is all but irreversible.

Now what gets WRI from #2 to #3, from a 31% cut in 2020 to as much as a 38% cut — the light blue area under the purple line — is WRI assuming that some offsets are in fact used to meet the emissions targets:

The discussion draft requires 1.25 offsets to be submitted for compliance for every ton of regulated emissions. This requirement would yield additional reductions contingent on the number offsets used….  The range starts at zero and increases to 250 million tonnes per year each for both domestic and international uncovered emissions.

Of course, the possibility that the offsets’ provisions actually result in more emissions reduction, rather than say, less, requires a key assumption:

Offsets will be real, permanent and additional. As a result, we depict offsets as a real reduction in total global GHG emissions.

In short, WRI assumes the offsets — both international and domestic — are not fraudulent, are not rip-offsets.

I am well known for not being a big fan of rip-offsets — well, I’m a big fan of “rip-offsets” since I coined the term (see “Question from WSJ blog: Are Bogus Carbon Offsets Really That Bad?“) but I’m not a fan of offsets as they are currently being sold to consumers and businesses.  So you might think that I would dismiss WRI’s whole approach here.  But I don’t.

As I will discuss in Part 2, domestic offsets under a climate bill like Waxman-Markey are completely different than the current array of mostly dubious and fraudulent offsets you might buy.  International offsets are more problematic, but the Obama administration could — and I expect will — address most of the problem surrounding them in the implementation of W-M, as I’ll discuss in Part 3.

And yes, WRI will have to redo their numbers whenever the final, presumably weaker version makes it out of committee (see “Waxman-Markey deal-making update: 14% cut by 2020, about half the allowances given away at first, phased out to full auction in 10 to 15 years“).  And yes, WRI signed on to the USCAP proposal on which much of what Waxman-Markey was based — which to some extent makes WRI a “mother” of WM-DD [and yes that’s the best I could do for today’s holiday].

But WRI has a great deal of analytical credibility, and their analysis should be taken seriously.

And setting aside one’s dreams of a superior but hypothetical (i.e. politically untenable as of today) energy and climate bill, if Waxman-Markey crashes and burns (which I very much doubt will happen), I would not hold my breath waiting for a stronger bill to pass for a long time.

Still worried?  Stay tuned for Part 2.