Waxman-Markey Bill

US law makers always have great sounding names for their bills and acts as they are normally named after the legislators themselves rather than some drab sounding government diktat.


One bill that is going to potentially change the world is the Waxman-Markey bill. The bill attempts to replicate the EU-ETS in the US creating a federal cap and trade scheme. It passed the first hurdle getting through the House of Reps after some last minute compromises to appease the farm and coal lobbies. In the end, Republicans saved the bill from Democrats who represented the rust belt and the coal lobby. It now has to go through the Senate in September where a tough fight is expected.

So what does it entail? The Grist has a great summary of the 1000 page bill. First, the bill is asking for cuts of 17 % from 2005 levels by 2020 and an 80 % reduction by 2050. Sounds impressive, but it's only 3.6% below 1990 levels by 2020 compared to the EU where the reduction is 20%. However, the scope is far wider in the US system. It includes transport fuel, aviation and covers 80% of emissions compared to 46% in the EU.

Included in the bill is a standard requiring utilities to meet 20 percent of their load needs using renewable sources or energy efficiency by 2020, with at least 15% coming from renewable electricity and new funding for new clean energy technologies, including renewable-energy, energy-efficiency and clean-coal technologies

Unlike the Phase 2 EU-ETS, where 90% of carbon allowances were granted free to industry, the US system is auctioning 60% of theirs. Those allowances that are free will be granted to the usual industry sectors such as gas and coal, but also to adaptation which might mean renewable energy companies. There is also a price floor of $10/tonneCO2 which many have argued for the EU-ETS.

Offsets will be allowed but capped and 50% must be in the US with farming and forestry to play a large part. The EU has the CDM and JI Kyoto Protocol initiatives which may change after Copenhagen in December.

The bill is a radical departure from the Bush years and is receiving fierce criticism from everyone: farmers, the oil business, greens and the coal lobby. It won't please everyone, but if it gets passed we have a real chance to make progress on climate change. Americans, the world needs you to make the right choice!

The Holy Grail

I'm part of a team of three Carbon MBA students working on a consultancy project for Adnams. A very green company; their brewery is extremely efficient in keeping emissions low and their distribution centre is even greener. It's well worth a tour if you're down that part of the world.

The team is doing a fairly straightforward carbon footprint project, but the difficult bit is trying to attempt to link the carbon data to behavioural change. In Adnams' hotels up to 20% of emissions, and, possibly more, could be reduced by staff using less electricity or heat. The key question is: what would persuade staff to use less energy? The answer is the climate change equivalent of the Holy Grail.

What motivates you to actively reduce emissions? Some of you are aware of what needs to be done and act accordingly, but is an awareness campaign enough for those who are less bothered? And, what kind of awareness campaign: a softly softly approach or one that frightens them? It's not like cigarettes where a campaign might lead people to stop smoking and actually feel the financial and health benefits pretty quickly.

Perhaps competition is better. A league table of carbon emissions anyone? Each week your shop, hotel, university department, council department, business unit - you name it - competes with each other to see who has kept their emissions the lowest compared to last year. Would this work? The government likes them for schools and hospitals but has it improved standards?

What about a diktat? You will reduce emissions by 10% or...what? The sack? Less money? Perhaps it should be more positive: reach a 10% reduction and you will get half that saving. If that's a few bob, then that might motivate people.

I actually have no idea what might work the best, but our team is going to trial all three out and report the findings to Adnams. I'd love to know what you think or if you have any ideas that might motivate people. Let me know and maybe we can trial them.

Selling Hot Air part two

The Carbon Reduction Commitment (CRC) is something we're going to hear more about in the next few months. Unlike the EU trading system, which for most people is off their radar, the CRC is carbon trading coming closer to home.

From next year, any large organisation in the UK will now have to measure their carbon emissions for energy use and from 2011 they will have to buy carbon allowances (permits) at £12 a tonne of CO2. By large organisation, we're looking at companies that have a turnover of over £50million a year. Under the EU trading scheme, it was very energy intensive companies involved, but the CRC includes supermarkets, car dealerships, commercial property owners, colleges, schools, hospitals and government buildings.

Whereas I was suggesting that the EU trading system has a price floor, the CRC has one and prices cannot fall below £12/tonne. In addition, there is a league table of all companies involved - the less CO2 you emit the higher your league position. This last bit of legislation is very clever: companies might be tempted to pay the cost of pollution by buying carbon allowances, but now they have to consider the impact on their brand if they have a low league table ranking.

Gradually, the UK is carbonising its decision making. If you're a school and you want IT equipment, the person in charge of the budget will need to know what is the carbon impact. Less impact means less cash needed to buy carbon, or more income from selling surplus allowances to carbon hungry businesses. Building a new supermarket will need require calculations on how much future energy it will use to appraise the extra costs of buying carbon allowances. If a school is switching to low carbon IT equipment, then providers will need to go greener themselves; if Tesco are building a green supermarket (and, before you laugh, they are actually doing this!) they will need green architects, builders and so forth. Low carbon decision making will be forced on smaller firms whether they like it or not. The smart ones will be ahead of the game and gain extra business.

The CRC, if it has a successful launch, is likely to be replicated across the EU and the US. The green revolution is starting...Just one question, when is the government going to tackle the elephant in the room? Who will dare to touch transport?