The recently-released Fifth Assessment Report of the United Nations Intergovernmental Panel on Climate Change ("IPCC") has received widespread coverage for its conclusion, expressed with "high confidence," that global emissions of greenhouse gases ("GHG") are continuing to grow and that "without additional mitigation," will "result in global mean surface temperature increases in 2100 from 3.7 to 4.8°C compared to pre‐industrial levels." Similarly, the IPCC's conclusion that limiting GHG emissions will have relatively modest impacts on global economic growth, well below the costs of unmitigated climate change, has been widely reported.
The IPCC's conclusions regarding climate mitigation policy have, regrettably, received very little coverage in the popular press. This lack of attention is unfortunate because IPCC's report provides a detailed and well-documented discussion of many different climate change policies that have been tried around the world. Here in Washington State, the IPCC's report may offer a way forward for climate policy, which is currently bogged down in a partisan impasse reached by the Climate Executive Workgroup ("CLEW").
As we've discussed previously, the CLEW is the body established, at Governor Inslee's urging, to develop policies aimed at achieving the State's relatively ambitious GHG emissions reduction targets. Unfortunately, as the CLEW's January 2014 Report to the Legislature documents, the process has reached an impasse, with the panel divided along partisan lines. The IPCC report, however, suggests that both sides should revisit their findings, and therefore may provide a means to break the legislative logjam.
The IPCC Report is not good news for the major policy recommendation of the Democrats on the CLEW, a cap-and-trade system, described as "cap-and-market" in the CLEW Report. The IPCC concludes that cap-and-trade policies, which have been adopted in Europe, California, and in the Northeast, have had limited success in reducing GHG emissions because their "effectiveness has been compromised to a large
extent by a structurally lenient allocation of permits that was driven by the necessity for
institutional and political feasibility." Cutting through the bureaucratic understatement, the IPCC's bottom line appears to be that cap-and-trade programs have had limited effect in reducing GHG emissions because the political compromises necessary to enact such programs, such as generous allowances to existing GHG emitters, undercut the effectiveness of the programs.
On the other side, the CLEW Republicans are willing to embrace only modest policy proposals, such as encouraging nuclear generation and incremental improvements to existing hydroelectric facilities, out of fear that the "rushed" CLEW process prevented the consultants retained by CLEW from providing the Work Group with "sufficient information about the costs of climate policies," so that it was not possible to "make responsible recommendations to the Legislature." The IPCC report should put that concern to rest because it provides an exhaustive description of the economics of climate policies, the costs of particular policies, and their effectiveness in reducing GHG emissions.
The IPCC report also provides support for some of the specific, albeit more limited, policies recommended by both sides, such as increased support for building efficiency measures, improving information to energy consumers, support for research on new clean technologies, and policies aimed at specific sectors of the economy.
Finally, it is worth noting that neither side was willing to embrace the policy identified by the IPCC as most effective, a carbon tax. Citing economic studies of carbon taxes that have been adopted in parts of Europe, and by our neighbor, British Columbia, as well as fuel taxes adopted in many parts of the world, the IPCC concludes that a carbon tax is likely to be both more effective and more efficient than a cap-and-trade system. For example, in Europe, high fuel taxes have "contributed to reductions in CO2 emissions from transport by 50%," a finding of particular importance for Washington because the transportation sector is bar far the largest contributor to our state's GHG emissions. The IPCC suggests that carbon taxes have not been more widely adopted because they are politically unappealing. On this score, it is worth noting that British Columbia's carbon tax is "revenue neutral" -- increased taxes on GHG-producing fuels are offest by lowering taxes elsewhere in the economy -- which may make it more appealing politically. Further, the British Columbia carbon tax was adopted by a right-of-center government that has since been reelected by a surprisingly large margin. Hence, a revenue-neutral carbon tax may be palatable even to Washington voters who have generally been reluctant to approve new taxes.
If you have any questions about the matters discussed in this post, greenhouse gas regulation, renewable energy development, or other matters related to the energy industry, natural resources or the environment, please contact a member of GTH's Energy, Telecommunications, and Utilities practice group or Environment & Natural Resources practice group. We're proud that practice group members Jim Waldo, Don Cohen, Bill Lynne, and Brad Jones were all recently named 2014 Best Lawyers in America.