The FT reports today that the German government is acting to blunt the effects of the ETS (the European cap and trade program):

Berlin is preparing to help domestic industries overcome the economic crisis by cutting the electricity bills of the country’s largest energy users.

Aluminium, copper and zinc producers are among energy-intensive industrial sectors that could benefit from the plans, which are set to be agreed ahead of elections in September.

Ministers have argued for months about how best to aid domestic industries and the chancellery has also intervened in the discussions, industry sources have told the Financial Times.

Any subsidies will be examined closely by competition authorities in Brussels and could prompt renewed criticism that Berlin is undermining European Union climate legislation. . . .

The bulk of any relief is likely to be found by reimbursing companies for the cost of carbon dioxide emissions trading certificates that utilities currently price into their electricity bills.

Berlin successfully argued at an EU summit in December that energy-intensive industries should be not be forced to buy emission permits between 2013 and 2020 because companies would shift production overseas. It now wants to go further by compensating energy-intensive companies in the intervening years. Officials are also considering whether to reward big power consumers for their role in balancing the electricity network during peak-load periods.

But Claudia Kemfert, head of energy policy at the German Institute of Economic Research (DIW Berlin), said it was “not the government’s job to subsidise the profits of energy companies”.

With the Waxman Markey Bill passed out of the House Energy and Commerce Committee thanks to the tireless and strong leadership of its Chairman, Henry Waxman (D-CA), there will now be some time for reflection on what happens next. The simple answer is “no one knows.”

The bill could be referred to other committees for mark-up — following the same process that we observed this week in Energy and Commerce. The House Agriculture Committee has expressed an interest in having jurisdiction over the bill. If so, then the bill will certainly be watered down further to placate agricultural interests. We saw a bit of this late in the debate over Waxman Markey when an amendment was offered to “grandfather” offsets for actions taken by farmers more than a decade before W-M is intended to go into effect, i.e., for emissions already reduced, as if that makes any sense. Even if the jurisdictional issues are resolved without a further referral, these concerns will necessarily be addressed if and when the bill comes to the floor. When (and if) the bill eventually comes to the full House it will face a range of concerns, almost all of which will lead to a further weakening of the bill and concessions to various interests who want a piece of the pie. An after this long process, whatever results, if approved by the House, is probably DOA anyway as the bill faces long odds in the Senate. There are a lot of wild cards in the mix not raised here as well.

Far more certain has been the reaction of advocates for action on climate change who have displayed a very wide range of responses to Waxman Markey.

For instance, Joe Romm of the Center for American Progress, champions W-M as the only possible vehicle for reducing US emssions, and rejoices at the bill’s progress thus far:

Many people have asked me how I can reconcile my climate science realism, which demands far stronger action than the Waxman-Markey bill requires, and my climate politics realism, which has led me to strongly advocate passage of this flawed bill.

The short answer is that Waxman-Markey is the only game in town. If it fails, I see no chance whatsoever of stabilizing anywhere near 350 to 450 ppm since serious U.S. action would certainly be off the table for years, the effort to jumpstart the clean energy economy in this country would stall, the international negotiating process would fall apart, and any chance of a deal with China would be dead.

At the other end of the spectrum Mike Tidwell of the Chesapeake Climate Action network (pictured in photo below at the protest, far right) was arrested yesterday along with 14 colleagues for blocking the office of Representative Rick Boucher (D-VA), a Democrat who supported W-M and help craft an important compromise (supported by Waxman and Markey) that got the bill out of committee.

For his part Congressman Boucher wants to see the current energy mix sustained for at least the next 10 years, relying on the offset provisions in W-M to allow business as usual to continue, as he relates early in the following clip:

Allowing business as usual for the next 10 years has proved too tough to swallow for some. For instance, a CCAN member relates details of a meeting with another member of the Energy and Commerce Committee he arranged via a hunger strike and office sit in:

I went to [Congressman] Mike Doyle’s (D-PA) office at 2 pm yesterday and told Pat Cavanaugh, his energy staff person, that I was a long-time climate activist on the 18th day of a hunger strike (www.fastingforourfuture.org) for strong climate legislation and that I wasn’t leaving until I met with Doyle. . .

But as I sat in Doyle’s office, no one with me, none of the press people who I called showing up to find out what was happening, thinking about what was going to happen at 6 pm, wondering if I had been too impulsive, wondering what would happen if I was arrested–because I was very clear that it was either talk with Doyle or that–wondering, wondering. . . after two hours of sitting, into the office comes Mike Doyle.

I’d never met the guy, so at first I didn’t know it had happened when he arrived. But when he sat down across from me and said something like, “I’m Mike Doyle, what’s up,” I knew it was game time. And for the next half hour I had the most intense, in-your-face, no-holds-barred discussion with an elected official I have ever had.

Doyle’s no dummy, and I have to acknowledge that he’s a strong debater. I didn’t get him to change his mind about the efforts that he and Rick Boucher have been leading to weaken the “discussion draft” of climate legislation Henry Waxman introduced on March 31st. The way Doyle described it, he was doing the bidding of Waxman, carrying water for him by going to the blue dog Democrats to find out what was necessary in order to get a bill out of committee. He also said his main thing was the 15% free emissions permits for steel, cement, aluminum and other energy-intensive industries during a 10-15 year transition period. But when I asked him why he was then supporting the idea that 40% of the permits would be given free to coal companies/utilities (local distribution companies), the best answer he could give was something like this, a very revealing answer:

“If you return money directly to the American people for them to use to pay for higher energy costs in the transition period, they’ll spend it on things like flat screen TV’s. By giving free emissions permits to utilities they can then pass on the savings directly to consumers.”

With the environmental community split, the Republicans must be enjoying a good bit of satisfaction, despite the movement of the W-M bill out of committee. Going forward, the bill will require ever more compromises, and it is hard to see these actions winning more supporters to the bill from the environmental community.

Waxman Markey may well have taken its first steps toward a protracted death spiral, taking with it any semblance of consensus and coordination of the environmental community about what to do on climate change.

In an interview with the BBC, US Energy Secretary Steven Chu says that environmentalists in the the United States need to compromise their ambitions, such as supporting the building of new coal plants that are not outfitted with CCS. In response, Greenpeace said that action should be dictated by science not politics. Above is the interview, and below is an excerpt from Roger Harrabin’s BBC news story:

Prof Chu is a Nobel prize-winning physicist and a world expert on clean energy. But he said it was impossible to ignore political reality.

“With each successive year the news on climate change has not been good and there’s a growing sensation that the world and the US in particular has to get moving,” he said.

“As someone very concerned about climate I want to be as aggressive as possible but I also want to get started. And if we say we want something much more aggressive on the early timescales that would draw considerable opposition and that would delay the process for several years.

The US energy secretary said that awareness of climate tipping points had increased greatly only in the past five years. He added: “But if I am going to say we need to do much, much better I am afraid the US won’t get started.”

To the anger of environmentalists, he said that one compromise would be approving new coal-fired power plants without obliging them to capture and store their carbon. The UK government has made this a stipulation for new coal plants but Prof Chu declined to explain why the US government would not follow suit.

From the Waxman Markey hearings, a few moments of bipartisan levity (h/t TPM):

Last week I argued that the offset provisions in the various versions of the Waxman Markey bill were likely to allow the US to continue its business as usual carbon dioxide emissions, making the idea of a “cap” a charade. Congressman Rick Boucher (D-VA) said much the same (emphasis added):

[Congress will] provide two billion tons of offset each year during the life of the program. Those offsets would enable electric utilities like AEP (American Electric Power) to invest in forestry, agriculture and projects like tropical rain forest preservation in order to meet their CO2 reduction requirements under legislation. Therefore, they can comply with the law while continuing to burn coal.

Now over at the Breakthrough Institute (where I am a senior fellow) Jesse Jenkins has done some math on the consequences of the offset provisions, finding (see figure above):

. . .the offset provisions in the bill — combined with the ability to bank allowances during the major oversupply likely in early years of the program — would allow economy-wide U.S. greenhouse gas emissions to rise at projected business-as-usual rates through the year 2030. Emissions in capped sectors could exceed business-as-usual projections by nearly 9% in 2030 if the full two billion tons of offsets are routinely utilized.

Above is a figure from Jesse’s analysis, and he helpfully provides a spreadsheet showing his work along with his post.

The New York Times editorial page takes the Obama Administration to task for not “following the science” on the Yucca Mountain nuclear waste repository.

The administration’s budget for the Energy Department raises a disturbing question. Is President Obama, who has pledged to restore science to its rightful place in decision making, now prepared to curtail the scientific analyses needed to determine whether a proposed nuclear waste repository at Yucca Mountain in Nevada would be safe to build? . . .

We have no idea whether Yucca Mountain would be a suitable burial ground for nuclear wastes. But after the government has labored for more than two decades and spent almost $10 billion to get the site ready for licensing hearings, it would be foolish not to complete the process with a good-faith evaluation. Are Mr. Obama and Mr. Reid afraid of what the science might tell them?

Surely the NYT editorial writers understand presidential politics and how well the Yucca Mountain issue played in Nevada, which happened to go for Obama in the 2008 election. Are we now at a point where, whenever possible, political differences are to be instantaneously mapped onto questions of science?

Data is now available from EIA and BEA to allow for a preliminary assessment of US carbon dioxide emissions in relation to economic growth (h/t JJ). US GDP grew by 1.1% while carbon dioxide emissions decreased by 2.8%. Now if the rate of emissions reductions can be doubled while economic growth is tripled, and we can sustain that for about 40 years, we might be on to something.

The Financial Times gives its impression of the cap and trade proposals now being debated in the U.S. Congress:

On the drawing board is a vast and unfathomably complex new system, which fosters corruption, raises little revenue and tries to suppress the incentives that are its entire purpose. Otherwise, it all looks quite promising.

As I showed this morning, the Obama Administration’s new fuel economy standards result in an expected emissions reduction of about 46 million tonnes of carbon dioxide per year. Since the implementation fuel economy policy will have occurred (assuming it does indeed go forward) prior to the passage of Waxman-Markey, shouldn’t this imply that the emissions allowances in the Waxman-Markey bill should be reduced by 46 million tonnes per year? After all these emissions will no longer occur and thus no longer need to be reduced.

If the allowances are not reduced, then the cap and trade program will have 46 million extra allowances per year that might have seemed to be necessary yesterday, before we learned of the fuel economy policy, but are not needed today since those reductions are already “on the books”. And with 46 million extra allowances, the cap and trade program, ironically enough, will allow extra emissions exactly offsetting Obama’s fuel economy program, making its net effect on emissions reductions just about zero.

Cap and trade has all sorts of interesting outcomes. There will be more.

[UPDATE: DH writes in to note that there are only 19.6 gallons of gasoline per barrel of oil, which contains 42 gallons. Numbers corrected below. Thanks!]

The Obama Administration’s announcement this afternoon of tightened fuel efficiency standards provides an excellent example of what the Congressional debate over cap and trade does not — a direct and obvious connection between the policy and the outcome, in this case reduced use of gasoline and by extension greenhouse gas emissions. If emissions are to be reduced then efficiency gains will necessarily have to be a big part of the equation. Speaking on a morning news program White House official Carol Bowner had this to say:

The new limits will save 1.8 billion barrels of oil over the program’s seven-year life, President Obama’s climate czar said Tuesday. Well the price of a car will increase, the Obama adviser also said consumers would save money in long run on lower fuel costs.

“[T]he American public — when they go to the pump, will actually save money. Their cars will drive further on a gallon of gas, and ultimately we’ll reduce our oil use by 1.8 billion barrels over the life of the program. Now, that’s good news,” White House energy and climate change advisor Carol Browner said on MSNBC Tuesday morning.

What are the carbon dioxide emissions consequences of 1.8 billion barrels of gasoline?

At 20 pounds of carbon dioxide per gallon and 19.6 gallons of gasoline per barrel the answer is 706 billion pounds of carbon dioxide or 0.32 gigatonnes of carbon dioxide (a gigatonne is a billion metric tons, and a metric ton is about 2,200 pounds, so 0.32 Gt = 706 billion pounds = 706/2,200). Over the life of the fuel economy program (7 years) this equates to a reduction of about 0.046 gigatonnes per year (i.e., = 0.32/7). In 2007 the US had about 7.28 Gt of greenhouse gas emissions, so the effect of the new emissions regulation on greenhouse gas emissions from a 2007 baseline are a reduction of about 0.6%. If this seems like a small number consider that the U.S. consumes 390 million gallons of gasoline per day (!), meaning that 1.8 billion barrels represents about 90 days worth of gasoline usage, or 13 days per year for the 7 years of the program.

So if the program actually saves 1.8 billion barrels of gasoline then the new standards over 7 years will free up 90 days of gasoline and reduce greenhouse gas emissions (from a 2007 baseline) by 0.6%. These numbers may seem small, but they are actually quite significant. Piece by piece, step by step are how efficiency gains are achieved in practice, and perhaps more importantly, when established as performance standards can be made permanent so the benefits continue (and indeed increase) indefinitely.