"Cap-and-trade" legislation is touted as a solution to global warming. What exactly does it mean?
By Amy Leinbach Marquis
There’s no denying that Earth’s climate is changing—the proof unfolds daily in the form of melting glaciers, raging wildfires, and an alarming number of species facing extinction. And it doesn’t stop at park borders—it’s threatening the very resources, wildlife, and historical icons we’ve worked so hard to protect for so long.
Thankfully, Congress is taking a serious look at new climate legislation that would cap greenhouse gas emissions and generate billions of federal dollars that could fund innovative technology and conservation projects to battle global warming’s effects. National Parks’ Associate Editor Amy Leinbach Marquis sat down with Mark Wenzler, NPCA’s director of clean air and climate programs, to get the details.
Q. We’ve heard a lot about polar bears and Greenland’s ice sheets, but talk a little about global warming’s impacts on America’s national parks.
A. From Glacier National Park in northern Montana to Florida’s Everglades, everything is being impacted. Glaciers are disappearing, Joshua trees are threatened, coral reefs are dying, species are being driven toward extinction, insect pests are destroying forests from the Smokies to the Rockies. Our cultural resources are at risk, too—like Fort Massachusetts on Gulf Islands National Seashore in Mississippi, which could be wiped out as sea levels rise and storm surges increase. Farther inland, ancient Indian dwellings and artifacts are at risk from wildfires and flash floods.
This isn’t just some future scenario—this is the stuff that’s happening now. And these problems will only grow worse if we fail to act. So reducing greenhouse gases is absolutely essential to stave off irreparable damage—but it’s not enough, because we could turn off every emission source in the world today and we’d still have enough carbon in the atmosphere to impair our ecosystems for another hundred years. So the sooner we act, the better off we’ll be.
Q. It seems like cap and trade is a pretty popular solution—can you explain how it works?
A. Basically, industries are given a limit, or a “cap,” on the amount of greenhouse gases they can emit, and each year that cap gets smaller. Industrial plants that emit less than the cap would be able to sell their leftover allowances to industries that exceed the cap. So, say you have a coal plant that decides to change over to natural gas, retrofit its plant, and all of a sudden it’s emitting much less CO2 and has this big chunk of emissions allowances. That coal plant can sell those allowances to another coal plant that doesn’t want to bear the expense of retrofit. In other words, it’s an affordable way to reduce emissions—and as long as these companies collectively stay under the established emissions cap, the process will drive the reductions to the industries that can most afford it.
At the outset of the cap-and-trade program, industries will be given mostly free permits to cover their existing emissions. But each year, a greater percentage of the permits must be purchased in an auction, creating an enormous stream of new federal revenue. We’re talking hundreds of billions of dollars each year.
Q. That’s a lot of money. Where will it all go?
A. Well, there is definitely a fight over it. Everyone has their hand out on Capitol Hill. But NPCA believes strongly that we should use these funds to prevent global warming and its impacts. It can’t just be, “We want new highways,” or “Wouldn’t it be nice if everybody got a break on their mortgage?” Global warming is an enormous problem, and it’s going to cost a lot of money to fix it.
We need to invest in technology that helps speed the reduction of greenhouse gases—by generating clean energy, for example, especially since we’re going to require all these plants to clean up. And we need to provide energy assistance to low income U.S. consumers, because a cap-and-trade bill could cause energy prices to rise a bit in the short term as industry transitions to cleaner sources of energy.
NPCA’s main interest is strengthening and protecting natural resources on which humans and wildlife depend. And that’s where all of this really ties in to the national parks.
Q. How much of that revenue is needed to help the parks deal with climate change?
A. We don’t know the exact amount, but we do know that things like land acquisition, habitat restoration, rebuilding coastal wetlands, and the like—applied throughout the public lands system—will require multi-billion-dollar investments over many years. The Lieberman-Warner cap-and-trade bill that ultimately failed to pass in the last Congress would have invested $7 billion a year in natural-resource protection. That $7 billion is a tiny sliver of the hundreds of billions of dollars that would be generated through the new cap-and-trade program. But even a sliver would help safeguard natural resources and wildlife from climate change.
And it’s not just natural resources that need help. As sea levels rise and threaten historic forts, or as roads are being washed out by floods, our parks are going to need additional funds to help pay for prevention and repair.
Q. Even with that money, can we really protect natural resources and wildlife from climate change?
A. There’s still much to learn about how climate change is altering our world, but national parks are already helping to mitigate climate change’s effects on wildlife. For example, in California’s Redwood National Park, forests and streams are being restored after years of being devastated by logging—and that helps wildlife cope with stresses like wildfire and drought brought on by climate change. It also provides healthy salmon habitat and cleaner drinking water, both of which are vital to the surrounding communities.
In Everglades National Park, restoration of the natural water flow in the “river of grass” is helping the Florida panther and other endangered and threatened species. It also provides safe drinking water to Florida communities threatened by salt intrusion, and enhanced storm protection as climate change prompts more destructive hurricanes.
Throughout the National Park System, funds are needed to create wildlife migration corridors, restore the wetlands that protect coastal areas, reduce wildfire impacts, and build scientific understanding of how climate change affects natural systems and wildlife. These actions aren’t necessarily cheap, but they are absolutely essential if we want to safeguard wildlife for our children and grandchildren.
Q. In these difficult economic times, how do we justify investing in natural resources?
A. History shows that investing in national parks and wildlands creates jobs and boosts rural economies across the country. A recent NPCA study found that national parks generate more than four dollars in value for every tax dollar invested; in many cases, the value is much greater. They support $13.3 billion of local, private sector activity and 267,000 private sector jobs. And they attract businesses and individuals to the area, creating more economic growth around parks than in other areas of the state. Investing cap-and-trade revenue to safeguard natural resources from climate change is a win-win situation for wildlife and for rural communities.
Q. Is there real support for this concept in Washington, D.C.?
A. Fortunately, yes. National parks have always had strong bipartisan support. After all, they belong to all Americans and reflect the great natural and cultural diversity of our nation. But we do need to help Congress see how parks are threatened by climate change, and how we can safeguard park wildlife with the right level of investment.
There has been some important groundwork in the past couple years. House chairmen like Norm Dicks, Nick Rahall, and Raul Grijalva are all strong supporters of protecting wildlife from climate change. And they’re all heading up key committees in Congress. President Obama also supports this concept—his budget actually puts aside $130 million for natural resource protection. So we’ve got some powerful advocates to help us make the case to other members of Congress.
Q. Is everyone who wants to reduce greenhouse gas emissions pretty much on board with cap and trade, or are there competing solutions?
A. Well, cap and trade has its critics, so yes, there are competing ideas. Like “cap and dividend,” for example. Its supporters agree that we need to cap greenhouse gas emissions and it’s important to address global warming, but they want to give all that revenue back to consumers.
It’s legitimate to want to help people. As the economy transitions to clean energy, it’s possible that energy prices will go up—and we should use cap-and-trade revenue to help consumers deal with that increase. But even if you fully compensated everyone in America for increased energy costs, there would still be hundreds of billions of dollars leftover to do the other things—to invest in clean energy, to protect natural resources. And that’s what we want to ensure—that there’s also adequate funding set aside to protect and restore the wildlife and natural habitats that are also being affected in a negative way.
Another competing plan is the carbon tax. It seems very simple: Tax emitters or energy consumers based on greenhouse gas emissions. The problem is it doesn’t guarantee a specific level of greenhouse gas reduction—so it might help decrease greenhouse gases, or it might not.
The second problem is industries would likely seek exemptions as they have done successfully in other areas within the tax code. This thought that taxes are simple and elegant and don’t have loopholes, yet cap and trade is complicated and provides too many opportunities for industries to game the system, isn’t very persuasive. Industry has worked the tax code to their benefit for decades and they will find a way to exempt themselves from carbon taxes.
Q. Say we get the funding. Is the technology there to move forward?
A. We can do a lot right now in the building and auto sectors, but we also need new technology to come online. Acid-rain legislation in the 1990s offers a promising example: When the bill was passed, the electric utility industry claimed there was no technology to reduce emissions and they would go bankrupt. But innovators quickly found cost-effective ways to reduce emissions by developing new technologies like pollution scrubbers and new catalysts that neutralize pollution. Those early innovators actually made money by cutting their own emissions and selling their excess pollution permits to competitors who were slow to innovate. In the end, the ndustry cut sulfur dioxide pollution by more than 50 percent—at less than a tenth of the cost predicted at the outset of the program. It’s very likely we’ll see the same kind of outcome resulting from the carbon cap—innovators will figure out ways to reduce CO2 in cost-effective ways, and those early innovators will be handsomely rewarded by selling their technology and excess emission permits to others.
Q. So how do you get the public on board?
A. We have to reduce greenhouse-gas emissions—because if we don’t bring emissions down and stabilize the climate, many of our national parks could be irreparably damaged. Most of the climate scientists believe that there’s a certain tipping point in our ecosystem, and we’re not there yet—we may have another decade to act. But if we don’t reduce emissions significantly within this timeframe, and emissions reach a certain level, we’re then at the point where all the glaciers melt, some of the ice caps melt, and we’ll be faced with a level of impacts that are going to be very, very difficult to deal with.
People also tend to overlook the fact that natural resources are the economic backbone of many communities in America. Healthy ecosystems provide safe drinking water, bountiful fisheries, forest products, and so on. And outdoor recreation is huge for many of these rural communities near the parks. In terms of overall U.S. economy, these things really add up—and an economic boost is something that can benefit us all right now.
At the time this issue went to press, the House Energy and Commerce Committee had just passed the Waxman-Markey climate and energy bill. As written, the bill would initiate the country’s first cap-and-trade program and set aside an average of about $1.9 billion for natural resources every year through 2030. The bill is expected to be on the House floor after the July recess; the Senate is moving at a slower pace, and may not cast votes until late summer or fall.