Cap and Lose? 

An Oakland think tank says the federal climate bill doesn't invest enough in green-energy technology. Plus, an innovative mass-transit company struggles to get noticed.

Throughout the presidential campaign, Barack Obama said the best way to reduce greenhouse gases and spur investment in renewable energy would be to pass a so-called cap-and-trade climate bill. The plan would limit — or cap — carbon dioxide emissions while allowing green energy producers to sell "credits" to the fossil fuel industry. The plan would raise much-needed funds for green-tech research and make renewable energy cheaper. But according to a liberal environmental think tank in Oakland, the watered-down version of Obama's plan that recently passed the House of Representatives and is now in the Senate will do more harm than good.

The Breakthrough Institute, which has become one of the most vocal opponents of the climate bill sponsored by Democratic congressmen Henry Waxman and Edward Markey, argues that the legislation fails to generate enough investment in green energy because it offers too many corporate giveaways. In fact, Michael Shellenberger, president of the Breakthrough Institute, argued that CO2 emissions may actually increase in the next several years if the Waxman-Markey bill becomes law. "If this bill passes the way it is, we're going to be stuck with bad legislation that actually includes incentives to increase emissions rather than decrease them," Shellenberger told Eco Watch.

Climate scientists and green-energy producers generally agree that the US government should invest $20 billion to $30 billion annually over the next few decades to research and develop renewable energy sources and make them competitive with fossil fuels. Obama promised in the campaign to invest $150 billion over ten years — or about $15 billion a year. But according to an analysis by the Breakthrough Institute, the Waxman-Markey bill, also known as the American Clean Energy and Security Act, would only invest $6 billion to $9 billion total each year for clean energy. Of that, just $490 million to $735 million would go to research and development, depending on whether credits sell for $10 or $15 per ton of CO2 produced.

As a result, Shellenberger and others, including the respected Brookings Institution in Washington, DC, argue that the Waxman-Markey bill will fail to address the coming global warming crisis in both the near and long term. Both Brookings and the Breakthrough Institute liken the need to invest in green tech to what the federal government did with the aerospace, microchip, and pharmaceutical industries.

According to critics, the primary reason for why Waxman-Markey comes up short is that it allows the fossil fuel industry to initially obtain free carbon credits, instead of having to buy them at auction. As a result, CO2 producers, particularly coal plants, will have no incentive to buy credits from green-energy companies. The giveaways also will fail to lower emissions, since coal plants can simply use up their free credits instead of slashing CO2, Shellenberger and others argue.

In the past, Obama also has criticized cap-and-trade proposals that give away carbon credits, also known as offsets or permits: "If you're giving away carbon permits for free, then basically you're not really pricing the thing and it doesn't work — or people can game the system in so many ways that it's not creating the incentive structures that we're looking for." Obama's budget director Peter Orszag has been even blunter: "If you didn't auction the permit, it would represent the largest corporate welfare program that has ever been enacted in the United States. In particular, all of the evidence suggests that what would occur is the corporate profits would increase by approximately the value of the permit."

In a recent radio interview with Montel Williams, Waxman said they decided to give away carbon permits in order to keep energy prices low for consumers and gather enough votes in Congress. Waxman noted that if the government forced coal plants to buy the carbon offsets from the start, they would simply pass on the extra costs to ratepayers. As a result, consumers in states that depend heavily on coal — such as the Midwest and the Southeast — would be hit the hardest. Waxman didn't say it explicitly, but he also implied that congressional representatives from coal-dependent states would never go along with a plan that would force their constituents to pay more for energy than residents of other states.

In fact, Republicans have used the threat of increased energy costs as their main weapon against the bill (along with denying that climate change exists). In addition, the concern about raising energy prices during a recession may convince Senate moderates to oppose the bill, too. The House barely passed the bill 219-212, and the closeness of the vote has convinced many Democrats and environmental groups to support the legislation out of fear that they won't be able to get anything better. Even Obama has lobbied Democrats to vote for the bill and will sign it into law if the Senate passes it.

Moreover, not everyone believes the Waxman-Markey bill will fail. Al Gore supports it, and Paul Krugman, the liberal Nobel Prize-winning economist and columnist for The New York Times, has argued that it could still lower greenhouse gas emissions despite its flaws. "Even when polluters get free permits, they still have an incentive to reduce their emissions, so they can sell their excess permits to someone else," Krugman explained in a recent op-ed piece.

But Shellenberger predicts the bill will be watered down further before it becomes law. As a result, he argues that Congress should ditch the plan now and begin talking seriously about levying a tax on carbon and then using the proceeds to invest heavily in green tech. "Technology innovation is the only way to bring prices down," he said of renewable energy.

He's right about that, and he's probably right that the bill will become weaker before it reaches Obama's desk. There's also no doubt that Waxman-Markey is seriously flawed. But it also may be the best we can hope for under the current political and financial climate.

The close vote in the House proves that there is little political will to tackle the global warming crisis head-on. And as inviting as a carbon tax would be, it likely will be tougher to get through Congress than the current bill. Hopefully, Krugman and Gore will turn out to be right. They certainly have been before.

Beating Trains, Buses, and Automobiles

If we were really smart, we also would be investing heavily in innovative new forms of mass transit. In Oakland's Jack London Square, there is one company that deserves notice — CyberTran. The company has developed a sort of smart-car, automated train that will take passengers directly to their destinations without having to stop at every station. It combines the advantages of cars, buses, and trains and is greener than each of them.

This is how it works. Say you're at the UC Berkeley campus and want to get to downtown Oakland. First, you walk up to a station and punch in your destination. Within minutes, a single, automated twenty-seat train picks you up and sends you down an elevated track covered in solar panels. It travels much more quickly than buses or traditional trains because it doesn't stop at every station between campus and downtown — although you likely would stop to pick up passengers who want to go to the same destination as you. But even with those stops, the system travels rapidly because when a train car pulls into a station, it moves off the main track to allow trains behind it to speed past.

Neil Sinclair, chairman and CEO of CyberTran, also said the system is much cheaper to build than traditional rail and light rail. It's also competitive with Bus Rapid Transit and doesn't require two lanes of traffic. Currently, rail systems cost about $100 million per mile, but Sinclair says a CyberTran system can be built for about $40 million per mile, because it requires much less infrastructure, and because the train cars are smaller and much lighter since they're not linked together like traditional train or light-rail cars. The elevated tracks also take up much less space because CyberTran is so light, it doesn't require a huge support structure.

CyberTran has actually been around for more than a decade. It was the brainchild of John Dearien, a onetime senior engineer with the US Department of Energy. But over the years, the company has struggled for attention. The reason is that public transportation agencies are extremely reluctant to experiment with untested products, Sinclair explained. In fact, CyberTran can't qualify for most competitive bid processes because it has yet to actually build a full-blown system. "It's a Catch-22," Sinclair said. "You can't enter into an RFP until you build it." So far, the company has stayed afloat thanks to private investment and grants from the Energy Department and from the US Department of Transportation.

Sinclair said that the company has been working with several cities to try to obtain a federal grant for a test project. Still, for CyberTran to catch on, Sinclair acknowledges it's going to take a courageous local agency willing to make a significant gamble.

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