Waxman-Markey overlooks outsourced emissions

By:
09/03/2009

With the passage of the American Clean Energy and Security Act (also known as the Waxman-Markey cap-and-trade bill), the House of Representatives took a bold step to address the long-neglected issue of climate change. This promising piece of legislation is a step in the right direction, but the public debate over climate change has largely ignored the important issue of outsourced emissions. Outsourced carbon emissions come from products consumed in the United States that are produced in the developing world where there are lax or ill-enforced environmental standards. According to the Norwegian University of Technology and Science, U.S. emissions jump by close to 20 percent when these outsourced figures are included.

The European Union’s Emissions Trading System (ETS) provides the closest working model to any potential cap and trade system in the U.S. As a result, U.S. policymakers could learn much from the initial flaws of that approach: early over-allocation of permits, excessive volatility in the carbon market, and windfall profits for utility providers. Yet, the most important lesson to be drawn from the EU’s carbon exchange is that consumption habits must be altered to successfully address climate change.

The best example of this comes from England, where carbon emissions increased by 5.8 percent during the first phase of the ETS (2005-2007). However, according to a report from the Stockholm Environment Institute, “Carbon dioxide emissions embedded in imports went up from 35 percent of UK emissions in 1992 to 67 percent in 2004, while those embedded in exports increased from 31 percent to 45 percent of emissions over the same period.” The data indicates that while UK emissions may be only trending slightly upward (with plans to begin trending downward), the nation’s contribution to climate change has been merely outsourced and subsequently has increased significantly. Most of these outsourced emissions come from emerging countries like China, India, and Russia, all of which have not been proactive in reducing their carbon output.

Given the global nature of the climate change threat, outsourced emissions and emissions generated by consumption must be part of each nation’s climate change calculations. Americans are legendary consumers, and a cap-and-trade plan would go a long way toward making utilities and homeowners conscious of their energy-related emissions. Nonetheless, legislation in Congress and the public discussion about climate change must reflect the reality that, while making the U.S. look good, a system that does not factor in outsourced emissions does less to contribute to an overall solution. Instead, these emissions will be embedded in the totals of other countries where creating jobs for poor people, no matter how much pollution they create, is understandably far higher on the list of priorities than combating climate change.

I support the American Clean Energy and Security legislation pending in the Senate. Like most products of Congress, the legislation is flawed, but it is much better than the status quo. As the largest per capita polluter, the United States needs to be a leader on the climate change issue, and our willingness to enact tough legislation will make other countries more willing to address their own carbon emissions. My hope is that the Obama administration will work toward a tough and internationally focused agreement at the United Nations Climate Change Conference in Copenhagen this December. Any agreement must balance the need for political viability with tough regulations to reduce emissions. Although U.S. public opinion and action may be behind our European counterparts on climate change, we must hope that the Obama administration makes use of this historic opportunity to pass the American Clean Energy and Security Act, and work with other countries so that outsourced emissions do not undermine the efforts of those working to make our planet cleaner.

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