Although the current federal administration has deregulated and decreased many important environmental regulations over the past four years, this is not to say that important climate work isn’t occurring at the national level.
Congressman Sean Casten, a first term Representative from Illinois, has been committed to climate work in the legislature since his election in 2019. Last year, Rep. Casten co-sponsored H.R. 9 in order to recommit the United States to the international Paris Climate Agreement, and to outline specific ways through which to reach our national target. He also serves on the Select Committee on the Climate Crisis, and co-chairs the New Dems Climate Change Task Force.
Now, as the Congressman prepares for the upcoming session, he is planning to introduce more climate legislation, and protect his constituents from the worsening impacts of climate change.
In our most recent Deep Dive Webinar, we paired with the Pricing Carbon Initiative to ask Rep. Casten some questions about the future of climate policy at the national level. This is a slightly edited version of that conversation.
This webinar transcription has been condensed and edited for clarity.
Bill Eacho, CEO and Co-Founder, Partnership for Responsible Growth: Can you tell us a little bit about the Select Committee, your role in it, and how you see the purpose of it?
Rep. Casten's Response
The Select Committee on the Climate Crisis was a lot of fun. I think VOX got it right when they described our report as being the most serious and comprehensive climate policy that has ever come out of Congress. Essentially what we did is, we said, we have to have a scientifically informed report, we have to quantify our results, and we have to determine whether we got there. And we don’t shy away from saying we didn’t get there. What we did was to say let’s look at what the science tells us we have to do. Because we are a committee of jurisdiction (we don’t have the authority to write law in the committee), we looked at all of the bills that have been introduced during the 166th Congress that would fit what the science tells us we need to do, put them together, and then brought outside folks to go through them and say, “what would happen if we implemented this broad suite of policies?”
It’s about a 520 page report, and the answer is that we would save about $8 trillion dollars before factoring in energy cost. We’d save a lot more once you factor in energy savings. We would avoid 62,000 deaths per year, and we would reduce carbon dioxide emissions in the United States by 88% by 2050. Here’s the problem — that ain’t enough. What the science tells us is that if we went to zero carbon dioxide [emissions] today, we’ve still got another two feet of sea-level rise baked in. Figuring out how to get to zero carbon dioxide [emissions], not by 2050 or 2030 but by 1985, because that’s the last point when the carbon dioxide levels were consistent with what they had been over the prior roughly 100,000 years when we evolved arts and culture and religion and cities and moved away from being nomadic hunter-gatherers. That’s the stakes of this. We then went through and recommended a series of other things to the committee of jurisdiction to do that. Now I should mention that the policies we recommended I think actually go significantly farther, but we only quantified the ones that were quantifiable. So for example, we said we have to get to a clean electricity sector by 2040, so that’s a quantifiable impact. We’ve got to get to zero emission vehicles, that’s a quantifiable impact. We included bills, a number of which I’ve led, including cleaning up the financial system, standardizing ESG reporting, requiring the FED to treat climate change as a systemic risk, and allow the private sector to better allocate capital. I don’t think anybody would argue that any of those changes would not increase the availability of capital to clean technologies, reduce the availability of capital to dirty technologies, increase the reduction of CO2 — but we can’t quantify that, so we didn’t include any of those. We have at this point our roadmap, and if we do a major energy bill every 15 years (one in 1978, one in 1992, and one in 2005), I’m hoping that this report will be the 2021 energy bill that we are overdue for at this point.
Bill Eacho: So you’re working towards a major energy bill in 2021. You’ve also got your own idea for legislation on how to address climate change in the electricity sector where you’re planning to introduce a bill shortly. Could you tell us a little bit about that bill and what your thoughts are?
Rep. Casten's Response
This bill is essentially what I’ve been working on since the day I got into Congress, and we haven’t got the final text back from legislative council which is why it wasn’t in the report, but it essentially comes out of discussions I was involved in when the Regional Greenhouse Gas Initiative (RGGI) was being founded. I was leading the trade association in New England. A number of my colleagues were saying that we can see what the problems are going to be [with RGGI] because the political exigencies of cap-and-trade always lead you to over allocate free allowances and then the price falls too far. The political exigencies of a carbon tax always cause you to make the tax too low to cause capital to go forward because there’s too much pressure the other way. You can’t ignore that, so how do you square that circle? This bill was something that we put the idea out, but we couldn’t get the RGGI folks to adopt it, we were just too late to the game.
The intent is to cover both the electric and thermal sectors for a variety of reasons. I don’t think an economy-wide price on carbon works very well for transportation or agriculture. But, within those sectors is essentially a generator-based output allowance. When you think about it, just in the electric sector, would be to say right now we’re 925 pounds of megawatt hours of carbon dioxide emissions roughly, let’s stipulate we’ve got to get to zero by 2040. We can change the year, it’s just algebra. We’re then going to stipulate that we will have every year, if you are a generator of electricity you will get an allowance of the lesser of whatever it is to meet that slope, or a number that the EPA stipulates to make sure that there is no leakage between other sectors of the economy so that we stay on that overall slope. Or, is 95% of the value from the prior year. So if we start doing this really well, we’ll decline faster.
Now imagine, we’ll stipulate that next year we’ve got this in place. We’re 925 [pounds of megawatt hours] this year, we’ll say that the allowance is for 800. If you’re a solar panel, and you generate a megawatt hour, you immediately get 800 pounds that you have the ability to sell. If you’re a coal plant, you generate 2,000 pounds of megawatt hour, you immediately get 800 pounds of allowance, but you’re gonna have to find a way to buy 1,200. Because they’re indexed to the megawatt hour, you get the allowance. You set this up in a situation where you can make an objective case where you probably have no impact on the price of electricity, because the trading happens on the other side of the transaction. For the customer buying electricity, the solar planet has more money, the coal plant is poorer — what happens to their margins is between them. But there’s no aggregate increase in the price of energy generation.
Then, we separately put a piece in that recognizes that virtually everything you can do to lower carbon dioxide emissions in the power and heat spaces is the investment of capital in something that will lower your ongoing operating costs. That matters because, in my experience, you are going to run a solar panel regardless of what the price of power is. What you’re getting paid to run that solar panel doesn’t really matter. What matters is, do you have a differential incentive to invest in that panel in the first place? In order to put that in place, what we’re saying is that to the extent that the parties to these contracts enter into long-term contracts, let’s say at least 15 years, they can both lock in the allowance at the day the contract is signed for the duration of that contract. So now the coal plant that is seeing ever-increasing obligations, can meet their obligations at a lower value in 15 years. The solar plant, which is seeing ever-decreasing opportunities to sell, can lock in their value over 15 years, and use that in a way so that now, when you’re going in front of your board of directors, or your bank, or your investment committee, saying, ‘I want to build this,’ you can say, subject to looking at the credit-worthiness of your off-taker, you have materially changed the formula and therefore the likelihood that you’re going to build this project. There are some wrinkles to make that apply for the heat sector as well, those are primarily matters of algebra. I think you can imagine the same thing applies to boilers and furnaces as well.
Bill Eacho: It’s a fascinating approach, to be honest. It’s very innovative. A lot of the folks on this call work for organizations that have been advocating for a carbon fee. A lot of us have looked at it and came to the same conclusion that you did: the problem with cap-and-trade is that the cap is set too high, because all the lobbyists want the cap to be higher and politicians set the cap. We have seen every cap-and-trade to date ends up at the floor price, because it’s just too easy to reduce emissions, more so than people thought. But with a carbon tax, you mentioned, political pressure will be to make it too low. But you also have the need for revenue, and one thing we’ve heard from your peers in Washington is that the attractive thing about a carbon tax is that we could really get some money, and we need money, because we’re running too much of a deficit. If you were to position your proposal versus a carbon tax, that would yield significant amounts of money to the federal government, is it that much stronger financially to incentivize solar power, versus, say, a $50 tax on carbon?
Rep. Casten's Response
Number one, I think we can never lose sight of the fact that the reason we are talking about pricing carbon is to get the bloody CO2 down. If we happen to have some positive impacts on deficits or environmental justice that’s great, but if those things come at the expense of getting carbon down, it’s a waste of time. A lot of my colleagues really like a carbon tax because we love to be Santa Claus. Give us trillions of dollars a year that we can reallocate through society, it’s awesome, we’ll keep getting re-elected over and over again. It has nothing to do with carbon policy.
The opinions given here are those of the Congressman, and do not represent the views of Climate XChange. We, as many others working on climate solutions in the U.S. and around the world, believe in the interconnectedness of the causes and effects of the climate crisis and other issues of social justice and equity. To learn more about these views, check out our page There is no Climate Justice without Racial Justice and our articles on intersection.
The reality of a carbon tax is, if you go into a board room and say, ‘I have a 15 year contract with American Electric Power,’ that is bankable and it affects your performer for the 15 years of that contract. If you go into a board room and say, there was recently a change in U.S. tax policy that causes me to get some money. Do you think that Congress will retain that tax policy over the duration of this investment? Have you ever heard of the tax extenders that are up every two years? People simply don’t take that seriously. So the practical effect is that for any price on carbon, if you structure that to be realized through a transaction between two private parties, the private sector is going to say, Congress does not like to undo those, it’s a takings violation in the Constitution, there’s a lot of legislation that doesn’t get done. If you structure it as a tax, it’s going to be massively discounted for any given price.
The second issue that I have with a carbon tax is that I think it is predicated on something that is true in economic models, but almost nowhere else, which is the idea that a tax on your competitors is a source of revenue to you. Maybe that’s true in the long-run, but we did projects in places like Alberta that had carbon taxes, we did projects in areas subject to Kyoto type rules. When you sit there and you say you’re going to build a project that has no marginal emissions, my competitor’s facing a charge. What is that going to do to my revenue? Well, am I sitting there on a merchant contract or am I thinking of something long-term? If I’m thinking of something long-term, it’s irrelevant. If I’m on a merchant contract, you have to start guessing. For my competitor, are other shareholders going to be able to eat that price, are they going to pass it through to their customers, is it going to be something in between, what’s the elasticity? You get into all of these theories that are very easily solved in an economic model, but at the point of making the investment, they all get discounted to zero.
From my own view, if you force me to choose between a carrot and a stick, I will advocate for the carrot everytime, because the carrot will always outcompete on the margin, the dirtier generator. Ideally, we should have a carrot and a stick, and ideally, in my really simple view of markets, if you’re selling avocados, shoes or carbon prices, the price you pay as a buyer should be relatively equal to the price you receive as a seller. That’s my simple economic theory, subject to perhaps some transaction costs or sales taxes, but we shouldn’t have something where, to assume we’re going to have a price, move that money to the government, and then have the government reallocate it. Whatever that is, it’s not a capitalist system. And if we want to use market forces to do this, let’s use markets. Let’s not assume that the government in their infinite wisdom will figure out how to allocate those resources.
Bill Eacho: Let’s look at the economy from a broader perspective. One of the arguments for a carbon tax is that it appeals across all sectors. It applies to everything. And you mentioned that it doesn’t work well enough in transportation, because of course, the price has to get pretty high, around $80-$100, before it starts to have an impact on transportation. And it could, in one theory. But how would you approach those other sectors of the economy, that your approach doesn’t work as well with?
Rep. Casten's Response
I think, and our Climate Committee report said this, a carbon price is essential to a zero-carbon future, but it is not sufficient. If you just think about an internal combustion engine, if I put that in a power generation mode, maybe I’m going to run it for 6,000-7,000 hours a year, and over it’s life, maybe 15, 20 years, over the life of the asset, the cost is going to be overwhelmingly dominated by what I spend on fuel. If I take that same technology and put it inside the car parked in my driveway, and I drive an hour back and forth to work, 5 days a week, and I own that car for 12 years, I’ll put 7,000 hours on that engine over the lifetime of the engine. The cost of operating that engine is going to be overwhelmingly dominated by the insurance and car payments, and so the goal is to figure out how we can deploy low carbon technologies. Once you have a Tesla, you don’t wake up in the morning and say, ‘Oh, I’ve got to look at the gas price and see when I should buy it.’ You drive it, because it’s cheaper to drive and it’s really fun, right? But how do you get that Tesla into somebody’s driveway? The answer is when you’re dominated by the capital cost, you put the regulatory incentive on the vehicle.
I just introduced an update of fee-bates to include [electric vehicle’s] that I think was fantastic. It changed the price of the vehicle, because that’s where people feel the pain, and tie that to carbon. But I think if you’re going to have a single clearing price for carbon, you’re always going to clear electricity, and thermal, and high-capacity electricity and industrial markets, way below the price that’s going to be required to change behavior on the transportation sector, at least on the side of heavy-duty. Long-haul, high capacity factor transportation.
Dallas Burtraw, Senior Fellow, Resources for the Future: Economists come to this problem, and every one of us to a certain degree are advocates of carbon pricing, recognizing its efficiency. But what Rep. Casten is talking about is that for the foreseeable future, we can’t anticipate a carbon price at the level that’s adequate to do the job for us. I remain a strong advocate for carbon pricing, but there are very many obstacles to overcome to put an adequate carbon price in place. What Rep. Casten is talking about is a policy that will promote directed technological change. Directed towards specific areas of the economy where it takes years to achieve that, and you have to build out infrastructure and coordination mechanisms, and where there is long-lived capital. We cannot wait for carbon prices to achieve a level to drive that different investment options, and that’s what Rep. Casten’s proposal would propose. It’s a durable mechanism, that’s what I really like about it, and it creates incentives within an industry to make it durable in a political context. But the important thing I want to come back to, Rep. Casten, is that your proposal plays well with carbon pricing. You can imagine having both at the same time. While we are pushing, those of us who want to advocate for as strong of a price as possible, that is not at all undermined by the proposal you’re putting out there. As a matter of fact, by driving technological change, your proposal is making it increasingly possible to imagine a robust and stringent carbon price.
Examples of this are already out there, such as in California, and to some degree in Europe also. In California, there’s a low carbon fuel standard in transportation along with the renewable portfolio standards. And you can imagine the low carbon fuel standard as a $200 tax on emissions associated with transportation fuels. But what’s special about it is that revenue stays inside the sector. To consumers, it manifests as about 20 cents per gallon, which is equivalent to a $20 carbon price. So California has these two policies side by side, and both of them are contributing about 20 cents per gallon. But within the low carbon fuel standard, the money is focusing like a magnet focusing the sun on a hot spot, creating incentives for technological change at the magnitude of $200 per ton. I’d rather see a uniform price throughout the economy, but this is the hand we’re dealt with right now. And importantly, this minimizes the impact on consumers. There’s real costs, and economists are really going to be worried about this, but the impact for consumers as I just illustrated, most of the cost is borne by producers, with a burden on dirtier producers and an incentive for new investments in clean production. That’s my comment on the situation.
But there are still many missing incentives in the economy, which is what I want to ask you about Representative Casten. What are we going to do, even within the industrial and energy sectors, about efficiencies further down the product stream? We’ve talked briefly about this before, but I’d like you to elaborate here on considering a product output standard versus a BTU output standard. Your proposal would provide this incentive on an energy output on the electricity side or in the thermal industry, but there are examples of a product based standard that also includes an incentive for efficiency in other elements of the manufacturing process. In the European Union Emissions Trading System, this is manifested in 54 product categories, California has many product categories for types of steel and food processing. So that’s an alternative approach, I know you’ve considered it, but you chose something different. Can you explain why?
Rep. Casten's Response
Sure. I think, Dallas, we’re all victims of our past life experience. In my case, I think a lot of the carbon pricing theories I have struggled with are things that energy markets have solved decades ago. How do you price an account for an invisible commodity that you can’t hold in your hand? Well, electric markets have figured that out a long time ago. How do you deal with transfers from the electric sector to the thermal sector, per ton of paper use, per ton of steel, what have you? In my case, having spent a lot of time negotiating energy service contracts with industrials, where we were sitting inside the fence calling the utility administrators and saying, ‘how do you make sure that you as an outsourcer of our energy are providing us with lasting value?’ I would submit to you that we solved that problem. Not just our company, but all those companies in our energy outsourcing space, have solved that problem a long time ago. What we as an industry collectively found was that you can meter the output of a power plant, boiler or furnace, and you can index those that says, I as the operator of this asset, and whether I’m operating the asset as an energy outsourcer or I’m metaphorically operating the asset because that’s where all the carbon is released and that’s the thing I want to incentivize, if I stop at those boundaries, I have complete control over my own destiny. As soon as I get to saying, well let me index to the downstream board feet of lumber, or whatever your unit is, I’m now running into all sorts of other rather complicated relationships of what is the turndown efficiency of your plant, what are the market economics that you’re going through? If you change production because something new comes up in your industry, do I have to renegotiate the contracts? I’m not doing any of that. I’ll just say, look: you’ve got a boiler, your boiler makes useful energy, I can calculate that useful energy that comes out, and we will keep ourselves laser focused aligned on what matters, which is: are we providing our economy with as much energy as it needs with as little carbon as possible? Whether our economy depends on board feet of lumber or we find ways to shift on our materials, that’s all external to that question. Personally, I think it’s cleaner to stay focused on useful energy, and leave plant operators to figure out how to do the rest of that algebra.
Bill Eacho: Let me shift gears here and ask Bud DeFlavis if he can react to the Congressman’s proposal. Your organization has pushed for a carbon price with 100% of the money rebated so that consumers are not hurt. What’s your reaction to this idea?
Bud DeFlavis, Director of Government Affairs, Alliance for Market Solutions: I’d like to take a longer look at it when the language is done. We do advocate for an economy-wide approach. We spend our time talking to Republican members about the way a carbon tax could be implemented that promotes economic growth. We talk about a carbon tax with reductions to other distortionary taxes or where we’re providing some regulatory relief. One of the most important things that we focus on is trying to promote the idea of lasting climate policy. I think we all agree that we don’t want to see something done by one administration or one political party undone by another. That obviously requires bipartisan buy-in. We think that there’s space for Republicans to come around to support something, I think a number of climate positions, but I think a carbon tax that ties in some reasonable offsets. I’d be curious more about your interactions with the conversations with your Republican counterparts— how they’ve gone, and are you looking to strike some sort of deal with your Republican counterparts? I know your bill is not out yet, but I’m curious as to your approach to putting together something that is lasting, getting bipartisan buy-in, and what your conversations have been.
Rep. Casten's Response
So a couple comments. Number one, you are absolutely right that anything we do has to be lasting and durable, especially given that we’ve got something like $9 trillion of depreciated capital in the energy sector and it’s got about a 20 year turnover. If we don’t figure out how to get the whole economy to be making investments on the scale of a tarp a year, because they’re already investing about $400 billion a year, if we’re going to get to zero carbon dioxide [emissions] in 20 years, we’ve got to roughly double that number.
So we better be making policies that people who think about deploying elongated capital on that scale assume the policies will be durable. I would submit to you that structuring this as contracts between two private sector players than what the coalition of Congress wants who happen to vote for the initial bill. It is legally impossible for all practical purposes in this country, to undo an existing project between two private actors. Look at when Bonneville Power tried to get out of their obligations to buy renewable energy. They went all the way to FERC. They said these markets have gone negative, they said too bad. You entered into a contract, it’s a matter of contract law. That’s how you make it durable.
I want to challenge your second point. Partisanship has become a dirty word, and that is really dangerous when good ideas become partisan. There is nothing that is naturally synonymous about bipartisanship and good policy. It’s a weird thing about this job, and maybe that’s just because I’ve never been in this job. I was talking last night to a group of high school democrats, and I said, alright, you invited me to this because I’m a Democrat. But when you go home at night, do you say, alright, I’ve divided my school into nerds and jocks and I only got a C on this paper, but I worked with 3 nerds and 2 jocks. We would never say that in any other line of work! Somehow, I think we cheapen ourselves by saying this. “Forget about whether it was good policy, but was it bipartisan?” The reality is we are darned near out of time to deal with climate change. Our grandchildren do not give a damn how bipartisan we are. They care that they don’t see more fires and floods.
I won’t name names, but my closest friend across the aisle, I chatted with him about getting involved in this, in what I thought was a pretty productive conversation. He got it, he understood the logic. But, he said here’s the deal, if I come out in support of this, it will be like coming out in support of gay marriage. I’ll get a primary challenger, I’ll lose my seat, and you won’t like the guy who replaces me.
And I said to him, “okay, what you’re basically telling me is that you’re incapable of leadership.” In the meantime, I’ve got work to do. So, I’ve had plenty of conversations with my colleagues saying, the big kid table is warm, it is ready, we have work to do at the big kid table, but we are not going to water this down to something that doesn’t do what scientifically must be done, in the name of bipartisanship. We have to find a way to make sure that it gets the majority of the votes, and the way to structure it to make it durable. We cannot – it’s the same thing I said about solving deficits. Being bipartisan is nice, but if it comes at the expense of solving climate change, it ain’t climate change policy. It’s something else.
Bill Eacho: What’s interesting about it, to be honest, is that it strikes me as the type of approach that would appeal across the aisle quite a bit, because you really are depending on market forces and market contracts.
Rep. Casten's Response
A lot of the intellectual weight behind this is my friend Bill Reilly, who was the Director of the EPA under George W. Bush, and was the Deputy Director under Reagan. He put together the Montreal Protocol. He had a very, “let’s use market forces and get away from strict command and control measures, let’s lever that power.” Those programs were successful. That kind of intellectual rigor of prioritizing markets is pretty lonely in today’s Republican party. And that’s tragic, and we can have a whole conversation about it, but the fact that Bill was a Republican has nothing to do with the fact that it was a good idea, any more than the fact that I am a Democrat means that this is a good idea. You have to get a coalition of people who have good ideas.
Bill Eacho: Let me shift gears here and ask Tyson to weigh in. Tyson also understands the way energy markets work.
Tyson Slocum, Energy Program Director, Public Citizen: Thank you so much, Bill. The Federal Energy Regulatory Commission is one of the most important and complicated agencies, but yet, Representative Casten, there is a pretty broad consensus in Congress that you are the go-to FERC expert, which says a lot about your leadership. As you know, FERC is holding a technical conference later this month on September 30th to talk about carbon pricing within its markets. And as usual, you are ahead of the game.
Earlier this year, you introduced legislation, HR 742, that would require any entity charging rates in FERC jurisdictional markets to include the externality effect of climate change into that electric rate. Could you talk a little bit about your thoughts and opinions on carbon pricing through FERC and through the organized wholesale markets?
Rep. Casten's Response
Sure, but first I have to slightly correct one thing. We didn’t require, we reminded FERC that they already had this obligation in energy prices, and that’s an important distinction. There are things we could do more aggressively, but my view of the law is that when FERC was created, when the Federal Power Administration was created if you want to get wonky on this, but in 1935 the Federal Power Act said that in the course of fulfilling their obligations, they have a whole series of issues they have to address that are not limited to consumer prices. They have to factor in environmental issues; they have to factor in issues of social equity. We’re three or four decades into this Milton Friedman view of the world that consumer price is a surrogate for all that is good in the world and you don’t have to look anywhere else. But the successes of clean energy are going to be our own destruction if we’re not careful, because we have set up energy markets where the price of electricity is set by the highest marginal cost per producer. That has in turn attracted a whole market of people to differentially run their low marginal assets more often. Witness the whole nuclear industry, which went from 60% to 90% capacity factor, to invest in assets that have lower marginal costs than their displacing. And they have to build a lot of zero marginal cost renewables.
The consequence of that has been that the power plants that used to be able to reliably bank on getting $60/70 a megawatt hour over the life of the assets, are now likely to get $20 or $30. The power plants, depending on what node you’re in, you may make 100% of your profits during 20 days of the year when the grid is tight (high marginal cost generator setting the high price). And the fact that since 2005, we’ve gone from 1300 pounds of megawatt hour to 925 pounds of megawatt hour. The retail price of electricity is down seven to eight percent, and is exactly what everyone fighting over Waxman/Markey said was impossible. But it also means that the incentive to build a new generator is falling. The entire conversation going on in the nuclear industry right now is, ‘how do I possibly fund my next refueling cycle when I can’t justify those economics at $20 per megawatt hour, that’s all I can count on.’ The co-gen (cogenerational) industry that I spend a lot of time in, it’s $1500 a kilowatt technology. It was $1500/kilowatt 10 years ago, but you used to be able to get a contract at 70, and now you’re lucky to be able to get whatever spot price you can get, and the return on capital is below those target levels.
Solar and wind are starting to mature on the cost curve, they’ve been coming down the cost curve so quickly as they mature as technologies that they’re able to keep up. And at this point they’re going to get squeezed. And so the purpose of that energy price act was to say, under the 1935 Federal Power Act, you have an affirmative obligation to factor these things into your markets. You are very quickly going to lose the incentive to invest, you’re going to lose the incentive for my teenage daughters to turn off the lights when they leave the room because energy is going to get so bloody cheap. We have to have a conversation about how to equitably allocate the gains, not the pay in, the gains of our energy conversion. So that yes, some of that gain should accrue to consumers, but it also needs to accrue to investors and other players in the system to make sure that we still run along. I’ve had a fair amount of time chatting with Chairman Chatterjee with Commissioner Glick and no one disagrees with my argument. We framed this as a reminder that we can try to keep some friends on the FERC commission of let’s give you the obligation to do this under your terms, but if you don’t get it done we may have to come back with something a little bit more draconian.
Christine DeConcini, Director of Government Affairs, World Resources Institute: I wanted to follow up on the comment you had – first of all, I completely agree. Bipartisanship, by itself, isn’t a value that is necessarily good. But to get your policy, or any policy passed, in the House you don’t need bipartisanship but in the Senate you do, unless a majority takes over and gets rid of the filibuster. I’ve worked on these issues for a long time. WRI really follows the facts on these issues. We support anything that will reduce emissions quickly that can pass. That includes a price on carbon, clean energy standards, you name it. I guess I’m just frustrated because there’s such a sense of urgency with this. Are you going to have Senate Republican support that you’re pretty sure of to get your bill over the finish line? How do you see that? Because we too have been chasing down these Republicans for so long, we’re part of a lot of dialogues with Fortune 100 companies, we have a lot of ties with Republicans who want to see climate action, but to date we don’t have a Republican other than Brian Fitzpatrick in the House stepping out on these, and certainly not in the Senate where we need it just because of numbers. There’s no way we’re going to have a 60 vote majority after this election. I’m just wondering what’s your thinking on how you’re going to get your bill passed, or other bills?
Rep. Casten's Response
First I think we need to at least acknowledge the tragedy that to describe legislation that is scientifically informed,revenue-neutral, that makes U.S. businesses more competitive, and that uses market forces, as this massive level of capital to bring energy forward. That would generate massive amounts of investment – we really take it for granted that in a Mitch Mconnell-led Senate, it will never come up for a vote. That speaks volumes about the character of Mitch McConnell.
I spoke with some friends, and they said, ‘what are you going to do to get McConnell to take this up,’ and I said, ‘we’ll throw in a provision that says everyone gets a gun and say some mean things about gay people.’ It wouldn’t make good policy, but that’s the unfortunate reality. I don’t know what to do about that. All I know how to do is say, ‘let us articulate the best possible policy; let us make the case for that best possible policy.’ Let’s put people out there making the case for it who understand this. I think part of the challenge, and I’m going to be a little bit personal here, is that Congress does not reward expertise, neither as much as it rewards seniority. When we put people out advocating for these things, who understand the issues, waiting for their staff to tell them how it all works, we can deserve what we get, right? You put the JV on the field when you’re playing the Chicago Bears, you’re gonna lose. I think you have to acknowledge that.
I think the second thing is, I think we need to stop talking about climate change, with the lens of when will we get the political will to act. Because when we do that, we are expressly saying, ‘I don’t care about what’s necessary, I want credit for getting done what’s politically possible.’ Fermilab is right at the edge of my district. Name one elected official who ever said, ‘we shouldn’t have built that super conductor at Fermilab because the majority of the country doesn’t understand quantum physics.’ Did anybody say, ‘we shouldn’t have invested in the internet because people don’t understand packet switching?’ Did anybody say that it was a good idea to shut down the pandemic preparedness task force that is now causing all this pain for COVID, because there wasn’t a big clamoring to do that?
Climate change is this weird thing where it’s one of the few scientific disciplines where we have decided to handicap ourselves by assuming that, unlike any other science, this science is somehow uniquely subject to Democratic will. I get the question. I understand that we’ve got to get these things passed into law. But, what matters is, in my lifetime, the carbon dioxide atmospheric concentration is down. In my lifetime, I thought Kyoto was going to be a slam dunk because it’s basically the idea that the Regan and Bush White House had already done for chlorofluorocarbons and for sulfur emissions. I would submit to you that the only reason Kyoto fell apart was because the Republicans at the time decided that they were going to oppose anything that came from a Democratic president. So it fell because it was Clinton’s idea, not because it wasn’t from a policy perspective, with all the ideological approaches that the Republicans had developed in creating market solutions to solving climate change. It’s not fundamentally different from saying, why do the republicans hate Mitt Romney’s healthcare plan? At some point, either you have a consistent political ideology that we can negotiate with, or your political ideology is simply to oppose things that are presented by the other side. I cannot answer the second question. But I can tell you that every idea that informs this policy is consistent with the values of the Republican party circa 1992.
Christine DeConcini: I recognize that, and we did have real Republican support on this in 2007, 2008. There were multiple Republicans that introduced bills, the Republican platform is unbelievable when you look at it in 2008. Obviously, there are a lot of political forces that have turned that upside down and now it’s become all these other issues. I don’t think it’s just a lack of vision from members of Congress, because there is a whole lot of money primarying people who step out on this thing, and threatening them, etc.
Bill Eacho: I want to step in here and get at least one or two questions from the audience at large.. We have a question: when we think about carbon sequestration in nature with regenerative agriculture, wetlands preservation, to stop deforestation, what are your thoughts about the government paying for sequestering carbon in nature?
Rep. Casten's Response
I think that there is no question that agricultural solutions are going to have to be a huge part of the negative carbon equation. The sheer amount of capital generated through direct capture is unfathomable. The physics aside. I think the challenge in this space, and part of why I said I don’t think an economy wide price is sufficient, is that it is very easy to measure how much carbon dioxide is released per megawatt hour per BTU, how much is sequestered in a direct capture device. It’s really hard to measure how much a particular agricultural practice was able to sequester. You can come up with directional averages that are accurate in aggregate, but it’s very hard to get on the specifics. So my own view, and I think the view of a lot of my colleagues, is to really make sure that we maximally use agricultural solutions, but we really need to focus more on practice based incentives and less on specific, per ton of carbon incentives. We can think of a whole lot of things, including some of the things your question mentioned. But I think it’s more about incentivizing the right practices, and frankly, getting rid of some of the current agricultural incentives that incentivize the wrong practices.
Bill Eacho: Certainly, if we have some form of a carbon price, and there’s at least an opportunity to then fund some of the right kind of agricultural practices, that is also a way to get a lot of Republicans on board because you have funding going into agriculture and a way to motivate people to change the way they do agriculture.
Rep. Casten's Response
Certainly one would hope. And if your audience hasn’t seen it, I would really recommend the work of Peter Bick out of Arizona State. He’s doing really interesting work looking at agricultural practices on a huge range of soil types, climate conditions, and drainage. To actually go through and take plugs of soil so that you can say, ‘if you do X and Y location, you can get some comfort that this will actually lead to this differential rate of carbon uptake in soils.’ It’s really interesting work, and funded interestingly. I think McDonalds is one of their biggest funders.
Bill Eacho: We’ve got several questions asking you for your thoughts on carbon fee and dividend. But we’ve covered that, in terms of how you think this is superior to a carbon tax. But, if there is a grand swell of support for some kind of a carbon fee, a flat fee across the economy, could that coexist with your proposal?
Rep. Casten's Response
Well look, there’s a problem as it is with that carbon pricing proposal because the federal government elected not to lead. We have to fit in with existing programs. How are we going to fit in with AB 32, with RGGI, with contracts that were signed under that, with the counting rules that are being set up by multi-nationals who are also subject to Paris. I think in general that’s a few rules that we are going to figure out how to tie together and reconcile with.
I would come back to what I said before, that if you force me to choose between a carrot and a stick, give me a carrot. I think the biggest flaw of the fee and dividend approach is that you lose a stick and then you absolutely guarantee that the carrot doesn’t exist. You lose all the proceeds that come from the stick and then you give it to anybody but the people who if they received that money would reduce CO2 emissions. It’s a beautiful way to play Santa. You could probably get the votes, because the voters would love it in the short term, but it doesn’t lower carbon if you don’t get an incentive to invest in lower carbon resources. It’s really easy to raise the price of energy.
Bill Eacho: How would you expand it globally? How would you encourage people to take this, in other countries, to do something similar? By example?
Rep. Casten's Response
I was in Madrid as a part of the delegation that wanted to represent the United States at the Conference of the Parties after Trump pulled us out of the Paris Climate Accord. I would’ve been in Glasgow in a couple months, but of course that’s now been deferred a bit in the wake of COVID. The purpose of Madrid was to set up Glasgow. One of the major tracks of the Glasgow COP 26 is going to be developing a standard for international private accounting. How do you make sure that a reduction from a Spanish manufacturer that’s going to zero carbon by buying nuclear power from France, and you’re selling your products to someone in Portugal, who owns the credit? That’s complicated, it’s tricky, but it’s just accounting. We should be at the table where those conversations are happening. If we had adopted a program under Kyoto, if we adopt my proposal, if we adopt something in between, we’re gonna have to figure out how to get that back into an accounting proposal on a bus that is already running, with a whole lot of people already on that bus, a whole lot of people who may or may not share our values driving that bus, and it’s going to be hard to fit in. But such is the consequence of electing not to lead.
Bill Eacho: It sort of ties in to the Nordhouse approach of encouraging countries to come into the climate club, and then you administer it internally and in effect, you make sure everybody is complying in whatever different way they are doing so.
Rep. Casten's Response
We’ve already settled that for power markets. We have cross-border flows and we know how to account for those. Those things all exist. But now we don’t have the will. They’re complicated, but they can be done.
