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Why the Inflation Reduction Act passed the Senate but cap-and-trade didn't

The Climate 202

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Send us a letter with a confidential tip using one of the new stamps! But first:

Why the Senate passed the Inflation Reduction Act but not a cap-and-trade bill, according to three ex-lawmakers

In 2010, the biggest climate bill in the nation's history crumbled in the Senate, where climate legislation has gone to die for decades.

The measure — known as “Waxman-Markey” for Reps. Henry Waxman (D-Calif.) and Edward J. Markey (D-Mass.), the authors — would have set a nationwide cap on carbon emissions while letting companies trade permits to meet it. 

But many factors converged to spell the cap-and-trade bill's demise, including the Great Recession and opposition from industry interests. After narrowly passing the House, it never got a Senate vote.

For those involved in the failed attempt to advance Waxman-Markey, the Senate's passage of a major climate bill on Sunday was nothing short of an astonishing feat — one that offers important lessons for the future of climate policy in the United States.

The Climate 202 on Tuesday spoke with three former U.S. lawmakers who were directly involved in the legislative effort more than a decade ago: former senator Barbara Boxer (D-Calif.), who chaired the Senate Environment and Public Works Committee at the time; Washington Gov. Jay Inslee (D), who served in the House; and Waxman, who helmed the House Energy and Commerce Committee.

Here's why it was possible to advance the Inflation Reduction Act, which the House is expected to approve on Friday and send to President Biden's desk, according to the trio of climate champions:

Boxer: Carrots are easier than sticks

While the Inflation Reduction Act contains $369 billion in new spending to fight global warming and bolster clean energy, most of that spending is in the form of carrots, not sticks.

In other words, the bill provides generous incentives for consumers and corporations to curb their planet-warming emissions, rather than punishments for individuals and industries that emerge as climate laggards. 

That's a major change from Waxman-Markey, which fell decidedly into the stick camp, prompting loud complaints from conservative groups and the fossil fuel industry. The conventional wisdom in Washington has also long held that a carbon tax — another stick — amounts to political kryptonite.

The cap-and-trade bill “told companies that they couldn't emit more than a certain amount of carbon into the air,” Boxer said. “I think that made it harder because it was laying down the law.”

By contrast, Boxer said, the Inflation Reduction Act “is all incentives. I think that really is an easier lift.”

Still, the Inflation Reduction Act includes a Methane Emissions Reduction Program that uses both carrots and sticks to curb methane pollution from the oil and gas sector.

  • The stick: Certain petroleum and natural gas facilities would be subject to a “methane emissions charge” that would start in 2024 at $900 per ton of methane, increase to $1,200 in 2025, and reach $1,500 for 2026 and each year after.
  • The carrot: The bill would provide up to $1.55 billion in grants, rebates and loans to help companies comply with the program. And companies would be exempt from the fee if they comply with the Environmental Protection Agency's forthcoming methane regulations.
Inslee: Climate disasters are on the rise

Compared to 2010, more Americans are now experiencing extreme heat waves, wildfires, floods and other weather disasters fueled by rising global temperatures.

The compounding disasters have put more pressure on Congress to act, said Inslee, who mounted a long-shot 2020 campaign to become America's first climate change president.

“The country is now recognizing that what might have been a hypothetical concern in 2010 about sea-level rise and glaciers is now a flooded Kentucky and a California on fire,” Inslee said. 

“What was somewhat of an abstraction in 2010 is now a reality with floodwaters going through your living room and being evacuated from your home because of fires,” he added. “And that has fundamentally changed the dynamic of this issue and has allowed the Senate to catch up with the House to really take some climate action.”

Waxman: The filibuster needs to go

In January, after Sen. Joe Manchin III (D-W.Va.) said he could not support Democrats' climate package, Waxman told The Climate 202 that he supports abolishing the filibuster, which would have ensured the passage of the cap-and-trade bill.

Waxman reiterated his support for ending the 60-vote threshold in an interview Tuesday, although he acknowledged that Democrats only needed 50 votes to pass the Inflation Reduction Act via the budget reconciliation process, with Vice President Harris casting the tiebreaking vote. 

“We need to abolish the filibuster because it doesn't make sense that a minority should be able to block a majority from doing what needs to be done,” said Waxman, who now runs a public relations and lobbying firm called Waxman Strategies.

“It's been a real roller coaster ride,” he added, referring to the decades-long quest to get climate legislation through the upper chamber. “And while this bill is not going to solve the problem completely, it's a major step forward.”

On the Hill

Sens. Schumer and Wyden seek to tax Big Oil in new bill

Senate Majority Leader Charles E. Schumer (D-N.Y.) and Senate Finance Committee Chair Ron Wyden (D-Ore.) are pushing new legislation targeting the windfall profits of large oil and gas companies amid high gasoline prices, Nico Portuondo reports for E&E News.

The Taxing Big Oil Profiteers Act would double the tax rate on the profits of major oil companies, impose an excise tax on stock buybacks, and close a tax loophole used by energy firms.

“Our broken tax code is working for Big Oil, not American families,” Wyden said in a statement. “While Americans pay more to fill up their gas tanks, Big Oil companies are raking in record profits, rewarding their CEOs and wealthy shareholders with massive stock buybacks, and using special loopholes in the tax code to pay next to nothing in taxes.”

The bill is the latest among several windfall tax proposals introduced by congressional Democrats. It differs from other proposals, such as the Big Oil Windfall Profits Tax from Sen. Sheldon Whitehouse (D-R.I.), because it is based on energy companies' profit margins rather than oil prices.

While one such proposal has passed the House, none are expected to be approved in the narrowly divided Senate.

Pressure points

A victory at whose expense? Climate activists grapple with political compromise.

When the Senate passed the Inflation Reduction Act on Sunday, many climate activists cheered the historic achievement. But the celebrations troubled other activists, who worried about the provisions in the bill that could harm low-income people of color who are disproportionately likely to live near polluting fossil fuel infrastructure, The Post's Sarah Kaplan reports.

Rhiana Gunn-Wright, director of climate policy at the liberal Roosevelt Institute think tank, recalled seeing mostly White activists tweeting about hugging their children. 

“I got that, I understood that,” said Gunn-Wright, who is Black. “But I looked at my own 8-month-old and I didn’t feel that. What I felt more was, yes, we made some progress, but I couldn’t tell him that it wouldn’t be at his expense one day.”

As part of a hard-fought political compromise with Sen. Joe Manchin III (D-W.Va.), the package includes a pledge to hold oil and gas lease sales in the Gulf of Mexico; a commitment that congressional Democrats and the White House will complete the controversial Mountain Valley pipeline; and a promise to pursue a separate measure that would ease permitting requirements for fossil fuel facilities as well as clean energy infrastructure. 

Varshini Prakash, co-founder and executive director of the youth-led Sunrise Movement, called the moment “bittersweet.”

“It's clear to me that this is both a big step forward and there’s more work to do," she said.

Extreme events

Europe faces another wave of record heat, prompting alerts

Much of France and parts of England are forecast to swelter under another heat wave this week, with temperatures possibly reaching 18 to 25 degrees above normal, prompting safety alerts and jeopardizing records, Matthew Cappucci reports for The Washington Post. 

The U.K. Met Office on Tuesday issued amber warnings — the second-highest alert for extreme heat — in parts of England. The high temperatures are also expected to increase the risk of wildfires and exacerbate an ongoing drought. 

Health officials have advised residents to “look out for others, especially older people, young children and babies and those with underlying health conditions” amid the scorcher, warning of heat stress, heatstroke and other ailments, considering that most people do not have air conditioning in their homes. 

The brutal hot spell comes barely three weeks after the previous one, which was made 10 times more likely because of human-caused climate change, baked Western Europe and broke records in Britain.

Northern Mexico has a historic water shortage. It's not going away anytime soon.

Abnormally hot, dry weather and exceptional drought conditions have plagued northern Mexico for more than a year, with water shortages becoming increasingly alarming in recent months, Kasha Patel and Lauren Tierney report for The Washington Post. 

The lower-than-normal amount of rainfall linked to climate change has been exacerbated by insufficient water management and population growth, adding strain to water demand and an already-weak socioeconomic system. 

Reservoirs are emptying, taps are running dry and water bills are skyrocketing, forcing ranchers to give up their livestock and people to steal water from trucks or pipes. Researchers say that water issues in the region will continue to worsen as the planet warms without better adaptation, adding that the government should update water policies and craft better drought mitigation plans.

In the atmosphere

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