9 December 2009: Small steps in the UK budget, much larger ones in the US

UK Chancellor of the Exchequer, Alistair Darling, today gave his pre-budget report to parliament. This included some good climate measures including:

  • A doubling in government finance for CCS demonstration projects.
  • A new scrappage scheme to help up to 125,000 homes replace inefficient boilers.
  • Changes to the climate change levy, company car tax and fuel benefit charge.
  • Tax advantages for those with micro-renewables and those who purchase electric vehicles.
  • Rail electrification between Liverpool, Manchester and Preston.

This is better than nothing, but not dramatic. The main focus was inevitably on reducing the UK budget deficit while trying to maintain economic recovery. On the deficit, there was no mention of green taxes, which should have been increased instead of increasing employment taxes, which will make job creation more expensive. In addition, there was no mention of the expansion of Trident nuclear weapons, which will cost between £72bn and £92bn over the next 20 years(see theguardian: Brown offers to cut Trident nuclear submarines by a quarter).

The Liberal Democrats have said that the expansion should be halted, as it cannot be afforded. Cancellation would save enormous sums of money, some of which could be used on the low-carbon transition, and would also meet the UK’s obligations under the Nuclear Non-Proliferation Treaty. It would also demonstrate that it is possible to be pro-nuclear power without being pro-nuclear weapons.

On the recovery, the UK is spending much less, proportionately, than is the US. The American Recovery and Reinvestment Act allocated, according the White House website:

… more than $80 billion in clean energy investments that will jump-start our economy and build the clean energy jobs of tomorrow:

  • $11 billion for a bigger, better, and smarter grid that will move renewable energy from the rural places it is produced to the cities where it is mostly used, as well as for 40 million smart meters to be deployed in American homes.
  • $5 billion for low-income home weatherization projects.
  • $4.5 billion to green federal buildings and cut our energy bill, saving taxpayers billions of dollars.
  • $6.3 billion for state and local renewable energy and energy efficiency efforts.
  • $600 million in green job training programs – $100 million to expand line worker training programs and $500 million for green workforce training.
  • $2 billion in competitive grants to develop the next generation of batteries to store energy.

(See The Whitehouse: Energy & Environment.)

The Obama administration is also getting serious about energy efficiency. The President has told the Department of Energy to be more aggressive on efficiency standards for common household appliances, like dishwashers and refrigerators:

Over $2.7 billion in formula grants are now available to U.S. states, territories, local governments, and Indian tribes under the Energy Efficiency and Conservation Block Grant (EECBG) Program, funded for the first time under the American Recovery and Reinvestment Act of 2009. [This] provides funds… to develop and implement projects to improve energy efficiency and reduce energy use and fossil fuel emissions in their communities.

(See US Department of Energy: Energy Efficiency and Conservation Block Grant Program.)

The low-carbon transition requires money, but also regulation. Obama supports the cap-and-trade Bill that has been passed by the House of Representatives, but is stuck in the Senate. However, the EU cap-and-trade scheme, the Emissions Trading System, has delivered very little climate benefit, because too many permits are allocated. Cap-and-trade is only any good if the cap is tight enough. Direct regulation may well be a better approach and, on 7 December 2009, the US Environmental Protection Agency (EPA) issued what may prove to be a landmark in US climate policy. The EPA said that:

The current and projected concentrations of the six key well-mixed greenhouse gases–carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur hexafluoride (SF6)–in the atmosphere threaten the public health and welfare of current and future generations.

(See EPA: Endangerment and Cause or Contribute Findings for Greenhouse Gases under the Clean Air Act .)

This means that the EPA can regulate them under the Clean Air Act. This announcement was specifically in the context of emission standards for light-duty vehicles. However, Clean Air Act regulation of greenhouse gases could be applied to power stations as well.

Those opposed to action on climate change, including some Republican senators, have already said that the EPA will be taken to court to challenge this. However, in 2007, the US Supreme Court has ruled that greenhouse gases are air pollutants covered by the Clean Air Act. So the EPA appears to be on solid ground. It should regulate power station emissions as soon as possible so that, whatever the outcome of Copenhagen and whether or not the Senate passes the cap-and-trade Bill, the US can move beyond dirty energy.

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