Who's going to get the carbon pollution credits?

One of the newest parlor games in Washington is figuring out who will get a slice of more than a hundred billion dollars' worth of carbon credits contained in energy and climate-change legislation emerging in Congress.

That game sloshed into Boston Monday afternoon with Obama energy czar Carol Browner, presidential science adviser John Holdren, and US Rep. Ed Markey, D-Mass., coauthor of new energy-climate legislation, telling a packed auditorium of MIT students, faculty, and business executives that their efforts were critical to solving the major problem facing the world: climate change.

Global climate warming and US energy security are connected, they said, by the need to sharply curb the burning fossil fuels to make electricity and drive vehicles to reduce carbon dioxide emissions.

"The energy challenge we face is actually a more difficult challenge than putting a man on the moon," Dr. Holdren said. "We have to do things that pervade our whole economy – and not just in this country but around the world – in order to get it done to the degree that is required. So it will take more than an Apollo program, more than a Manhattan project that produced the first nuclear weapons to get this done."

Significant federal investment in research and development would be needed to make the transition to renewable energy and other technologies including fusion and nuclear power, Holdren said, noting that such spending had in recent years been "pathetically small."

Ms. Browner, who is charged with coordinating energy and environmental policy across the federal government, said that difficult environmental problems had been met successfully before.

"In each case, there were those who said it would cost too much, it couldn't be done," Browner said. "But in each case American innovation and ingenuity proved them wrong."

Touting the power of market-based initiatives to stimulate change, Ms. Browner noted that by banning ozone-depleting chemicals used in refrigerating equipment, "we created a market opportunity, created incentives. So what happened was that in record time and at far less cost than anticipated, we had a replacement."

When Congress required capturing sulfur dioxide to limit acid rain, "a lot of people worried that this idea was too complicated," she said. "We had never done it. It would put too heavy a burden on business. But through the use of market mechanisms, we were able to find the most cost-effective way to reduce the problem. The actual price per ton of SO2 reduced in our environment, again, has been far less than anyone anticipated."

Likewise, putting a price on carbon is key to shift to renewable energy and avoid the worst impacts of climate change, Mr. Markey said as he fielded audience and media questions on the volatile subject. He and Rep. Henry Waxman (D) of Calif., released details two weeks ago of a new draft discussion bill that would deal with climate and energy together.

"We do create a market for carbon credits which is similar to the one which exists in Europe right now  – and we think it can work, and that way, the markets can make a determination. Rather than the Congress trying to pick a price they think will work, the market will do that."

A curious omission in the legislation is that it makes no mention of how carbon pollution credits generated under the new "cap-and-trade" legislation would be allocated  – a point not missed by audience members such as Jeff Seth Kaplan of the Conservation Law Foundation. He questioned how the carbon emission "allowance" credits for each ton of carbon dioxide pollution would be allocated – and whether they would all be auctioned as the administration has said it prefers, or not.

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