Skip to Content

Loopholes in the Climate Bill

Some powerful industries may yet find ways to shift the burden of reducing emissions to others.

One of the potential problems with the energy and climate bill now working its way through Congress is its size. It’s bound to be full of hidden loopholes that could help various interest groups, probably making doing something to slow climate change more expensive.

Economists have already pointed out at least one subtle problem that could lead to higher costs. Certain industries, such as the steel industry, will be awarded allocations for emitting greenhouse gases according to how much they produce in the first place, and these allocations will be updated periodically, as their output changes. This gives them the perverse incentive (as economists like to put it) to generate more emissions so that they can reap more of the potentially valuable allocations, which they can sell on a carbon market. The overall carbon emissions for the United States won’t increase–the overall cap doesn’t change. But giving more allowances to steel manufacturers means that other industries won’t get as many. That could drive up the cost of electricity, for example.

The solution, says Gilbert Metcalf, a professor of economics at Tufts University, is to change from output-based updating of allocations to setting allocations based on emissions before the law goes into place.

Today, the Washington Post uncovers another subtle detail of the bill that it says could be worth millions of dollars to oil refiners.

During the final days of the drafting of a 946-page climate bill, Rep. Gene Green (D-Tex.) won support for an amendment that deleted a single word and inserted two others. The words could be worth millions of dollars to U.S. oil refiners.

The Green amendment deleted the word “sources” and inserted “emission points.” In the arcane world of climate legislation, that tiny bit of editing might one day give petroleum refiners valuable rights to emit carbon dioxide when it otherwise might not have been allowed. Refiners could get the extra allowances in return for cutting carbon emissions by 50 percent at a single point of a vast refinery complex instead of slashing emissions by 50 percent for the entire facility.

The article goes on to mention a couple more loopholes, and surely in this long and convoluted bill there are more that aren’t obvious. Some more may simply be the result of unclear wording. Again, they won’t change the total emissions as long as the overall cap stays in place, so the bill still has some teeth. Indeed, Robert Stavins, director of the Environmental Economics Program at Harvard University, says that the political wheeling and dealing could be a good thing: it could get more people behind the bill, which could make it more likely to pass.

That said, some of the worst polluting industries–as long as they have strong lobbyists–might get away with doing little to change their ways, passing on the burden to others.

Keep Reading

Most Popular

A Roomba recorded a woman on the toilet. How did screenshots end up on Facebook?

Robot vacuum companies say your images are safe, but a sprawling global supply chain for data from our devices creates risk.

A startup says it’s begun releasing particles into the atmosphere, in an effort to tweak the climate

Make Sunsets is already attempting to earn revenue for geoengineering, a move likely to provoke widespread criticism.

10 Breakthrough Technologies 2023

Every year, we pick the 10 technologies that matter the most right now. We look for advances that will have a big impact on our lives and break down why they matter.

These exclusive satellite images show that Saudi Arabia’s sci-fi megacity is well underway

Weirdly, any recent work on The Line doesn’t show up on Google Maps. But we got the images anyway.

Stay connected

Illustration by Rose Wong

Get the latest updates from
MIT Technology Review

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

Explore more newsletters

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at with a list of newsletters you’d like to receive.