Two Thoughts for President Obama on his Way to Copenhagen
With the President getting ready for Copenhagen, the EPA did what Congress would not: Put in place a policy to ultimately reduce carbon emissions. The EPA finding that greenhouse gases (GHG) pose a danger and thus trigger a process to reduce the risks through direct regulation has become the president’s only “deliverable†in Copenhagen. More important, the only forces that will ever prod Congress to take action on such difficult matter as climate are broad public opinion and pressures from powerful groups — and that’s where the real importance lies in the EPA finding and a series of additional rule-makings scheduled over the next year.
The finding and rule-makings should bolster the public’s existing opinion that serious measures to reduce greenhouse gas emissions action are required, while putting the fear of God in many business executives (or more precisely, the fear of unaccountable government regulators). And the threat that in the absence of congressional action, EPA may directly regulate the greenhouse gas emissions of every company in America is credible, given the Supreme Court’s recent holding that the law requires that EPA come to some finding about the dangers of those emissions. The only way for all the powerful groups that work so hard to stop or profoundly weaken climate legislation — see their most recent handiwork in the effective gutting of Waxman-Markey — is to enact a serious program that would preempt EPA. Are you listening, Big Coal? And climate activists should be on the same mission, once they consider what such regulation would look like under the next conservative Republican president.
The finding, however, could accelerate the search for new responses to climate change by broadening the debate beyond the cap-and-trade model which Congress has already rejected three times; and, if Kerry-Boxer ever comes to a vote, will almost certainly go down in defeat again. The leading alternative, of course, is a carbon-based tax with its revenues going to cut payroll or other taxes. It’s an approach that’s worked well in Sweden and now is being considered in France, Ireland and Denmark. Economists like it, because it doesn’t introduce additional volatility to energy prices as cap-and-trade does; and environmentalists like it, because a stable price for carbon is a prerequisite for businesses to invest large sums in developing and adopting alternative fuels and technologies. Now, if businesses can come to dislike the prospect of direct EPA regulation with enough fervor, a new consensus could emerge around a new way to address climate change.
Speaking of Copenhagen, let’s cut through the nonsense about the whole project foundering unless rich countries agree to pay for the climate efforts of poor countries. Climate change is almost entirely the business of the world’s developed and large, fast-developing countries, because poor countries simply don’t have enough electricity generation, factories, capital-intensive farming and automobiles to produce significant amounts of GHGs. In fact, the world’s three economically-dominant places — America, the European Union, and China — account for 55.5 percent of all emissions. Include twelve more nations — Russia, India, Japan, Canada, South Korea, Iran, Mexico, South Africa, Saudi Arabia, Australia, Brazil, Indonesia, — and you cover 85 percent of global emissions. Among those twelve, the only, barely plausible cases for assistance are India and Indonesia, although both are on sharply-rising growth and development paths that could soon generate the incentives and resources required to become more climate-friendly on their own. Ensuring that the world’s 120 or so other countries, most of them small and many of them poor, share some responsibility for addressing climate change is truly a secondary issue.
It’s also clear that at this time, virtually no country seems prepared to shoulder the cost of making even its own economy truly climate friendly, much less pick up the bills to make other countries less carbon-dependent. The best course is probably a business form of technology sharing, in which governments support the formation of joint ventures between developers in the United States, the EU and the other 12 or so large GHG emitting nations — especially, of course, China and India — to develop, produce and sell climate-friendly fuels and technologies. Then saving the planet could end up being good business for everybody.