Understanding the Climate Policy Debate

obama 30 Understanding the Climate Policy DebateIt is amazing to me how the media can both create and resolve its own conflicts. On April 10 John Broder wrote a piece for The New York Times, “Obama, Who Vowed Rapid Action on Climate Change, Turns More Cautious.” In the story Broder asks, “Has the administration scaled back its global-warming goals, at least for this year, or is it engaged in sophisticated misdirection?” The answer: “Maybe some of both.” 

Broder seems surprised that the Obama administration is moving carefully to build consensus behind new policies aimed at reducing carbon dioxide emissions. He identifies actions the administration has taken to move climate change forward and then seems perplexed when it pauses to reflect and build consensus. I’m not sure why anyone would expect President Obama to be aggressive and reckless when everything about him seems persistent and careful.

The transition to a “green” economy will take a long time, and it will require determined, constant and strategic effort. Rapid, risky and symbolic actions may make dramatic news stories, but they are not going to do much to reduce carbon dioxide emissions.

The electricity that allows me to sit at my computer and write these words is wholly dependent on the fossil fuels that power New York City’s electrical grid. The still fragile economy, which saw the shedding of nearly 700,000 jobs in the United States last month, is fueled in the same way. It is clear to me and an increasing number of world leaders that this is not a sustainable energy future. What is less clear is how we get to one that is.

The policy prescription is obvious in general, but complex when you get to specifics. Think about congestion pricing. It is clear to many of us that when there are too many vehicles on the streets of lower Manhattan to move freely, someone needs to figure out a way to reduce traffic. But how do you do that without destroying the vibrancy of the local economy?

If you set a price on bringing a vehicle downtown, what is the correct price? In addition to policies that “push” cars off the street, you also want to make mass transit convenient and comfortable to “pull” people down underground as well. 

To make this real we need to answer specific questions. How much do we charge as a congestion fee? How much do we invest in new transit infrastructure and technology? No one really knows. We need specific answers, but do not have enough experience and hard data to do more than guess. The same is true of the transition to a fossil-fuel-free economy. What should it cost to emit carbon dioxide? How much should we invest in new energy technology? How do we push the economy off fossil fuels and pull it toward renewable energy?

There is no question that we need to reduce carbon dioxide emissions. There is also no question that we will not do this quickly enough to stop global warming. So we will also need to sequester and store the carbon dioxide we have already emitted and will continue to emit. We will need both a regulation limiting carbon emissions as well as a tax on the carbon dioxide that is emitted.  But how quickly can we reduce emissions?  What is technologically and economically feasible? What are the positive economic impacts that will come from the technological development of alternative energy and increased energy efficiency? What are the negative economic impacts of the increased price of energy that will come from a tax on carbon and/or a cap on carbon dioxide emissions? The simple answer to both of these questions is that no one knows.

I have seen plenty of compelling analyses based on many sophisticated mathematical models of what this energy future should look like. While these models help us understand the complexity of the issue, none can predict the future. We are going to have to do this the old fashioned way – through trial and error.  We will end up formulating climate policy the same way we have developed all the other environmental policies we have set to date. We will start with less stringent standards than the ones we will eventually adopt.

As Broder’s piece indicates, The Waxman-Markey climate bill, which I wrote about in an earlier piece, provides an aggressive approach that changes the political equation and allows the Obama administration to play the role of climate moderate. We’ve seen this approach before. In building a consensus approach, the White House can point to the Waxman proposal and tell industry insiders that if they don’t play ball the law will end up even more extreme.

During the debate leading to the 1970 Clean Air Act, then-Senator Gaylord Nelson proposed banning the internal combustion engine. Suddenly the catalytic converter seemed a lot more technologically feasible to auto industry lobbyists.  The climate issue will follow the same well-worn path to environmental regulation we have seen before. It will be made more complicated by the international dimension of the issue, but the general pattern will look the same.

From my perspective, the key issue is to start this trial and error process as quickly as possible. Let’s avoid the symbolic debate over the level of reductions we will achieve in 2050. Let’s focus on what we can do by 2010 and 2012. Let’s get started.