On June 26, 2009, the House of Representatives took the historic step of passing the first piece of U.S. legislation to reduce emissions of greenhouse gasses. While the bill, like all legislation, is not perfect, it is a giant step in the right direction. The most important provisions of the bill require:
• Reductions in greenhouse gases by 17 percent from 2005 levels by 2020 and 83 percent by 2050 through a cap-and-trade program.
• Electric utilities to produce at least 12 percent of their power from renewable sources by 2020.
• Reductions in greenhouse gasses from new coal-fired power plants.
• New buildings to be 30 percent more energy-efficient by 2012 and 50 percent more efficient by 2016.
The bill also authorizes $1 billion a year to develop carbon-capture and storage technologies.
The Republicans are ferociously propagandizing this bill as a job-killing tax that raises the cost of energy and will destroy the American economy. The close vote of 219 to 212 in the House indicates that a lot of people are buying this tired argument. In the interests of political cover, 40 Democrats in marginal districts were allowed to join with the all-but-nine Republicans who opposed this bill. My gut tells me that this inside-the-beltway mind-set is misreading American public opinion and that a “no” vote on this bill will eventually come to be a badge of dishonor, rather than the safe vote some representatives believe it to be.
The American public understands that global warming is a real problem and they also understand the need to develop sources of energy that do not require fossil fuels. They are correctly worried that we do not know how to build a green economy and that the high costs of shifting from fossil fuels to renewable energy will be difficult for our economy to handle. But the problem with the same old anti-tax mantra that is coming from the same old political dinosaurs is that it misses the point. People get the idea that we need to invest in new and cleaner forms of energy. The average person knows that we can’t maintain the status quo. They may not like it, but no one thinks the transition to a sustainable economy can be done for free. It will require investment.
We need to accelerate the pace of development of renewable energy. We need to force the development of the technology of carbon capture and storage. This can’t be done as long as fossil fuels are as inexpensive as they are today. If capital is to flow into these new technologies, government must help ensure that the full price of the use of the fuel is included in the price that people pay for energy. The environmental impact of fossil fuel use creates costs that all of us must pay. It costs money to remedy pollution, ecosystem destruction and global warming. The cap-and-trade regulatory scheme provides a way to create a dollar value to pay for these costs. A direct carbon tax is another, probably simpler way of doing the same thing. In any case, by raising the price of fossil fuels we make renewable energy more cost competitive.
In the long run, fossil fuel prices will rise. Fossil fuels are finite, and as they get scarce and harder to dig up, they will get more expensive. For all practical purposes, solar power is infinite. Eventually, as we get smarter about how we capture and store solar energy, it will come down in price. Unfortunately, eventually takes too long. We have lots of fossil fuels left on earth, and climate change is already under way.
Many people do not like this new law. Some environmentalists feel it does not go far enough. Some business lobbyists think it goes too far. Like all legislation in the American political system it represents a compromise. To build support among moderates, some of the original provisions of the bill had to be watered down. This is typical lawmaking in our political process, and is of little concern. As I have written elsewhere, public policy does not attempt to solve problems, but to make them less bad. For example, homicide is down dramatically in New York City—from a high of over 2,000 per year in the 1990’s to around 500 last year. The problem is less bad, but is far from “solved.” The families of those murdered continue to suffer. Social security provides a second example: When the original Social Security Act was passed in the 1930s, many important provisions were omitted and then added in the next half-century or so. Lots of people were left out and lots of important benefits couldn’t generate a political majority at first. It took until the 1960s to add health care for seniors when Medicare was finally enacted. It took until the 21st century to add prescription drug coverage to Medicare. Environmental legislation typically follows the same incremental path. That is why it is so critical that we take the first step.
It is important to stand back and understand the importance of this step. In 2007, Senators Lieberman and McCain fell a few dozen votes short in their effort to enact national climate policy. The recent vote in the House was close, and victory was far from automatic, but it was achieved. The difference was Democratic control of the Congress and the effective leadership of President Barack Obama. Obama, Representative Henry Waxman and House Speaker Nancy Pelosi went all-out to secure this win. While the battle in the Senate will be equally difficult, a similar dynamic will be in place. The success of the president’s agenda depends on this win. The survival of Democratic majorities in Congress depends on the success of this agenda and the president, who is pushing it. If these senators and representatives hope to be returned to power in 2010 and 2012, they cannot afford for Obama to fail. Fortunately for them, Obama’s agenda is doing pretty well. When seen alongside victories on the stimulus bill and the budget, this climate and energy bill must be seen as another sign of a presidency that is beginning to show signs of success. In the era of the endless news cycle and infinite media sources, this is a small miracle.