Climate Capitalism

AP White House Correpondent Jennifer Loven published this analysis today on the Obama administration’s brokering of a compromise between the federal government, state governments, the auto industry and environmentalists on vehicle emissions standards.  No doubt many will find fault with one or more aspects of the deal, but that is the nature of any compromise.  The fact that the various stakeholders with significantly divergent interests were able to find common ground is reason for optimism that we will start to see progress on other energy and pollution issues, including the fight against global warming more generally.

The Pew Center on Global Climate Change has released a report this week that should help put some hard data back in the debate about a possible U.S. Cap and Trade system.

The study assumes CO2 price of $15/ton. Since there is not historical cap-and-trade data for the U.S. the study used statistical simulations looking at 20 years of data for 400 U.S. industries.

Industry interests claim that mandatory caps in the U.S., if not mirrored in the emerging economies of India and China will only outsource carbon emissions and further cripple Americans industrial sector.

Basic economics suggests that as the price of production increases in the U.S. due to the cost of carbon taxation, you can expect two things to happen, consumption should decrease and imports for comparable products should increase (i.e. consumption shifts from U.S. production to foreign production.) Industry’s claim is that rising prices will send consumers running for lower-priced, high-carbon alternatives and take the U.S. economy into a tail spin. The authors of the report claim that based on their analysis “energy-intensive manufacturers are likely to face only modest ‘competitiveness’ impacts under a U.S. greenhouse gas cap-and-trade program.” They suggest that environmental regulations make only a small impact in the cost of production. The real drivers of cost include the availability of skilled labor, access to capital, access to natural resources, and transportation costs. As the report puts it, “It is clear from this analysis that fear of competitive harm should not stand as an obstacle to strong climate change policy.”

To be clear, a cap-and-trade system is not a silver-bullet to solving global warming. Cap-and-trade focuses on mitigating emissions from industry and energy production and does little to solve our addiction the oil that runs our transportation system. That said, hopefully this report will help battle the fear-mongering that is sure to come from industry interests intent on derailing any efforts to enact a meaningful cap-and-trade system. However, it is heartening to read science supporting the general notion that we can use the tools of capitalism to help move towards a more efficient future.

Read full report here: http://www.pewclimate.org/docUploads/competitiveness-impacts-report.pdf

A guest submission by our friends at: ProgressiveKid. This article was originally published on Oct, 29, 2008 at: http://www.pkonaledge.com/2008/10/29/clean-coals-dirty-little-secret/

By Sarah Lane, ProgressiveKid

Both President Obama and his former opponent John McCain endorsed “clean coal” as an important element of their energy plans. But “clean coal” is a fairy tale with a very bad ending, as in the Big Bad Wolf eats and digests Little Red Riding Hood and belches out a black cloud afterward. (continue reading…)

It wasn’t so much of a debate since the story ran as two separate interviews, but NPR’s Robert Siegel interviewed both former Vice President Al Gore and Joe Lucas, vice president for communications for the American Coalition for Clean Coal Electricity.

Robert Siegel gave Al Gore a series of softball questions, but I thought Gore did an excellent job delivering a clear message that subtly derided the green washing of the coal industry without shutting the door on any future possible uses for coal in a carbon-neutral economy.

During Joe Lucas’s segment, however, Siegel seemed to transform into more of a journalistic pit-bull (albeit in a very NPR sort of way.)  Siegel asked Lucas a very pointed question: Does a “clean coal” plant exist today where 90% of CO2 emissions are sequestered? Lucas response was to re-define “clean coal”. He continued with a very thin argument about how the evolution of clean coal was similar to the development of medical technology. “30 years ago when didn’t have MRI machines we didn’t argue we didn’t have medical technology,” Lucas reasoning went. As the interview progressed, (or regressed) Lucas started to sound Palin-esque, making a series folksy appeals to support his cause.  Lucas compare the “difference of opinion” about how clean, “clean coal” should be to his mother’s opinion about the cleanliness of his room.  Siegel did a very solid job of taking him to task and brought him back to hard number definitions.

You can hear both interviews on NPR at this link.

While I was happy to hear Robert Siegel earning his public radio salary today it was sobering to hear Gore’s claim industry has spent a quarter of a billion dollars promoting the idea of “Clean Coal” this year alone. This is not investment into the technology to help figure out how to make coal into a “clean” fuel source, but as Lucas explained to support the evolving feeling or perception about coal in the minds of the American public.

As if solving the climate crisis wasn’t hard enough already… it should be a good time to be a PR firm.

Matthew Lockwood of the Guardian published an op-ed on Monday arguing that the free markets will never fix climate change and that government intevention is the only solution.  He makes several points that are difficult to dispute, such as that measures currently being considered are wholly inadequate to solve the problem, that that political pressures keep politicians from being able to make truly radical changes to energy policy needed to combat global warming, and that greatly increased investment in infrastructure to support green technology is essential.  He concludes that “the free market will not deliver.  We governments to take a lead.”

My only quarrel with the piece is the absolutist nature of the conclusion.  I don’t dispute Lockwood’s description of the issues.  Clearly more government intervention would be helpful.  Clearly more investment in technology and innovation are needed.  However, saying that we need more government intervention isn’t any more a solution to the problem than saying we need the free market to incentive green energy innovation. The difficulty in implementing radical governmental change is all the more reason why the free markets must deliver at least part of the solution.  We can’t rely on government alone to bail us out of this problem.