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In the Media

What Nancy's Reading

Sallan Review of Two Books

Possible But Not Probable

The political scientist Tom Ferguson sees a significant shift in the US business position on climate legislation — from unified hostility to selective support — especially among those sectors of the US economy related to investment, insurance, and pensions. At a conference on the Economics of Global Warming held in October 2007, he stressed, as he always does, that economic clout is the driving force of national politics and that smart money was shifting its position on climate. As if to confirm Ferguson's Golden Rule (University of Chicago), in a startling turn about, the New York Times reports that Republican presidential contenders are now debating how to address climate change, rather than how to ignore or deny it. Ferguson also insisted that as a general rule public opinion polls don't predict policy developments. Based on these two premises, he concluded that Americans should expect passage of federal climate legislation, regardless of whether concern over climate change starts to top polling data.

Contrast Ferguson's position with an exhortation to dream and frame a positive message. Ted Nordhaus and Michael Shellenberger (I'm going to call them "N&S" from now on) expand on their widely read "Death of Environmentalism" essay in their new book Break Through: From the Death of Environmentalism to the Politics of Possibility (Houghton Mifflin).

Stripped to its core argument, the authors assert that progress on political solutions to climate change are stymied by business-as-usual environmentalists who rely on nightmare visions of a world transformed and degraded by rising temperatures and rising sea levels in order to leverage political change. For those who want to save the planet, the N&S message is: accentuate the positive, get hundreds of millions in public funding to support the research and development of clean technologies and stop worrying about legislating caps on carbon emissions or raising the automotive fuel efficiency standards. For N&S, caps and efficiency standards reek of negative thinking and that's something Americans just don't like. The impact of the oil, gas, electric power or auto industries in the federal climate legislative and policy arenas don't rate a mention.

Let's make sense of this just-accentuate-the-positive position by taking N&S at their word. They say they are writing to foster strategies for a "politics of possibility" that will pack a punch because of its mass appeal and be equipped to succeed at the ballot box. How do they go about this strategy-building task? N&S are deft polemicists who sample from scholarly writing and the daily news to create a shimmering piece of eco-sociology about political and social movements, and that's a fine thing to do. The N&S recipe calls for something innovative — harnessing the commitment to the environmental goal of slashing our carbon footprint and blunting the impact of climate change to the muscle inherent in new economic and technical developments.

If properly harnessed, we will have the tools we need to cure our carbon addiction by growing the economy and garnering irresistible public support. This is a clarion call that unites the Apollo Alliance and New York Times columnist Tom Friedman. The Apollo Alliance calls for the large-scale creation of "green collar jobs" — good jobs for blue, white and pink collars alike — and so does Friedman. Friedman also links the development of new green technologies and industries to securing the international economic position of the US in a world where China and India could become major new markets. So far, so good.

While it is unlikely that the corporate members of the US Climate Action Coalition (USCAP), General Electric's Ecomagination or Goldman Sachs' Green Initiative would see eye to eye with the Apollo Alliance (and the devil, after all, is always in the details), they share a vision of combating climate change with a growing economy that is not carbon-dependent. Even more important, they all favor legislation that will change the way we manufacture and consume products and services with carbon content.

The big difference between N&S and USCAP is that the corporations advocate for a cap and trade scheme as the defining mechanism of federal climate change law. Caps would impose enforceable limits on carbon and other greenhouse gas emissions; they would drive change because they'd require carbon emitters to take actions to cut emissions in some measurable way and by some measurable amount. Does this mean that cap and trade should be the sole province of corporate America? Hardly. In addition, although markets for trading carbon emissions are not the only possible price-setting mechanism, as carbon tax advocates forcefully argue, they are the mechanism favored by USCAP and some of the large national environmental organizations.

Contrast this to the heart of the N&S "breakthrough". They call for passage of federal legislation that, "would invest $300 billion over ten years in the fastest-growing markets in the world: energy. Initial econometric analyses show that a portfolio of investments in wind, solar, biofuels, carbon sequestration, mass transit, hydrogen and other energy sources would attract an additional $200 billion in private capital and create roughly three million new jobs."(N&S, 257). Sounds good, but how much would greenhouse gas emissions be reduced and by when? And why are they putting all their investment eggs in the clean technology basket?

Now we come to the crux of the matter: can we say that N&S have mapped out a coherent, credible "breakthrough" strategy for shrinking our carbon footprint while growing our economy and expanding opportunities for good jobs? Alas, the answer is no because their prescription is not rooted in a proper grasp of the history of 20th Century environmental policy in the US.

The era of modern American environmental policy is defined by passage of landmark federal legislation including the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act and Superfund. What all these laws have in common is the operating principle that pollution is reduced by permitting systems, thereby regulating and reducing it. All these laws provided the impetus for vast new areas of scientific and engineering expertise and the appearance of new industries. Although, the 21st Century has not been returned to an environmental Eden, the success of these landmark laws is indisputable. Laws that permitted and constrained pollution produced great technical and economic growth. Such growth would be inconceivable without the mandates and restrictions imposed by law.

The N&S prescription for positive thinking and investment to address 21st Century climate change also lacks a sure sense of the actual role of national leadership on climate in the Bush era, especially where enormous economic forces are in play, not to mention the high-stakes arena of international energy competition. And let's not forget, if Tom Ferguson is right, even if he's not 100% right, understanding policy making as well as political outcomes cannot be reduced to polling and "popularity".

It's worth noting that N&S are silent, for example about investing in innovations or updating building codes that make buildings much more energy efficient in order to shrink our carbon footprint. Well-insulated buildings and low e-value windows don't seem like requirements that would send voters running in the other direction. It's N&S who are running in the other direction by pouring some of their greatest rhetorical scorn on environmentalists unsuccessful campaign to win legislation that would increase CAFE standards while saying nothing about the role of the auto industry in fighting new standards or cutting CO2 emissions, both in Congress and the courts.

Don't be fooled by recent green advertising by Detroit automakers. Contrary to their image-makers, investment in the research and development in cutting carbon emissions from their products is driven first, by European and Japanese carbon emissions standards. If domestic companies sold cars and trucks only in the US, would there be similar investment in carbon emissions research? Draw your own conclusion and decide whether it's in keeping with the N&S "breakthrough".

While making the case for the alternate energy investment strategy, N&S take time to write off legislation that sets carbon limits, "The problem with regulation-centered approaches from Kyoto to a carbon cap-and-trade system, is not just that they are ecologically inadequate, but also that they are economically insufficient for accelerating the transition to clean energy." (N&S, 258). At the same time, they call legislation that would cap the nation's carbon emissions a "small, incremental" policy! While incentives and "carrots" certainly can be powerful change agents, there is no evidence that meaningful levels of carbon reduction will occur without the stick of enforceable mandates. Why? Simply put, because the individual benefit of inaction or investing in something that's climate damaging in the short term can outweigh the collective benefit in the long term. That's why combating global warming requires the enforcement power of the collective action known as law.

A close parallel to the N&S investment-only recommendation is President Clinton's reluctant embrace of and President Bush's enthusiasm for climate volunteerism. Here, things look even worse for achieving significant carbon emissions reductions. In Reality Check (Resources for the Future), Billy Pizer, reviewed recent studies of voluntary programs to cut carbon, in the US and abroad. He found that, "Notwithstanding the many potential benefits of voluntary approaches, the absence of deliberate price or regulatory signals to encourage fundamental changes in corporate or consumer actions or stimulate demand for cleaner technologies, is a clear limitation." (Pizer, 9)

Getting even more specific, research on the U.S. Department of Energy's Climate Challenge Program, which focused on 50 large electric power utilities, found, "that adoption of the program seems to have no effect on emissions. In fact, those firms predicted to volunteer higher reduction levels were found to reduce their CO2 emissions less." (Pizer, 13)

Of course, the political relevance of the implacable opposition to setting higher fuel efficiency standards and limits on the carbon dioxide emissions on the part of still-powerful US auto makers and what remains of their organized labor force, in combination with an American public that is allergic to tax increases and deeply suspicious of government policies that lead to higher prices, should not be underestimated when handicapping federal legislation that caps or prices carbon emissions. Unfortunately, N&S fail on this political relevance score. They overvalue voluntary climate change strategies that fund new jobs and new technologies but don't mandate carbon limits or carbon costs. Comparing "Voluntary versus Mandatory Approaches To Climate Mitigation", Thomas P. Lyon found: economic analysis shows that voluntary programs cannot achieve the same level of environmental protection as mandatory programs. Hence, government sponsored voluntary programs are best understood as weak instruments adopted when political resistance blocks the implementation of more powerful mandatory controls. (Lyon, 2)

The Lyon study used an Organization for Economic Co-operation three-part classification system of voluntary environmental programs: unilateral initiatives by industry, negotiated agreements between industry and government, and public voluntary agreements, ("PVAs") — a particularly US phenomenon and therefore, the focus of this comparison of voluntary and mandatory cap and trade programs. US firms are further categorized as Dinosaurs, Survivors and Leaders. Lyon found:

"PVAs typically involve government provision of technical assistance, access to specialized software, publicity for firms that adopt abatement technology, and sponsorship of technical conferences at which participating firms can exchange information about cost-effective means of pollution control. These benefits can be thought of as a small positive inducement to encourage firms to adopt the abatement technology — an in-kind subsidy, if you will, or an economic carrot to reward good behavior.

How does a PVA affect the three groups of firms we are considering? Dinosaurs are unaffected by the subsidy; even with government assistance, these plants cannot afford to adopt leading-edge abatement technology, but neither are they forced to exit the industry. Similarly, Survivors are not affected by the PVA; they, too, cannot afford to adopt new abatement technology, nor are they required to purchase permits. Only the Leaders change their behavior. At least some of these firms will find the government assistance enough to induce them to adopt new abatement technologies. The need to raise (costly) government funds to finance the PVA program, however, means that the assistance will not be enough to achieve all desirable environmental improvements. Fewer firms will adopt new abatement technologies under the PVA than under a tradable permit system, which does not rely on public funds to create carrots rewarding good behavior." (Lyon, 8-9)

This conclusion throws into sharp relief the sheer improbability of N&S's expectation for what Americans can expect from a $300 million tax-payer supported energy program that has no carbon caps. Instead, Ferguson might find support here for his theorem about the link between economic clout and political outcomes.

Finally, as to who would get access to or benefits most from the complex of climate legislation, funding, implementation and enforcement, that could emerge from the convergence of corporate, environmental and popular interests, well that's for another day. For now, at least one thing is clear; legislation imposing mandatory cuts on greenhouse gas emissions is a necessity. For reasons of economic growth, equity and political viability, these mandatory cuts should be firmly coupled with a "green collar solution" that consists of smart public and private sector investment in green, clean industries and jobs. But investments in green innovations, products and jobs without the compulsion of meeting compulsory greenhouse gas emissions cuts within a specified time period are doomed to failure if our goal is saving the planet from unbearable warming.