Earth's climate needs the help of incentives:
The discussion about climate change can be mind-numbingly complex, filled as it often is with economic and scientific jargon. But I think there are three broad principles that help sort out the substantive attempts at change from the others.
The place to start — the first thing that distinguishes the most serious reformers — is an acknowledgment that a cooler planet will cost money. It’s extremely tempting to focus instead on the dazzling economic opportunities that come with alternative energies. President Bush did so during this year’s State of the Union address when he said, “The way forward is through technology.”
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Some of these probably will become major energy sources in the decades ahead. But in most places they’re not yet nearly as cheap as oil, coal or the other fossil fuels that make the planet hotter by emitting carbon. Government subsidies cannot make up the gap, and, more to the point, nobody can accurately predict which alternative energies are the most promising and most deserving of subsidy. So a hodgepodge of new research-and-development tax credits just isn’t the answer.
The only reliable way to reduce carbon emissions is to make them more expensive. When you hear somebody talk first about doing this and only then about the wonderful innovations that will follow — and they will follow — you know that person is serious.
Parenthetical comment: Um, this is a serious blog?
This is essence of the second principle: the market created this problem, and the market is going to have to solve it. The issue, says David H. Festa, director for the oceans program at the advocacy group Environmental Defense is ‘how do we make sure people are given the right economic signals to do what we need them to do.’ ”
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All of the climate bills in Congress revolve around a similar idea. The government would cap greenhouse-gas emissions and issue tradable permits, each giving power plants the right to pump out a set amount. The plants that did the best job of reducing their emissions could then profit by selling unused permits to inefficient plants. A similar system put in place during George H. W. Bush’s presidency reduced acid rain much more quickly than economists had predicted.
The successes of the acid rain and fishing programs point to the third principle: the solution should be clear and straightforward. It should cover the entire economy, and it shouldn’t have escape hatches that undermine the market mechanisms. Mrs. Clinton, whatever her rhetorical weaknesses, has signed onto a bill that passes this test.
But at least two of the current Senate bills fail it. The one proposed by Dianne Feinstein, a California Democrat, covers only the electricity business, among other problems. The one being prepared by Jeff Bingaman, a New Mexico Democrat, sets a maximum price on the carbon permits, which undermines their whole point. It’s like asking people to invest in the stock market and then forbidding them from making more than a 5 percent return.
These three principles — acknowledge the costs; let the market work; and keep the solution simple — won’t cover everything. But they will go a long way toward reducing carbon emissions here, in the country that produces more of them than any other, and then letting us turn to another big problem: persuading China and India to follow suit.
