As one new climate study after another crosses our headlines, most of us have come to understand that the problem is real, but we are uncertain about what we need to do about it. In Creating a Personal Plan for Confronting Climate Change: Part 1 – Sources of Information, I argued that the first step is to stop reading endless “Tips for Reducing Your Carbon Footprint” and find reliable sources that address the actual scope of the problem. This leads to the realization that political action must be part of any effective personal plan for confronting climate change.
Simply put, the problem is too big to be effectively addressed through changes in personal habit alone. Most climate scientists maintain that in order to avoid disastrous consequences, we need to keep CO2 concentrations below 560 parts per million. According to the Princeton Carbon Mitigation Initiative, our atmosphere contains 800 billion tons of CO2, and we are currently adding about 8 billion tons a year through fossil fuel use. About 4 billion tons of that is absorbed by forests and the ocean; the remaining 4 billion tons is going into the atmosphere. If we stay our current course, worldwide economic development and population growth will increase our annual 8 billion ton output to an estimated 16 billion by mid-century, which would push CO2 in our atmosphere to 1200 billion tons and 570 parts per million in the second half of the century – beyond the “disastrous consequences” level. In order to simply maintain the current rate of adding 4 billion tons of carbon per year to the atmosphere by mid-century, over the next 40 years, we will need to find ways to reduce our annual output of carbon by 8 billion tons per year, the entire amount we are currently emitting annually. This is a tall order. To put it into perspective, if we were to double the average gas mileage of all the cars in the world today (600 million) from 30 to 60 miles per gallon over the next 40 years, we would cut our emissions by 1 billion tons annually (1/8th of our target objective). Buying a Prius is not enough to solve the problem. In addition to changes in personal habit, we will need massive innovation in our ability to produce clean electrons and use them efficiently.
But why is political action needed? Isn’t the free market our best source of innovation? As Thomas Friedman points out, a free market in the energy sector is a myth (Hot, Flat, and Crowded, 245). We charge a 54 cent/gallon tax on sugar ethanol imported from Brazil, but only a 1.25 cent/gallon tax on oil imported from Saudi Arabia. We pay billions in tax incentives to oil, coal, and gas companies, but only intermittent, tiny tax incentives for renewable energy. Our government has been playing favorites in the energy sector for a long time.
Moreover, current business practices clearly demonstrate that new rules for the game are needed in order to provide energy companies with sufficient incentives to create the kind of innovation we need. Exxon-Mobile recently recorded the largest annual profit in history ($40 billion), yet invested less than .1% of that in renewable energy research and development. The average investment in research and development by electric utility companies is .15% of revenues; 8-10% is normal for most competitive industries (Hot, Flat, and Crowded, 247). It is clear that current market incentives are not sufficient to motivate businesses in the energy sector to invest the resources needed to create clean and abundant new energy sources. Current market conditions have allowed companies like Exxon-Mobile to serve their investors well, but are serving the long-term public interest poorly.
There are many political options available for creating new market incentives that will stimulate the kind of innovation we need. Congress could place a floor tax on gasoline or oil so that when the price drops below a certain level (say $100 a barrel), a tax kicks in to maintain the price at that level. This would reassure investors in renewable energy that there will be a consistent demand for their products in the long run. We could change the way that utility companies are paid so that they receive additional payments when their customers purchase technologies that reduce energy use. This would provide the market incentives needed for companies to make significant investments in creating a smart grid that is capable of communicating with household appliances, running them only when needed or during off-peak hours. We could shift subsidy payments away from industries that do not serve our public interest, such as corn ethanol, toward new subsidies for programs that do, such as the creation of a corridor of wind turbines from Texas to North Dakota. Perhaps the most significant step we can take is to impose a carbon tax or cap and trade system on industry so that the actual costs to our environment imposed by emissions are reflected in the price we pay for products.
Friday, the House narrowly passed a climate bill by a vote of 219-212. It does include a cap and trade provision. However, some environmental groups have argued that the restrictions on emissions in this bill are too weak.
According to Greenpeace, "To avoid the worst impacts of global warming, science tells us that the United States and other developed nations must collectively achieve emissions cuts of at least 25-40% below 1990 levels by 2020 and 80-95% by 2050. But ACES [The American Climate and Energy Security Act], as it currently stands, only sets a domestic target of approximately 4 percent below 1990 levels by 2020. Even with additional measures elsewhere in the legislation, the U.S. effort would still fall far short of the emissions cuts that climate scientists say are necessary."
A common objection to taxes or caps on emissions is that they would place U.S. companies at a disadvantage in the worldwide market by increasing costs. To solve this problem, the House bill includes a provision that would place a tariff on imports from countries that fail to impose similar restrictions on carbon emissions.
Strenghthening - or even passing - this bill in the Senate will require widespread public support driven to serve our broad, long-term interests. And therein lies the problem – How do we mobilize the political will to serve our long-term, public interest? Energy policy has historically been driven by particular interest groups – the automobile companies and unions, the coal companies and unions, the farm states, the oil companies. The potential to further one’s personal wealth and sustain a livelihood are powerful motivations, driving these groups to take political action on their own behalf. By contrast, the broader public is a poor lobby. It suffers from apathy. Climate change does not feel like an immediate threat – not something we worry about today. There is also a free-rider problem. If others take action, fine. I will reap the benefits from their action without having to get involved myself. But if others do not take action, there is little that I can accomplish on my own. So I will sit back and let others take the lead. In addition, the public that has the most to lose from inaction – a future generation – has no voice on Capitol Hill. This is why the challenge of climate change is so daunting. In order to effectively address it, we would have to make serious sacrifices on behalf of our common interest, as we have when faced with common threats in the past, such as fascism, but the threat in this case does not appear to be imminent . . . so we carry on, neither satisfied with the status quo, nor sufficiently bothered by it to become politically active.