Spring 2009 Climate Alert
Achieving Economic Prosperity and Climate Protection [ PDF ]
In this Newsletter:
Good Economics: A Strategy That Might Save the Climate
John C. Topping Jr., President and CEO, Climate Institute
This issue of the Climate Alert highlights the need to integrate climate protection strategy into efforts to catalyze economic recovery in the US and the globe after the worst buffeting in generations. Just as evidence grows that a mounting concentration of greenhouse gases driven by industrial and agricultural activity is accelerating us toward tipping points that, once passed, might ultimately doom our coastal cities and imperil our supplies of food and fish, confidence is shaken that our children and grandchildren can look to an economic future brighter than their parents could anticipate.
President Obama has acted decisively to move climate change and clean energy transformation atop his agenda alongside economic recovery and health care reform. His appointments in areas of climate and energy policy - Steven Chu, Cathy Zoi and David Sandalow at Department of Energy, Carol Browner as White House climate and energy lead, John Holdren to head the Office of Science and Technology Policy, Nancy Sutley to head CEQ, Jane Lubchenco to lead NOAA, and Lisa Jackson and Lisa Heiserling at EPA - all enjoy high respect in the climate protection community. Todd Stern, the Special Envoy for Climate Change, will report directly to Secretary of State Hillary Clinton, who has already made climate protection a key part of her discussions with world leaders.
Climate protection and clean energy transformation are, as Max Jerneck’s article indicates, a prominent feature of the recently enacted economic stimulus package. As Bill Nitze points out, the stimulus legislation contains a sizable investment toward a Smart Grid that should enhance both the efficiency and reliability of the US power system. Doug Gatlin indicates that dramatic increases in building sector efficiency can, over time, greatly reduce greenhouse emissions and save businesses and home owners large sums. Already some cities and entire nations are, as Heidi Heller shows, going further and implementing plans to become carbon neutral.
Yet before anyone cracks champagne, there is some very hard slogging ahead. It has become quite clear that major climate legislation will require sixty affirmative votes in the Senate. A carbon tax favored by many economists and analysts does not appear to command even a half dozen votes in the Senate. At this point there may be as many as fifty affirmative votes for some form of cap and trade, but despite sizable spending by environmental groups on media ads, the leading cap and trade approaches seem well short of garnering sixty votes. The biggest reason is the widespread perception that their enactment would bring burdensome costs to consumers and industry already crimped by the economic downturn. Added to that is a growing public fatigue with the mounting deficits and debt obligations associated with the bailouts of financial institutions and auto companies.
We may be at one of those rare junctures where doing what makes economic sense may be the only hope of enacting legislation to move the US to decisive action and help ensure success of international agreements before we pass climate tipping points. Least cost approaches to greenhouse gas reductions may be the only way to assemble the bipartisan coalition needed for climate action. The US can realize sizable emissions reductions at annual savings in the tens of billions of dollars by striking down restrictions in state laws against resale of power gleaned from waste heat to non-utility buyers, and by changing transmission pricing rules that are tilted against local generation by failing to factor in reduced line loss and lesser need for backup generation.
Even with these impediments, Amory Lovins shows dramatic movement is underway toward a more decentralized and supple electric grid. The Output Based Allowances proposed by Tom Casten would go far to achieve least cost greenhouse reductions in the heat and power sectors. Also by avoiding flow of revenues through government coffers, Casten’s plan minimizes chances for political pork and does not feed fears of energy policy building a Leviathan state. Mike MacCracken has set out a similar framework for the transportation sector that could achieve reductions quickly and cheaply, giving auto companies both greater flexibility and incentive than through command and control. Perhaps combined with the feebates described in Danny Reed’s article, this could be an engine for rapid reduction. Such out of the box thinking may enable us to give our children some hope.
Other Articles in this Newsletter:
Does a Big Economy Need Big Power Plants?
Output-Based Allowances for Efficient Greenhouse Gas Reductions
Green Provisions in the U.S. Stimulus Bill: Reducing Emissions While Saving the Economy?
A Practical Roadmap for Efficient Vehicles