Climate Fight Heads for New Round


Wall Street Journal
By Joseph B. White
June 17, 2009

The argument over whether climate change is a real problem is largely settled in Washington.

What to do about climate change? That debate is at a boil.

Under a bill being considered in the House of Representatives, companies that generate greenhouse gases — and their customers — could face steadily escalating costs for using fossil fuels. But businesses could keep those costs in check by investing in technology to change their carbon-dioxide-spewing ways. The legislation would require companies to obtain permits to emit polluting greenhouse gases, and the total number of permits available in the U.S. would be capped. If new technology or efficiencies lower their emissions, businesses could sell excess permits to other companies.

Europe has been using this approach, dubbed "cap and trade," for several years. But it is far from clear whether the system will win over U.S. lawmakers. One reason is that some political leaders are listening to the kind of doubts about the effectiveness of a cap-and-trade system put forward by a number of prominent thinkers on environmental issues.

Some of them assert that Europe’s experience with cap and trade shows that the system on its own has a negligible impact on pollution. It would make more sense, they say, to spend money on developing clean-energy technology. Others say the focus on cap and trade has diverted attention from the need for better strategies to reduce energy use.

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Bjorn Lomborg is one of the most prominent critics of cap and trade.
Bloomberg News

Bjorn Lomborg is one of the most prominent critics of cap and trade.
Bjorn Lomborg is one of the most prominent critics of cap and trade.
Bjorn Lomborg is one of the most prominent critics of cap and trade.

Bjorn Lomborg, a Danish business school professor and author, has won over many Republicans, and alienated many Democrats and environmentalists, by arguing that a cap-and-trade system rigorous enough to make a serious dent in fossil-fuel consumption isn’t politically feasible.

No matter how high oil prices rise, businesses and consumers will use fuel at roughly the same rate they do now, he says, because they have little alternative.

For proof, he says, look at last summer’s sharp run-up in oil prices. Demand for oil fell, but only by a little, he says, during a break from meetings with lawmakers — mostly Republicans — on Capitol Hill. "We are price-inelastic" when it comes to energy.

Mr. Lomborg’s numerous critics challenge his grasp of climate science. They also take issue with his view that governments should invest heavily in research on alternative technology instead of spending heavily to slash greenhouse-gas output in the short term.

* Compensating for Your Weaknesses: Leaders must hire others to compensate for their own weaknesses, says Copenhagen Consensus Center Director Bjorn Lomborg in this April 2009 video.

Mr. Lomborg says governments should commit to spending 0.05% of gross domestic product on clean-energy research, financed by a $7 a ton tax on carbon dioxide. That could address what he calls a "market failure" in the development of solar-power systems and wind turbines effective enough and cheap enough to compete with fossil fuels. Buying what he sees as today’s premature renewable-energy technology "would be like putting an inefficient [computer] on everyone’s desk in 1965."

The House measure, known as the Waxman-Markey bill, would provide a total of $20 billion for clean energy research and development through 2025, a spokeswoman for the Energy and Commerce Committee says.

David MacKay, a Cambridge University physics professor, shares Mr. Lomborg’s skepticism of cap and trade, but says industrialized nations need to make massive investments in clean energy using technology already available, from wind power to nuclear plants.

In a 2008 book, Prof. MacKay dismisses what he calls the "codswallop" in the energy debate, such as government campaigns to get citizens to turn off their cellphone chargers. In face of the enormous challenges posed by global warming, he says, such small changes amount to "a feeble gesture, like bailing the Titanic with a teaspoon."

Instead, he says, industrial economies need to think big about energy alternatives. To wean the U.S. economy off oil or coal, he says, will require "a California’s worth of wind farms, an Arizona’s worth of solar" and a lot of nuclear plants, he says. Shifting the energy mix this way will require big investments, he says, and a price tag on carbon emissions of about $85 a ton. That is far more than currently contemplated under the proposed U.S. or existing European cap-and-trade systems.

"Cap and trade," he says, "is acceptable because it achieves so little."

Hal Harvey, chief executive of ClimateWorks Foundation, a network of environmental groups, supports the House climate bill, but says the first priority in Congress should be to emphasize efforts that scale back U.S. energy consumption.
[total carbon-dioxide emissions]

"There are a small number of policies that make a huge difference," he says. Among them: Pushing for "best practices" — tougher efficiency and conservation standards — in areas like vehicle fuel efficiency and energy consumption in buildings.

"The lowly building code" can be used to cut energy consumption by as much as 75%, he says. The burst of effort to ratchet up energy efficiency in the U.S. after the oil shocks of the 1970s led to significant declines in energy consumption and tilted the balance of power away from oil and energy producers toward consumers — lowering energy costs for individuals, Mr. Harvey says.

Mr. Harvey worries that proposed emissions limits and efficiency standards that are currently part of the House bill could be watered down. Without those requirements to motivate changes in the way businesses and households consume energy, he says, "you have labored mightily and produced a mouse."

Write to Joseph B. White at [email protected]
Printed in The Wall Street Journal, page A14

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