THE VINE JULY 1, 2009
Among people who think we need strong, rapid action to curb greenhouse-gas emissions and avoid dangerous climate change—and I'm one of them—there's been a great deal of hand-wringing over whether or not to support the House climate and energy bill, which is now cruising on over to the Senate.
The warts on the House bill are big and hideous: The renewable-electricity standard would require utilities to do little more than what existing state laws already require. The short-term targets for reducing emissions (nominally 17 percent below 1990 levels by 2020) fall well short of what the IPCC recommends to avert a climate fiasco (try 25 to 40 percent). The carbon cap-and-trade program relies on potentially shabby offsets that could weaken the targets further and will now face even less scrutiny thanks to a last-minute deal Collin Peterson struck on behalf of farmers. And it's quite likely the Senate will produce an even more diluted bill.
Still, in his New York Times column today, Tom Friedman lays out the case for why a watery, badly compromised bill is still better than nothing. Baby steps are important! In particular, Friedman argues that even a modest price on carbon will start steering our slow-turning supertanker of a country in a cleaner, greener direction:
More important, my gut tells me that if the U.S. government puts a price on carbon, even a weak one, it will usher in a new mind-set among consumers, investors, farmers, innovators and entrepreneurs that in time will make a big difference—much like the first warnings that cigarettes could cause cancer. The morning after that warning no one ever looked at smoking the same again.
Ditto if this bill passes. Henceforth, every investment decision made in America—about how homes are built, products manufactured or electricity generated—will look for the least-cost low-carbon option. And weaving carbon emissions into every business decision will drive innovation and deployment of clean technologies to a whole new level and make energy efficiency much more affordable. That ain't beanbag.
Hey, no need for Friedman to ask his gut. As Jon Gertner reported last year, the first item on the wish list of every venture capitalist working in clean tech is a simple price on carbon. Lay that down, they say, and money will start spilling into energy innovation. Likewise, Chuck Gray, executive director of the National Association of Regulatory Utility Commissioners has said that "climate-change legislation is essential no matter what the economic situation," because "it will remove many of the uncertainties that are preventing state regulators, utilities, and others from planning and financing new electricity investments."
One critical point to recognize is that this bill is only a first step. Looking back through history, every single piece of major environmental legislation in the United States evolved in fits and starts. The original Clean Air Act in 1963 dealt rather lightly with air pollution. But it kick-started innovation in scrubber technology and was expanded little by little, in 1965, 1966, and 1967, as awareness of the dangers of air pollution grew. Finally, by 1970, a new, much more comprehensive Clean Air Act was passed into law. (To be sure, that was a somewhat novel situation, as Richard Nixon was jockeying with Congress to see who could support the strongest environmental law.) Similarly, Europe's cap-and-trade system has been bolstered over time, its weaknesses patched, its targets tightened.
It's easy to envision a similar dynamic with global warming. A climate bill will give the Obama administration a better negotiating hand in the international talks at Copenhagen this December. If that helps us persuade China to take bolder action, and if reducing emissions proves as dirt-cheap as the CBO and EPA expect it to be, then combine those two things with the growing body of evidence that the dangers of climate change are more dire than we thought, and there should be fresh momentum down the road to augment and improve climate and energy laws here in the United States.
Indeed, that's essentially what happened with the push to curb CFCs and prevent the destruction of the ozone layer during the 1980s and '90s. As Michael Kraft, an environmental-policy expert at University of Wisconsin recounts, early moves on CFCs were modest, but the Montreal Protocol included a provision allowing countries to revisit the treaty every five years. As the science of ozone-layer destruction became clearer, and as people realized that transitioning away from CFCs didn't cost nearly as much as industry spokesman had warned, it became easier to accelerate the cleanup. "This sort of incremental decision-making is how the United States usually proceeds," notes Kraft.
Now, mind you, we could also see things careen in very much the other direction. It's possible for Congress to design a climate bill so malignant that electricity rates quickly spike, polluters buy up shady offsets by the truckload, and Goldman Sachs makes a fortune manipulating the carbon-trading market. In that case, public support for action on climate change would evaporate. Now, I don't think the House climate bill will lead us to that fate, and neither do the EPA and CBO analyses, but it's a definite concern.