McCain, Obama and burning air
Monday, June 30, 2008
WHATEVER the outcome of the United States presidential election, climate change policy will be transformed. Both candidates have placed great importance on global warming. Republican John McCain believes that it presents a test of foresight, of political courage, and of the unselfish concern that one generation owes to the next, while Democrat Barack Obama calls it one of the greatest moral challenges of our generation.
Both McCain and Obama could leave future generations lumbered with the costs of major cuts in carbon emissions without major cuts in temperatures.
Both politicians are keen to tap into voters concerns about global warming. McCain launched a television commercial declaring that he had stood up to President George Bush on global warming. If elected, Obama plans to count on former vice president and passionate campaigner Al Gore to help lead the fight against warming.
Each would introduce aggressive targets for reductions in greenhouse gas emissions. Obamas plan would reduce emissions by 80 per cent below 1990 levels by 2050, while McCain aims to ensure that emissions are 60 per cent lower by then. Both would achieve these ambitious cuts by the same method: a cap-and-trade system that imposes limits on industry emissions and forces businesses to buy rights to any additional emissions.
A cap-and-trade system can seem like a neat market solution. In fact, it is worse than a straightforward carbon tax. With a tax, the costs are obvious. With a cap-and-trade system, the costs in terms of jobs, household consumption, and economic growth are hidden, shifted around, and not easy to estimate, though models indicate they will run into trillions of dollars.
Not everybody would lose. Some big businesses in privileged positions would make a fortune from exploiting this rather rigged market. And politicians would have an opportunity to control the number and distribution of emission permits and the flow of billions of dollars in subsidies and sweeteners. This is a very expensive, unwieldy way to achieve a very small reduction in temperatures.
The Warner-Lieberman bill on climate change a piece of legislation which was recently abandoned in the US Senate but is seen as a precursor of future policy would have postponed the temperature increase in 2050 by about two years. Recently, the Copenhagen Consensus project gathered eight of the worlds top economists including five Nobel laureates to examine research on the best ways to tackle 10 global challenges including air pollution and global warming.
Their goal was to create a prioritized list showing how money could best be spent combating these problems. The panel concluded that the least-effective use of resources would come from simply cutting CO2 emissions.
The expert panel concluded that investing in research and development into low-carbon energy would be a much sounder, more effective option an effort that both McCain and Obama support. But this, not carbon emissions, should be the core of their climate change policy.
Currently, low-carbon energy solutions are prohibitively expensive. The typical cost of cutting a ton of CO2 is now about US$20 ($28), but the damage from a ton of carbon in the atmosphere is about US$2. So we need to reduce by roughly ten-fold the cost of cutting emissions.
We can achieve this by spending dramatically more researching and developing low-carbon energy.
The US could provide leadership by committing to spending 0.05 per cent of its GDP exploring non-carbon-emitting energy technologies wind, wave, or solar power or capturing CO2 emissions from power plants. It would then have the moral authority to demand that other nations do the same.
By focusing more on research and development, and less in carbon cuts, both candidates could embrace a solution that encourages the best of the American innovative spirit and leaves the best possible legacy to future generations: a high-income, low-carbon energy world.
Project Syndicate
Both McCain and Obama could leave future generations lumbered with the costs of major cuts in carbon emissions without major cuts in temperatures.
Both politicians are keen to tap into voters concerns about global warming. McCain launched a television commercial declaring that he had stood up to President George Bush on global warming. If elected, Obama plans to count on former vice president and passionate campaigner Al Gore to help lead the fight against warming.
Each would introduce aggressive targets for reductions in greenhouse gas emissions. Obamas plan would reduce emissions by 80 per cent below 1990 levels by 2050, while McCain aims to ensure that emissions are 60 per cent lower by then. Both would achieve these ambitious cuts by the same method: a cap-and-trade system that imposes limits on industry emissions and forces businesses to buy rights to any additional emissions.
A cap-and-trade system can seem like a neat market solution. In fact, it is worse than a straightforward carbon tax. With a tax, the costs are obvious. With a cap-and-trade system, the costs in terms of jobs, household consumption, and economic growth are hidden, shifted around, and not easy to estimate, though models indicate they will run into trillions of dollars.
Not everybody would lose. Some big businesses in privileged positions would make a fortune from exploiting this rather rigged market. And politicians would have an opportunity to control the number and distribution of emission permits and the flow of billions of dollars in subsidies and sweeteners. This is a very expensive, unwieldy way to achieve a very small reduction in temperatures.
The Warner-Lieberman bill on climate change a piece of legislation which was recently abandoned in the US Senate but is seen as a precursor of future policy would have postponed the temperature increase in 2050 by about two years. Recently, the Copenhagen Consensus project gathered eight of the worlds top economists including five Nobel laureates to examine research on the best ways to tackle 10 global challenges including air pollution and global warming.
Their goal was to create a prioritized list showing how money could best be spent combating these problems. The panel concluded that the least-effective use of resources would come from simply cutting CO2 emissions.
The expert panel concluded that investing in research and development into low-carbon energy would be a much sounder, more effective option an effort that both McCain and Obama support. But this, not carbon emissions, should be the core of their climate change policy.
Currently, low-carbon energy solutions are prohibitively expensive. The typical cost of cutting a ton of CO2 is now about US$20 ($28), but the damage from a ton of carbon in the atmosphere is about US$2. So we need to reduce by roughly ten-fold the cost of cutting emissions.
We can achieve this by spending dramatically more researching and developing low-carbon energy.
The US could provide leadership by committing to spending 0.05 per cent of its GDP exploring non-carbon-emitting energy technologies wind, wave, or solar power or capturing CO2 emissions from power plants. It would then have the moral authority to demand that other nations do the same.
By focusing more on research and development, and less in carbon cuts, both candidates could embrace a solution that encourages the best of the American innovative spirit and leaves the best possible legacy to future generations: a high-income, low-carbon energy world.
Project Syndicate
Business Besides Oil
