May 23, 2008
Why We Can Disagree to Agree
For 20 years, liberals and conservatives have been locked in a debate about the relative seriousness of climate change. Conservatives have either denied that it was happening or played down its significance, while liberals and environmentalists have tended to see it as ecological apocalypse meriting either extreme personal sacrifice or a supposed cost-free regulatory fix.
That debate is now undergoing a major shift. Conservatives like Jim Manzi, Newt Gingrich and others recognize that humans are affecting the climate and that something should be done about it. Liberals and environmentalists, like Joe Romm and most recently Al Gore, are beginning to recognize the political futility of peddling sacrifice, and have started emphasizing the need to make clean energy cheap. To be sure, both camps are still far apart in their view of global warming, with Romm seeing it as a future hell on earth and Manzi viewing it as little more than a rounding error. But if we fixate on these radically divergent views of the problem we risk missing some signs of agreement over what should be done about it.
The Model Muddle
Liberals and conservatives both rely on highly complex climate and economic models to inform their views of what should be done. The problem is not so much that the models are inaccurate as that they must, by their nature, produce a wide range of possible future scenarios. Models thus offer very little certainty upon which to base our actions. Will global warming result in so little damage that it is not worth investing any amount of money in cleaner energy sources? Or will it undermine the basis of human life on earth, which would merit extreme investments and personal sacrifice? Change a single decimal point on one of the hundreds of inter-related ecological or economic inputs -- faster-than-expected emissions from China, melting tundra, diminished albedo, slower rates of deforestation, faster economic growth -- and voila! you've constructed a radically different world.
One of the largest uncertainties is also the one that will have the largest impact on our ability to deal with the problem: technological innovation. If we bought enough of them, could solar panels one day become cheaper than coal? Could new air capture machines suck carbon dioxide out of the atmosphere and store it underground so cheaply as to obviate the need to slow emissions?
When modelers try to predict the effects of innovation on prices they tend to rely on learning curves. They allow us to make predictions about, for example, how many solar panels would need to be produced to become as cheap as coal. But while there is incremental technological progress there is also non-incremental progress, which can lead to the creation of either whole new learning curves, or disruptions to the old ones. Something like this occurred when, in the early 1990s, the Danish government started deploying massive wind turbines offshore, which produced energy far more cheaply than the older, smaller ones. Non-incremental progress ("breakthroughs") and sharp price declines may occur with printed ("nano") solar panels, air (CO2) capture devices, and new battery technologies -- though probably only if we subsidize their mass manufacture and deployment.
As a consequence, the most important factor for determining the cost of doing something about climate change is the one that is most difficult, and arguably impossible, to model. The result is that most models fail to calculate the myriad benefits that come from investments in technology and tend to cast the transition to clean energy in zero-sum terms: either we spend more on energy or we spend more money on preventing malaria and hunger. It is for this reason that Indur Golanky argues for money invested in adaptation instead of mitigation.
None of this is to say that modeling is pointless. Good models reveal myriad factors affecting the future. The best are transparent about their limited ability to predict technological change. But it is to say that conservatives and liberals could continue having the same argument for another 20 years and neither side could credibly claim victory.
Why We Can Disagree to Agree
Strange as it sounds, reasonable liberals and conservatives can disagree about the seriousness of the problem and still agree on solutions. But first they need to embrace two principles. The first is the Principle of Climate Uncertainty. Whatever action we take must be robust to ecological and economic uncertainty. Said differently, the policies we implement should be justifiable whether climate change results in floods, droughts and food shortages, or merely the need to turn up the air conditioner.
The second is the Principle of Climate Politics. People -- whether Americans, Europeans, Chinese, or Brazilians want to do something about global warming; they just don't want to pay much more for energy to do it. Thus, the world will only reduce emissions to the extent that clean alternatives to fossil fuels are cheap and available, or that there are cheap ways to capture and store emissions, or both.
If we can agree on these two principles, what then? First, we should make clean energy, and the capture and storage of emissions, cheap. Second, we should adapt to a warmer world.
Because voters and policymakers vote for policies, not predictions, they can support policies for a wide range of reasons that don't require seeing the world in the same way. Subsidies for electric cars and trucks, transmission lines, R&D for new battery technologies, air capture, and a National Energy Education Act can be supported for ecological, national security, or economic reasons. Electric cars and trucks will reduce our dependence on foreign oil and could revitalize Detroit. Air capture technologies can also be used to make synthetic fuels. New battery technologies for storing solar and wind power, or powering electric cars, could also be used to increase the productivity of cell phones, laptops and other electronic devices. Clean energy will reduce the medical costs associated with the premature death and disease caused by air pollution. And American workers and taxpayers would benefit from American leadership in the new energy industries, currently dominated by European and Asian firms.
Meanwhile, adaptation to a warmer world can be justified as intelligent planning (e.g., not building cities below sea level), as disaster preparedness (e.g., protecting vulnerable areas from drought, floods, and hurricanes), and as economic development (e.g., creating a secure built environment). But first we must stop viewing adaptation and mitigation as an either/or choice, which Golanky does for economic reasons, seeing mitigation as a zero-sum game, and Romm does for political ones, seeing adaptation as strategy to downplay the seriousness of the challenge. But economically, many kinds of adaptation -- such as urban planning and building design -- could accelerate our transition to a more energy efficient economy, and thus mitigate global warming. And politically, adaptation has the potential to empower Americans to do something about a problem that many view as too big and difficult to solve.
The Central Role of Technology Policy
Government has an obvious role to play in enabling the emergence of new industries. The government subsidized the creation of the canals, telegraph lines, railroads, electrical grid, highways, and the Internet. Government invests in R&D when private firms don't, often to great result, like in the case of Xerox's PARC lab, which created the windows computer interface, the mouse, and Ethernet technologies. Government funds the re-training the work force, as it did with the G.I. Bill and the National Defense Education Act. And when there is a promising but high-risk new technology, like computer microchips, or off-shore wind turbines, governments subsidize deployment and commercialization.
All of that feels very complicated to many on both left and right who wish we could implement some simple silver policy bullet, like a price on carbon, or clean energy mandates on utilities. But no government will set a price on carbon high enough to make clean energy cost-competitive. Europe has a $40 per ton price of carbon dioxide, about five times the optimal level recommended by the model favored by Manzi, and yet the continent is still set to build 50 new coal plants over the next five years. Nor will governments create or enforce clean energy mandates on utilities that dramatically raise energy prices, which is what Romm's plan would do. And new regulations or a price on carbon won't create the requisite enabling infrastructure: the R&D labs, the scholarships, or the new grid.
Both Manzi and Romm say they support government investments. The question for everyone, including Congress, is how much is needed and how should it be spent? Consider that the latest version of cap and trade would have raised $177 billion every year and cost the average American family several thousand dollars per year in higher gasoline and electricity costs. It is inconceivable that legislation raising energy prices that much will ever pass Congress -- witness the about-face of Democrats to the Republican push for off-shore oil drilling -- even under a Democratic president and Congress.
A better public investment would be in the range of $30 to $80 billion annually, which would cost the average American less than a dollar a day. Even if the annual investment were on the low side, say $30 billion, it could be bonded against to pay for the large up-front capital investments, such as in a new grid. The revenue could come either from auctioning pollution permits, a "wires fee" on electricity use, a modest tax on carbon, or a mix of all three.
Manzi argues that government investment should go to "detecting or ameliorating the effects of global warming, should serve a public rather than a private need, and should provide no obvious potential source of profit to investors if successful." But Manzi never says why. Given his own argument about the uncertainty of global warming's effects, wouldn't a better approach be to make investments that make sense no matter how serious global warming turns out to be? And while government contracts to private firms to do things like build transmission lines or conduct R&D should no doubt be transparent and competitive, why shouldn't firms and investors be able to make a reasonable profit while doing so?
Manzi argues that investments should be overseen by an agency "explicitly modeled on the Defense Advanced Research Projects Agency (DARPA). The character of such an agency would be a very high-IQ staff with wide flexibility in providing small grants." There is much to admire about DARPA, which Manzi points out invented the Internet. But there are limits to the model. DARPA invents military applications that, while expensive, are nowhere as capital intensive as deploying advanced power plants, which can cost as much as $5 billion each, more than the U.S. government spends on energy R&D annually. Because many of the innovations and breakthroughs that occur in energy are through real-world deployment, not lab R&D, like off-shore wind turbines, concentrated solar power, and carbon capture and storage, what's required is not just a DARPA for energy but also investments in the enabling infrastructure and outright deployment in the real world.
But Manzi makes a good point that government investments to make clean energy cheap shouldn't be doled out like so much pork to every congressional district in America. While a DARPA for energy R&D might be a good model, spending on deployment and infrastructure should be overseen by a diverse group of experts, perhaps modeled after the military base closings commission, whose recommendations could only receive an up or down vote from Congress (no amendments, no earmarks). That model protected the integrity of the decision-making process and protected members who lost a base but couldn't easily be blamed for it by voters. This is important because not every state has the same potential for supporting energy sources or technologies.
To his credit, Romm has recently acknowledged the limits of cap and trade policies both in Europe and the U.S. But Romm never grapples with why cap and trade cannot achieve large emissions reductions, which is that voters and policymakers will not raise the price of fossil fuels high enough to make clean energy cost competitive. Romm thus proposes deployment mandates in addition to cap and trade, but he never says how such mandates would help the cap meet the Principle of Climate Politics.
After cap and trade was defeated in July, Romm fulminated against Republican obstructionism but ignored the reality that many Democrats opposed the bill fearing the impact it would have on the energy prices of their constituents. Romm behaves as though constantly emphasizing the threat posed by global warming will be sufficient to tip the political scales. It's a position that depends on ignoring the overwhelming evidence that voters care more about energy prices than climate. Romm should stop seeing the call for government investment in technology innovation to make clean energy cheap as a nefarious delaying tactic and start seeing it as the basis for a new political center on climate.
Manzi, for his part, should address the capital-intensive nature of the energy sector, and the important role governments play in creating the enabling infrastructure for new industries. Manzi's small-is-beautiful view of government leads him to turn DARPA into a fetish -- a magical agency capable of generating wondrous technologies on the cheap. What Manzi doesn't mention is that the Pentagon's total R&D budget for 2008 was $78 billion, not DARPA's $3 billion. The big breakthroughs in energy technology occur in real-world deployment, not in labs, which is why it was the Danes who deployed off-shore turbines, and not the Americans stuck in their workshops, who came to dominate the global wind turbine market.
The right model for energy modernization is not the Manhattan or Apollo projects, nor DARPA, but rather the full suite of post-war investments in the Interstate Highways System, the GI Bill, microchips, personal computers, aerospace, the Internet, and the National Defense Energy Act. If Manzi thinks it is not the government's role to make large investments to enable the emergence of new industries then he should explain how America could have become such a rich nation without having invested in the railroads, the highways, the electrical grid, the Internet, microchips, the computer sciences, and the biosciences.
The New Political Center on Climate
Both Romm and Manzi deserve credit for helping to move the debate away from a narrow focus on global warming and toward a debate over solutions. Now liberals and conservatives need to come together around an agenda grounded in the Principle of Climate Uncertainty and the Principle of Climate Politics. Congress may already be moving in this direction. Before the vote on cap and trade, ten Democratic Senators -- the Technology Ten -- sent an open letter to Senate President Harry Reid saying that they supported action on climate but that it needed to be focused on containing energy costs and on technology. Then, just last week, another group of ten Senators introduced compromise legislation on oil drilling, calling for expanded drilling and tens of billions in new government investments to make clean energy cheap, and electrify the transportation sector. All of this has the makings for a new political center and, we hope, a political breakthrough.