Scientific, economic and political realities at the end of 2008 fly in the faces of carbon-price advocates. As 2009 approaches, we must learn how to reduce carbon emsissions in a post-pricing world by learning what killed it in the first place.
Next January there will be a new President and Congress, and the American public will have at least a somewhat better idea of the success or failure of the bailout that passed last week. A multiplicity of variables, from the state of our economy, to the outcome of the election, to the nuclear program of Iran will affect the American political landscape heading into 2009. Over the next few months, tons of organizations and movements will begin to take stock of how these shifting variables might affect their missions and objectives. Few could benefit from this self-evaluation more than groups demanding federal action on climate change. The long time standard of these organizations, cap-and-trade, is becoming increasingly less relevant to today's political world.
The quest for a carbon price by these green groups met abject failure back in June with the failure of Lieberman Warner. As energy prices rise, our economy stumbles and credit shrinks, it seems less and less likely that hard caps on carbon will be a viable political vehicle. Carbon pricing orthodoxy has run headlong into political and economic realities in at least three major ways.
The first is that carbon emissions are increasing at previously-unpredicted rates. It has been widely noted that, despite a slowing global economy, carbon dioxide output jumped three percent from 2006 to 2007, an increase that far exceeds even the worst case scenario in the IPCC. With emissions increasing at such an alarming rate, it is becoming increasingly clear that the technologies we thought would be able to provide energy to a growing world population while curbing carbon emissions are far from sufficient. This technology gap is much wider than anyone had previously conceived.
The second major problem with carbon pricing orthodoxy is in regards to the global economy. Every economic analysis of carbon pricing agrees that for a pricing scheme to work, the price of carbon must be globally harmonized. What this actually means is that developing nations would have to foot most of the bill as their energy consumption and emissions grow while developed nations' would remain relatively static.
However, developing nations like China and India have stated over and over again that they will not slow economic growth for the sake of cutting carbon emissions. And any attempts to price carbon on anything below a global scale has been shown to be at their best, ineffective. This is true even in Europe, where a forty dollar a ton price on carbon will not prevent the construction of fifty new coal plants in the next few years.
The third major problem is political. It is becoming increasingly difficult for politicians to advance cap and trade systems and other carbon pricing mechanisms without taking a battering from their opponents for trying to raise energy prices. Nowhere is this more easily seen than this past summer.
For Democrats and greens, things started going downhill on the first Friday of June when L-W failed to even get cloture and make it past debates. Gas prices were already starting their climb to the far side of four dollars, and it was clear to Dems that if they didn't want to be ousted in November, they couldn't enact legislation that would raise gas (and electricity and heating) prices even further.
In fact, proposing to raise energy prices was the opposite of good politics, and Republicans doubled down on the energy issue by supporting expanded drilling. Just ten days after the Friday defeat of L-W, John McCain reversed his position on offshore drilling, reversing his maverick position and saying he would encourage states to explore their offshore oil reserves with new incentives. And then, on June 19th, just thirty days after it had launched, Newt Gingrich's "Drill Here, Drill Now, Pay Less," petition had more than a million signatures. It was clear that increased drilling had garnered significant public support, and Republicans were painting the Democrats as an out of touch party that didn't care about the pocketbook concerns of average Americans.
The Democrats didn't stop reeling until after August's Congressional recess. Democrats took the lead on the Comprehensive American Energy Security and Consumer Protection Act, an all of the above energy bill that gave voters' what they wanted--an expansive and all encompassing approach to solving our energy crisis.
But in so many ways, it was too little too late. Take a moment to consider that, before August, it was inconceivable that democrats would introduce an energy bill that includes expanded domestic drilling. Consider that, before the summer, greens believed they could count on Democrats to enact legislation that would make energy prices higher. This is all evidence that the political barriers to enacting a carbon price are insurmountable. It will be increasingly hard for greens to find allies in Democrats or left-wing parties across the globe when it is clear they will be taken to task by opposing parties and risk huge political losses.
Given all these barriers to enacting a carbon price, a new direction must be found if we want to take steps to reducing our global carbon emissions. We believe there are some principles to be held in a post-carbon pricing world:
- Greens must abandon their hope that a post-Kyoto framework will be a global carbon pricing scheme. Given the position of developing nations and the abject failure of previous attempts, it is time to face facts.
- Any framework must be focused on making clean energy cheap and abundant. Driving down the price of clean energy is the best hope we have of getting the developing world to abandon dirty energy.
We at the Breakthrough Institute, who will surely be entering out own period of self-examination over the next few months, do not purport to have all the answers, but it is important to raise these issues as we all hope to move forward effectively in our attempts to mitigate climate change and renew America in the 21st century.
