Politics of global warming.

• Author: Lipow, Gar W.

Political consensus within the environmental movement is that fighting global warming requires putting a price on carbon. (For "carbon," read "all greenhouse gases.") Indeed the argument is nearly irrefutable; if at least some of the social costs of burning carbon are not included in its price the level of micromanagement required to lower its use would be staggering. But we need to avoid the leap from "this must be done" to "this is all or almost all we need to do." Putting a price on carbon won't work if not accompanied by a program of strong rule-based regulation and public initiatives.

Won't the law of supply and demand ensure that as prices rise, demand drops? Unfortunately, due to inelasticity, we can expect carbon taxes as a primary means of reducing emission to cost 60% more [1] than if we give public initiatives and rule based regulation equal weight. Doubling energy prices only reduces use 40%, long term. Short term inelasticity is even worse. (For various reasons, emission trading results in even smaller reductions than carbon taxes. [2]) When the price tag is in the trillions of dollars, a 60% cost increase is not a trivial obstacle to feasibility.

Doesn't political realism require a market-based approach to accommodate powerful corporations--even if carbon taxes and trading aren't the optimum solution? Can't clever wonkery craft a solution that bypasses politics, that (as our President puts it) "makes the pie higher," so that right and left can come together in a glorious consensus?

Coal, oil, and gas companies will oppose any solution that phases out fossil fuels. Dead dinosaurs are what they sell; no business wants to see use of their main product gradually reduced, then eliminated.

Among US corporations, this is obvious. Global warming denial is mostly kept alive in this country by money from the big coal companies and Exxon. In Britain, BP takes a better stand--recognizing the reality of global warming, spending hundreds of millions on feel-good warm and fuzzy ads explaining how green and pro-Kyoto BP has become.

However, despite greenwashing, British Petroleum has continued to donate to organizations opposing Kyoto, to drill in environmentally sensitive spots (often at the expense of locals)--in short, to behave like an oil company. [3]

To solve global warming we are going to have to take on the dead dinosaur purveyors. I know some environmentalists think we can buy them off by letting them handle renewables. It is true that as both a hedge and for public relations purposes most of the solar technology, and a great deal of wind as well has been bought by oil companies. But getting a fraction of a percent of your business from a competing technology is not the same thing as being ready to see a drastic sales reduction in your main product. Similarly, the automobile industry (which doesn't even like CAFE regulations) won't be in any great hurry to see increased use of mass transit or a switch to the electric and plug-in hybrid...