A Change in Climate for Climate Change Policy

From our friends at the Texas Public Policy Foundation, one of the many outstanding state-level research institutes working for liberty and free markets.

A Change in Climate for Climate Change Policy
By Kathleen Hartnett White
November 5, 2008

Come what dramatic political and economic changes may occur, a refrain persists within the media, industry, and the U.S. Congress that onerous federal mandates to regulate carbon dioxide (CO2) are inevitable. I don’t think so.

In less than a year, many unanticipated developments have complicated the political dynamics of “ending the era of fossil fuels” through the enactment of carbon reduction mandates. Consider six such developments that may give pause to policymakers otherwise inclined to support these measures:

• When the price of oil topped $4.00 a gallon and food inflation reached almost 8 percent, most voters got it: price and security first! At least a dozen recent polls show that three-fourths of likely voters put far more importance on the U.S. oil supply than global warming. This prevalent public opinion dissolved the U.S. Congress’ long and intransigent opposition to increased domestic oil production. In late September, the 30-year bans on offshore oil production expired. The rapid decline in the price of oil, as a result of economic slowdown, has not yet squelched broad support for more domestic oil production.
• Energy independence has become a battle cry across the political spectrum. The painfully high price of oil increased the public’s recognition that there are no near-term, realistic alternatives to the dominance of fossil fuels in the U.S. energy supply. American dependence on unreliable, if not inimical, sources of foreign oil worries Main Street far more than it used to.
• The European Union’s (EU) Emission Trading System (ETS), once the model for a U.S. program, continues to fail. Europe’s program is not reducing CO2 and has lead to higher energy costs. The U.S. has reduced more CO2 by market efficiencies and without any complicated cap-and-trade programs. Growing numbers of EU member countries, including Italy, now want to delay (read: scratch) the ETS because of economic woes approaching crisis proportions.
• By the time the Lieberman-Warner bill (S.2191) made it to the U.S. Senate floor last summer, the veil on its staggering cost had been lifted. The world’s most ambitious, enforceable carbon regime to date, S.2191 would impose exorbitant costs and require unprecedented expansion of the federal control, but would yield no measurable effect on global climate unless China and India undertook similarly draconian programs.
• Far more substantial climate science emerges and is a game-changer for the reigning science from the Intergovernmental Panel on Climate Change (IPCC). Observational evidence from NASA satellites indicates little to no heat-forcing effect from manmade CO2. This NASA data is empirical science, far superior to the uncertain IPCC computer models.
• And the clincher: the specter of global recession. Worldwide financial turmoil presents the most hard-hitting obstacle to mandatory CO2 reduction. While figures may differ, no one doubts that CO2 reduction mandates would lead to far higher prices for fuel, power, food, and other basic consumer goods. Until the U.S. and global economies stabilize, the least prudent among us might delay CO2 regulations that would overturn our energy economy.

Amidst the current economic maelstrom, some congressional leaders perversely cling to carbon regulation as a new federal revenue source to compensate for a reduced tax base. The Congressional Budget Office estimates that the federal government’s auction of carbon allocations, e.g., power companies forced to buy permission to keep generating electricity, could generate trillions in revenue. Inconvenient facts, however, may have changed the political climate necessary for major CO2 reduction programs absent available control technology.

In the last year, many policy makers and voters have learned some hard facts about energy and the economy. If an ounce of reason might prevail, climate change policymakers would acknowledge that mandates are premature and impracticable. Immediate steps should be toward extending the new empirical climate science and market-based development of energy efficient technologies.

Natural variability — or change, simply speaking — is the hallmark of climate and politics; not easy to predict and never inevitable.

Kathleen Hartnett White is Director of the Center for Natural Resources at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. She is the former Chair of the Texas Commission on Environmental Quality.