Stabilizing climate means embracing technology, public investment, and global economic development
The following is a guest essay by Ted Nordhaus and Michael Shellenberger, the latest in the ongoing conversation about their new book Break Through: From the Death of Environmentalism to the Politics of Possibility.
This week saw a watershed moment for those of us committed to moving environmentalism from a politics of limits to a politics of possibility. Senator Barack Obama proposed a $150 billion investment to develop and deploy clean energy technology on a scale approaching the challenge we face. In doing so, he has become the most recent of several national political leaders to go beyond the narrow regulatory agenda lobbied for by environmental groups.
Hillary Clinton proposed a $50 billion investment in clean energy last summer. John Edwards proposed we spend $13 billion annually. And even some Republican politicians, such as Newt Gingrich, have jumped into the fray, calling for major new public investments in clean energy in his new book.
Romm asks if we embrace Obama’s plan. Not only do we embrace it, we’ve been advocating such a plan since 2002. In the run up to the 2004 presidential elections we aggressively lobbied the Kerry campaign for such investments and were repeatedly rebuffed by his environmental policy and political advisers who claimed, similar to Romm, that major public investments weren’t a priority.
Obama’s energy plan, like the plan that we outline below, recognizes the need for regulatory standards and a cap on emissions. But these are positions he has long held — last January he co-sponsored a cap and trade bill in the Senate. What was new about Obama’s plan announced Monday was the large public investment. Obama’s proposed clean energy investment is not only larger than anything proposed by the other Democratic presidential candidates, it is much larger than anything lobbied for by the national environmental lobby in Washington. It goes half way toward the at least $300 billion we need to achieve the emissions reductions and clean energy price reductions we need.
And while Obama’s rivals all propose money for investment, what stands out about Obama’s plan is his clarity about the way to get to global greenhouse gas reductions worldwide: “My plan,” Obama explained, “isn’t just about making dirty energy expensive, it’s about making clean energy affordable — a project that will create millions of new jobs and entire new industries right here in America.”
Given Romm’s misleading attacks upon our position for the last two weeks, it’s ironic to now read him praising Obama’s plan — but then, it wouldn’t be the first time Washington D.C. “experts” like Romm shifted their supposedly objective analysis after the political winds changed direction.
What’s so striking about the attacks on us by Romm and others is that they have been just that: attacks on us, not on our arguments. Romm has steadfastly avoided criticism of the content of our analysis for the simple reason that he is unable to. We cite more than two-dozen of the world’s leading energy experts, including Stern and the UN’s IPCC report, to marshal the case for large public investments. Romm repeatedly insists that such investments aren’t really a priority. He says all the experts he talks to in that intellectually expansive world within the Washington beltway agree that there’s little need for large investments to deploy clean energy But note how Romm never cites any of them.
We hear nary a word from Romm about why he believes men like John Deutsch at MIT, Jae Edmonds at University of Maryland, Marty Hoffert at NYC, Dan Kammen at University of California, Greg Nemet at University of Wisconsin, Dennis Anderson, Oxford and even the U.S. government’s General Accounting Office are so wrong in their opinions about the central importance of investment to bring down the price of clean energy.
Nor can Romm say anything about that elephant in the room: China. That’s because he has no plan for China and believes that the best approach is to lobby the Chinese for … regulations like ours! Regulations that they are happy to implement, of course, as long as they don’t substantially increase the cost of energy.
Rather than confront these arguments or challenge our evidence, prominent national environmental leaders have chosen to attack the messenger. David Hawkins of NRDC claimed that we are “peddling a false choice of the kind that the Bush administration has used to justify its retrograde policies.” Romm accused us of “touting the exact same strategy on climate as Michael Crichton, Bjorn Lomborg, Frank Luntz, George W. Bush.” And environment writer Robert Collier, unable to respond to our point that new regulations in China won’t be sufficient to dealing with the crisis, lied about our position in the San Francisco Chronicle. “Like [Danish writer Bjorn] Lomborg, Nordhaus and Shellenberger argue that global warming is nothing to be much afraid of,” he wrote.
This is a lie, and Collier knows it. In our book, we compare global warming to nuclear war (page 7) and describe it as an “existential” threat (page 8) to human civilization. On page 13, in the introduction, we write, “global warming will likely trigger droughts, water scarcities, and famines.” And on page 252 we write the following: “Over the next fifty years, if we continue to burn as much coal and oil as we’ve been burning, the heating of the earth will cause the sea levels to rise and the Amazon to collapse and, according to scenarios commissioned by the Pentagon, will trigger a series of wars over basic resources like food and water.”
Collier quotes us writing, “Global warming could bring drought, disease and war – and it could bring prosperity, cooperation and freedom.” The context of that quote in the book makes it perfectly clear that global warming could trigger prosperity, cooperation, and freedom only if we make major transformations to the global energy economy.
These deliberate distortions of our position by Romm and Collier aside, there is something at the heart of this debate that every progressive and grassroots environmentalist should care strongly about: overcoming market fundamentalism. Romm and Collier say there is little need for public investment into clean energy because once pollution is limited, and a price for carbon is set, the market will take care of the rest. But there is a dilemma at the heart of any effort to deal with global warming. If policymakers limit greenhouse gases too quickly, the price of electricity and gasoline will rise quickly, triggering a political backlash both from consumers and industry. But if policymakers limit greenhouse gases too slowly, clean energy alternatives will not become cost-competitive with fossil fuels in time to prevent catastrophic global warming.
Some writers, like David Roberts, insist that the environmental lobby does embrace public investment. But watch what environmental groups do, not just what they say. Their push for more than 10 years has been cap and trade, not public investment, and there is little doubt that when push comes to shove in Congress, environmental groups won’t hesitate to jettison the investment agenda.
Carl Pope, who has established himself as the most thoughtful national environmental leader, has embraced the need for public investment, but there’s no sign of the Sierra Club lobbying for this agenda in Washington. What’s needed now is for environmental leaders to draw and line in the sand that any global warming legislation passed by Congress must generate no less than $30 billion per year to invest in and deploy clean energy.
Last week, we laid out the case for why we need both investment and new regulations. Here we specify the framework for those policies. What follows is a summary of two much longer analysis, “Fast Clean Cheap: Cutting Global Warming’s Gordian Knot,” which was commissioned by the Nathan Cummings Foundation and which will appear in the Harvard Law and Policy Review next January, and “The Investment Consensus,” which summarizes the expert consensus in their own words. Both documents can be downloaded from our website, and we challenge Joe Romm, David Roberts, Carl Pope and David Hawkins to evaluate and critique these analyses.
1. Establish a carbon price consistent with what present technology can accomplish. There is much argument presently about what level of carbon reduction legislation under consideration in Congress should mandate. The grassroots climate movement demands 80% by 2050. Most legislative proposals in Congress undershoot that goal substantially. But with present technology, 80% reductions by 2050, if such a cap was actually enforced, would result in a price for carbon that would rise to between $600 and $800 per ton. This translates to more than doubling the real cost of energy, an outcome that is both politically unsustainable and economically devastating.
For this reason, even Barbara Boxer and Bernie Sanders’ cap and auction bill, the preferred vehicle of grassroots environmentalists and the Sierra Club, includes a safety valve provision that would lift the cap if the carbon price that it established became too expensive.
By contrast, if clean energy technologies do see significant breakthroughs in price and performance, they will become cost competitive with conventional energy sources at much lower carbon prices. Either way, expending extraordinary political resources to establish caps over forty years that will either be unsustainable without technology breakthroughs or irrelevant with them doesn’t make a lot of sense. We’re better off establishing a carbon price in the shorter term that can capture the 20% to 30% emissions reductions that can be achieved through efficiency and shifting to cleaner conventional energy sources, and which can drive much deeper carbon emissions reductions if and when the price of alternative energy sources declines and their performance improves.
2. Establish a dedicated source of public funding for clean energy investment that can rapidly drive down the deployed cost of clean energy technologies. As noted above, whatever theoretical level a carbon cap is set at by Congress, there will almost certainly be a safety valve that will functionally limit how high the real price of carbon can rise. While we have no objection to setting caps that are more restrictive, as long as there is a safety valve the cap is largely irrelevant. What matters, then, is the maximum carbon price that the safety valve allows.
When arguing for caps that mandate deeper reductions, environmentalists argue that the cost of complying with those caps will be much less than opponents suggest. Safety valves call the question on this debate. Given this framework, the cap is largely symbolic, the safety valve, and the price and performance that clean energy technology can achieve will ultimately determine the level of reduction achieved.
Given this framework, the key to achieving deep reductions is to drive the real price and performance of clean energy technology down as rapidly and as far as possible. As noted above, it is our contention that targeted public investment is the most likely path to this outcome. Carbon regulation is in fact the most likely source for this revenue stream. Whether through auctions or carbon taxes, federal carbon regulation has the potential to generate tens of billions of dollars annually for public clean energy investments. These investments should include dramatic increases in funding for basic research in the energy sciences, a ten year commitment to buy down the price of solar technology and battery and other energy storage technologies, and a commitment to build a smarter and more efficient electricity grid that can support energy generation that is both more distributed and, in many cases, more remote.
3. Insulate federal clean energy investments from pork-barrel politics. We have many models for doing this, from DARPA, to the military base closing commission, to the creation of public corporations and industry boards. Some of the best thinking on this has been done by MIT’s John Deutsch, who headed the CIA during the Clinton years and walked away from the experience concluding that what’s needed is both more money for commercialization and new institutions, such as a public Energy Technology Corporation.
Successful government action requires both more resources and a willingness to change the conventional approach to government’s support for energy technology commercialization… The ETC would select and manage technology demonstration projects without favoring particular fuels or supply over end use. [T]he ETC would be composed of independent individuals with experience and knowledge about future market needs, industry capability, and best use of indirect financial incentives — loans, loan guarantees, production tax credits, and guaranteed purchase — in order to run a project on as commercial a basis as possible. The ETC would not be subject to federal procurement rules, and if financed with a single appropriation, would be somewhat insulated from congressional and special interest pressure (Deutsch 2005: 16).
4. Create a framework for global carbon regulation tied to living standards. China, despite much criticism from environmentalists, has already done more to mitigate the environmental impacts of its development than has any developing nation in history. The establishment of nascent carbon prices in developing countries should be based upon benchmarks associated with improving living standards in those countries, the attainment of real reductions in carbon emissions in the developed world, and major progress in bringing down the costs of appropriate clean energy technologies that can be deployed in developing economies. As economic development progresses, living standards improve, and the costs of clean energy technologies come down dramatically, modest carbon prices in the developing world will become both tenable and sufficient to drive the transition to low carbon alternatives.
Joe Romm called our new book, Break Through, an “instant best seller,” but the truth is that it didn’t officially go on sale until last Thursday. Romm says he won’t read it, but those who do — and who read it closely — will discover that what runs through it is the argument that global warming has a logic that goes beyond climate impacts and carbon prices. It is a logic of development, one that depends on both technology and changing social values.
We’ll end with this passage from the book to drive home our overarching point that action on global warming can no longer be separated from action for global economic development:
As surely as postwar prosperity gave birth to environmentalism, global warming is transforming it. Any successful effort to stabilize the climate will destroy the distinctions between environmental protection, economic development, and global equity. China, India, Brazil, and the rest of the developing world will not agree to any international approach that constrains the economic aspirations of their people–nor should they. The average Chinese consumes 15 percent of the energy of the average American. It would be immoral to attempt to lock the developing world into energy penury.
A successful effort to stabilize the climate will thus almost certainly result in a rough equalization of per capita carbon emissions globally. Given the close connection between energy use, emissions, and living standards, the implications of this are momentous: to equalize global carbon emissions is, in the end, to equalize global living standards.