28 January 2014

Climate Wars: Don't Regulate, Innovate!

Published on The National Interest (http://nationalinterest.org)
January 27, 2014

One of the strongest arguments for a pragmatic approach to public policy—whether foreign or domestic—is that reality almost always trumps noble intentions. Recognizing this sooner rather than later helps skilled leaders to fulfill many of their idealistic ambitions while avoiding unduly high expectations, unnecessary costs, and predictable failures.

The first decade of the twenty-first century has demonstrated convincingly to many Americans that national-level political and social engineering is an expensive and uncertain task, and that wars to win the privilege of pursuing such experiments are rarely a good investment of either taxpayer funds or our soldiers’ lives. The second decade may similarly discredit the idea that governments can improve the world by limiting economic activity—a core belief of the modern environmental movement, and a belief that ignores human nature in much the same way that foreign-policy interventionists fail to understand those whom they seek to reform.

Since the landmark United Nations Framework Convention on Climate Change entered into force twenty years ago, in 1994, advocates have sought aggressive reductions in greenhouse gas emissions that contribute to global warming. They have done so primarily by attempting to impose top-down limits on emissions, like those established by the Kyoto Protocol and the European Union’s emissions-trading system. Both are cracking under pressure from reality.

In the case of the Kyoto Protocol, the treaty’s so-called first commitment period—the years from 2008 to 2012, during which its signatories agreed to binding emissions reduction targets—has ended and parties to the agreement have so far failed to negotiate new binding limits despite efforts to creatively redefine what “binding” means. Attempts to bring the United States, China and India into the regime have stalled even as some current parties, including Japan, Canada and Russia, have wavered. The current goal is to negotiate a new deal by 2015 to take effect in 2020. It looks unlikely to succeed.

Now comes the news that European Union bureaucrats [3]—usually the champions of statist solutions—have proposed putting an end to binding national-level emissions limits within the EU. The reason is eminently predictable: national governments facing severe economic pressure and declining competitiveness are less willing to inflate energy prices to promote low-emission alternative energy. (Japan’s new reservations about the Kyoto Protocol, previously a source of pride for the nation in which it was negotiated, stem from a similar source; after the Fukushima nuclear accident removed a substantial share of Japan’s nuclear power from its energy mix, wind, solar and the like are just too expensive to make up the difference.) But in the absence of national limits, meeting an EU-wide limit will be virtually impossible—a classic problem of collective action that discourages action and rewards free-riding—especially one made even more stringent in what looks like an unsuccessful effort to appease activist groups.

None of this should come as a surprise; mandatory emissions limits are an illogical way to approach the very real problem of climate change and were doomed to fail. Put most simply, neither human civilization as a whole nor its individual constituent nations can make the dramatic reductions in greenhouse gas emissions needed to slow and reverse climate change without economically attractive technologies that produce energy without damage to the climate. If these technologies emerge, emissions will fall with or without limits. If they don’t, governments will violate whatever agreements they may have made. The solution to climate change lies in further progress, not in treaties or laws made to be broken. Note that the shale-gas revolution in the United States has already done more to reduce global emissions than the EU’s limit-based approach. It is also a powerful force undermining it, by weakening Europe’s competitiveness. Tellingly, the EU also decided not to recommend new laws making shale gas extraction more difficult.

Still, some will argue that limits promote new technologies by helping them to compete. This is also flawed—it is too expensive to work whether a government tries to make fossil fuels more costly through a carbon tax, a cap-and-trade system, regulations or some other means, or whether leaders try to make alternative sources less expensive through subsidies. Whatever the method, the cost ultimately falls on ordinary people in the form of higher gasoline prices, higher electricity prices, or higher taxes. Keeping the costs low enough to avoid fatal political opposition means sacrificing effectiveness (see: United States), while raising the costs sufficiently to produce meaningful policy impact means sacrificing political sustainability (see: Europe).

Others will argue that this kind of thinking ignores the social cost of high-carbon energy, including its climate, health and other impacts, and that including these costs should tip the balance toward alternative energy. But this ignores the wider social costs of higher energy prices—starting with the fact that ordinary people with less money will have less health care, less education, less retirement income and fewer choices. Most Americans have made this calculation and chosen to avoid concrete costs rather than abstract ones.

The only realistic path to a low-emissions future is the path of new energy technologies that reduce both emissions and costs. Governments can help to get there by redirecting resources away from subsidies for uncompetitive energy technologies and into research and development—something that is both less expensive and more likely to succeed. They can also stop thinking about how to prevent their citizens from using the energy they want and need and start thinking about how to help them to produce more energy in better ways.

Paul J. Saunders is executive director of The Center for the National Interest and associate publisher of The National Interest [4]. He served in the State Department from 2003 to 2005.


Links:
[1] http://www.addthis.com/bookmark.php?v=250&username=nationalinterest
[2] http://nationalinterest.org/profile/paul-j-saunders
[3] http://www.nytimes.com/2014/01/23/business/international/European-union-lowers-ambitions-on-renewable-energy.html?hpw&rref=world&_r=1
[4] http://nationalinterest.org/
[5] http://nationalinterest.org/topic/global-governance/environment
[6] http://nationalinterest.org/topic/global-governance
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