Climate Change Debate Hinges On Economics

By Steven Mufson
Washington Post Staff Writer
Sunday, July 15, 2007

Here's the good news about climate change: Energy and climate experts say the world already possesses the technological know-how for trimming greenhouse gas emissions enough to slow the perilous rise in the Earth's temperatures.

Here's the bad news: Because of the enormous cost of addressing global warming, the energy legislation considered by Congress so far will make barely a dent in the problem, while farther-reaching climate proposals stand a remote chance of passage.

Despite growing public concern over global warming, the House has failed to agree on new standards for automobile fuel efficiency, and the Senate has done little to boost the efficiency of commercial office buildings and appliances. In September, Congress is expected to start wrestling with more ambitious legislation aimed at slowing climate change; but because of the complexity of the likely proposals, few expect any bill to become law. Even if passed by Congress and signed by President Bush, the final measure may not be tough enough to slow global warming.

"I don't think there's any question that what is being talked about now would, over the long term, be insufficient," said Philip Sharp, president of the think tank Resources for the Future and a former House member. "The issue is: Will Congress get in place a larger architecture that sends a signal to the economy that accelerates change?"

The potential economic impact of meaningful climate legislation -- enough to reduce U.S. emissions by at least 60 percent -- is vast. Automobiles would have to get double their current miles to the gallon. Building codes would have to be tougher, requiring use of more energy-efficient materials. To stimulate and pay for new technologies, U.S. electricity bills could rise by 25 to 33 percent, some experts estimate; others say the increase could be greater.

Most of the technologies that could reduce greenhouse gases are not only expensive but would need to be embraced on a global scale, scientists say. Many projections for 2030 include as many as 1 million wind turbines worldwide; enough solar panels to cover half of New Jersey, massive reforestation; a major retooling of the global auto industry; as many as 400 power plants fitted with pricey equipment to capture carbon dioxide and store it underground; and, most controversial, perhaps 350 new nuclear plants around the world.

"The scope of the problem is really enormous," said Prasad Kasibhatla, associate professor of environmental chemistry at Duke University's Nicholas School of the Environment. Not only must Congress and the White House reach agreement on emissions limits, developing nations must also act to achieve temperature goals. "If the climate change bills go through Congress and could somehow be coupled to a multinational agreement, then things could really start to change," Kasibhatla said. "But I'd like to start seeing real agreements between countries before I call myself an optimist."

Measures taken by the world's governments to reduce greenhouse gases could cost 1 percent of world economic output, according to a report commissioned by the British government and written last year by former World Bank chief economist Nicholas Stern. But Stern said the cost of not taking those steps would be at least five times as much, hitting the developing world hardest.

The shape of U.S. legislation targeted exclusively at climate change remains a matter of debate.

"I sincerely doubt that the American people are willing to pay what this is really going to cost them," John D. Dingell (D-Mich.), chairman of the House Energy and Commerce Committee, said in a recent C-SPAN interview, adding that he intended to introduce legislation that would impose a carbon tax "just to sort of see how people really feel about this." He said his proposal would boost the gasoline tax by 50 cents a gallon and establish a "double-digit" tax on each ton of all carbon-dioxide emissions.

In the Senate, five climate change bills have been introduced recently -- with sponsors from both parties. They do not tax carbon but use variations on Europe's cap-and-trade system. Europe modeled its system on the 1997 Kyoto Protocol, which the Senate rejected and President Bush later dismissed, saying it would cause the U.S. economy "serious harm."

A cap-and-trade system creates a new market where a limited, decreasing number of permits for emitting greenhouse gases, measured in metric tons of carbon dioxide, are traded. One hedge fund manager compared the importance of such a move to the creation of paper money. If implemented in the United States, it would alter the calculations of almost every business; hundreds of billions of dollars of energy investments would be redirected.

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