Correction to This Article
The article incorrectly identified climate change legislation that is estimated to result in a loss of 60,000 jobs by 2030. That estimate referred to past climate legislation proposed by Sens. Joseph I. Lieberman (I-Conn.) and John W. Warner (R-Va.), not to a current bill proposed by Lieberman and Sen. John McCain (R-Ariz.).
An April 26 correction to an April 20 Outlook article confused two Senate measures on climate change. The current legislation is sponsored by Sens. Joseph I. Lieberman (I-Conn.) and John W. Warner (R-Va.), not Sens. Lieberman and John McCain (R-Ariz.), who sponsored an earlier bill.

Is This Green Enough?

By Steven Mufson
Sunday, April 20, 2008

How much are we willing to spend to save the planet? And just how much does saving a planet cost these days, anyway?

Those will be two of the hottest questions in politics as Earth Day is marked this week. They will persist over the coming year as Congress attempts to craft legislation to slow global warming by reducing U.S. emissions of greenhouse gases. But these two big questions have also driven the environmental movement to try its most delicate balancing act: pushing for legislation that slaps a price on greenhouse gases that's high enough to change corporate and individual behavior, while at the same time arguing that the costs of such a law wouldn't cause too much economic pain.

Listen to John Engler, former Michigan governor and president of the National Association of Manufacturers, and you'll hear that the price of the leading legislation -- cosponsored by Sens. John Warner (R-Va.) and Joseph I. Lieberman (I-Conn.) -- will be far too steep. "It would be like every month having a press conference announcing that you were closing another 1,000-person plant," Engler says. "I think you end up with a lose-lose proposition for the American worker and the environment."

Then listen to Nathaniel Keohane and Peter Goldmark of the Environmental Defense Fund (EDF), and you'll hear that the cost to the economy would be barely noticeable. After looking at scenarios done by five respected economic-modeling groups in government and academia, the EDF pair note that the median projected impact on annual growth of slowing greenhouse gas emissions is three-hundredths of a percentage point. Instead of reaching a GDP of about $23 trillion in January 2030 without greenhouse gas limits, Keohane and Goldmark say, the United States would get there in April of the same year if it took the greener path.

But look beyond this sharp, albeit predictable, divide between industrialists and environmentalists. The question of cost isn't simply a matter of money but also one of metaphor. Is slowing climate change a vital matter requiring shared sacrifice, along the lines of the everybody-pitch-in ethos of World War II? Or is it more like the Apollo space program, a noble national project in which ordinary citizens were basically spectators? Is the fight against global warming a question of setting limits or expanding horizons?

One set of answers demands that we all pull together to do our bit; the other requires little involvement from most citizens. One metaphor calls for Washington to set up a framework of limits and incentives like those in the Lieberman-Warner bill; the other favors major government spending on research and development. So who's right? The answer will help determine how green a world the United States is willing to pay for.

Let's start by thinking about the cost of doing nothing.

Former vice president Al Gore admits that policies limiting greenhouse gases would have a serious price tag. "This is one of the most difficult things we've ever done," he says. But "there will be a much larger cost if we do not deal with it."

That's what the World Bank's former chief economist, Nicholas Stern, said in a 2006 British government report that jump-started the debate over the costs of slowing global warming. Stern called climate change "the greatest market failure the world has ever seen," warning that it could shear 5 percent off world GDP and perhaps much more.

Future costs could include more severe hurricanes and flooding -- from New Orleans to Florida, from the Netherlands to Bangladesh. That worries corporate and financial elites who might quibble with some of Stern's methods for arriving at his estimates, but not his underlying point. Paul Volcker, a former chairman of the Federal Reserve, calls the costs of addressing climate change "manageable" -- unlike the costs of inactivity. "If we don't do anything," he adds, "I think there will be very likely great costs."

That brings us to the price of action. The main bill on the legislative table is the 548-page Lieberman-Warner proposal for a "cap-and-trade" system.

The very phrase cap-and-trade is a pithy marketing gimmick to explain a complex system, favored by many environmentalists, that aims to control thousands of emissions sites worldwide, from pig farms to power plants. The system establishes rules for a new market -- a sort of new board game in which we're all players and where the price of carbon emissions depends on the moves we make. Come up with a cheap, clean energy technology? The price of a ton of carbon emissions drops; we all win. Waste a lot of electricity? That price soars, and so do the costs of electricity, gasoline, steel, airline tickets and petrochemicals; we all lose.

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