EVENTS

Date:	Monday, December 11, 2006
Time:	3:00 PM -- 5:00 PM
Location:	Wohlstetter Conference Center, Twelfth Floor, AEI 1150 Seventeenth Street, N.W., Washington, D.C. 20036

December 2006

Strategic Options for Bush Administration Climate Policy

President Bush is widely expected to announce new initiatives to reduce greenhouse gas emissions in the State of the Union address in January; whether or not that happens, the new Democratic majority in Congress is certain to make climate policy a priority, and federal action on climate change in the near future is increasingly likely. What new climate change policies should Congress and the president consider?

In Strategic Options for Bush Administration Climate Policy (AEI Press, December 2006), Lee Lane, the executive director of the Climate Policy Center, explores the strengths and weaknesses of current federal climate change programs and the alternatives that will be considered in the coming months. His conclusions will surprise many: President Bush was right to reject the Kyoto Protocol and should continue to reject calls for “cap-and-trade” programs modeled on Kyoto. Kyoto-style emissions trading would be expensive and ineffective; the costs would be significant but the environmental benefits would be negligible. Instead, Lane calls for consideration of a carbon tax or a similar mechanism as a strategic measure to block political momentum toward a return to the Kyoto system. Lane also advocates greater focus on developing breakthrough clean energy and geoengineering technologies that, in the long run, may offer the only realistic hope of developing cost-effective methods of preventing global warming.

Lane spoke about the political and economic dimensions of climate change policy at a December 11, 2006, AEI book forum.

Lee Lane
Climate Policy Center

The debate about climate change has been dominated by assertions that quick, deep, greenhouse-gas-emissions cuts are a logical solution to the problem of global climate change. The best approach involves taking a long view of the situation, rather than focusing on short-term emissions reductions.

The pattern of the criticism of the Bush administration’s climate policy reveals problems in the climate policy debate. Whereas the United States was a net loser in the Kyoto Protocol, the whole rest of the world was a large net winner because of the large transfer payments from the United States that were imposed by Kyoto.

It is impossible to reduce greenhouse-gas emissions significantly without somehow including China and India in the emissions-control regime. Yet it may not be in the national interest of China and India to participate in greenhouse-gas-emissions caps.

There has also been a great deal of criticism of the Bush administration’s emphasis on research and development (R&D), particularly on developing new technologies to reduce greenhouse-gas emissions in the long run. Most of the world is unwilling to impose the kind of emissions controls and incur the costs required to significantly restrain greenhouse gas emissions with current technology. Critics are upset because of that, not because the administration failed to introduce short-run emissions controls.

The Bush administration’s R&D program needs to be strengthened, requiring some reorganization. There should also be international negotiations to increase overall international commitments to climate-related R&D spending. The administration should also consider proposing mandatory greenhouse-gas limits--ideally in the form of a carbon tax--or in some other price-based controls on emissions.

Joseph Aldy
Resources for the Future

If the Bush administration does not do anything over the next two years, its ideas will continue to resonate into the next administration and future Congresses as they discuss climate policy.

In the near term, an effective cap-and-trade program can be had with modest cuts. One of the major economic criticisms of Kyoto is not that cap-and-trade is a bad idea but that cap-and-trade was such a stringent early target, involving much higher costs than justified by the environmental benefits. There are ways to design a more reasonable cap-and-trade program.

Few economists would recommend that the optimal price of carbon should still be zero, and that is a key component of realistic policy. While they may be making some improvements on the R&D side, there must be a companion policy which sets a price on carbon that will advance the development of technologies for use in the private sector.

Thomas Schelling
University of Maryland

The president’s stated goals have been hollow from the beginning. They signal skepticism about whether climate change is a real danger of any kind.

There was nothing in Kyoto that was self-enforcing. A Kyoto regime would not have been any more enforceable than the now-rejected constitution of the European Union. In 1997, when the protocol was signed in Kyoto, no government had the slightest idea what would be required in order to meet the commitments they were undertaking. Kyoto has not induced any significant burdens, and if the United States had undertaken commitments, it would notice that no other countries are incurring severe burdens. And there is no procedure in the Kyoto Protocol for sanctions on nations that do not meet their obligations.

Post-Bush climate policy threatens to become an exercise in needlessly expensive symbolic politics. Leaving an institutional vacuum in U.S. climate policy is an invitation to mischief in coming years.

AEI editorial assistant Tim Lehmann prepared this summary.