Resident Scholar  Kenneth P. Green

A look at the websites of the candidates as well as media coverage reveals that all of the Democratic candidates for President have presented detailed plans for addressing climate change that include four components: carbon caps and targets; fuel efficiency measures; renewable electricity standards; and efficiency targets. They also generally oppose coal power plants unless greenhouse gases are sequestered.

Hillary Clinton, for example, supports reducing carbon emissions 80% by 2050; imposing a 55 mpg fleet standard for automobiles by 2030; generating 20% of electric power with renewables by 2020; reducing energy use by 10% by 2020; and supports investment in coal power only if it reduced greenhouse gas emissions by 20%. The other major candidates, John Edwards, Chris Dodd, and Barak Obama share similar targets, though there are minor variations seen in their calls for improved vehicle fuel economy. The only significant outlier in the Democratic field is Bill Richardson, who seems to be trying to out-Gore Al Gore, pushing for a 90% reduction in carbon emissions by 2050; a 50% share for renewables by 2040; and a call to ban coal plans outright unless they can capture and store their carbon emissions, a capability that, at present, does not exist.

In stark contrast to the unified Democratic position, the Republican field largely defies easy classification even after significant scrutiny. John McCain, who has long endorsed carbon emission trading, continues to do so, though at a less aggressive level than the Democratic candidates. Two other Republicans--Mitt Romney and Mike Huckabee--have expressed general support for the idea of capping carbon emissions, but have not spelled out any method by which they'd achieve such a cap. Rudy Giuliani might also fit into this category, as he has expressed admiration for the Arnold Schwarzenneger approach to environmental policy (which prominently features carbon emission trading)[i] though Giuliani has focused more on conducting another space race, this time focused on developing alternative (presumably lower-carbon) forms of energy.

In April, our AEI colleague Newt Gingrich wrote an article called "We Can Have Green Conservatism--And We Should" in which he discussed a number of values which he classified as green conservatism.[ii] Among these were the belief that economic growth and environmental health are compatible, and that positive environmental outcomes will be realized faster by working within market structures than via regulation and litigation. And Newt is not alone--while many will argue that Governor Schwarzenegger has failed when it comes to adopting market-friendly means to environmental ends, he has certainly shown the political viability of embracing the values and the outcome goals of his environmental constituents.

Here are two powerful, positive ideas to mitigating carbon emissions and averting expected damages from climate change that embrace the goal of climate protection, but utilize methods that are compatible with basic conservative policy principles.

As we argued in a previous AEI Environmental Policy Outlook in June[iii], a revenue-neutral carbon tax, offset by reductions in taxes on productivity is a superior policy option to carbon emission trading in virtually every dimension. Revenue neutral carbon-centered tax reform would: be more effective at reducing GHG emissions than emission trading; create a revenue stream to offset economic damage of higher energy prices; shift a portion of the tax base from productive endeavor to consumption; be less prone to corruption; require no new collection mechanisms; be predictably adjustable and be self-moderating--nobody is likely to want the tax to be higher than absolutely necessary.

Putting forward a program to get the price right on carbon emissions would allow Republican candidates to argue for regulatory streamlining and the removal of such things as CAFE standards, appliance standards, construction standards, light bulb standards, and so forth, all of which become totally superfluous in an economy that is properly pricing carbon emissions through a carbon tax.

Another area where Republicans could bring a positive, market-friendly agenda to the climate change debate involves adaptation, a subject treated like an unwanted step-child by Democrats and others fixated on a Kyoto-style approach to reducing greenhouse gas emissions.

NASA's James Hansen has estimated that the greenhouse gases already emitted into the atmosphere are likely to deliver about 1° of additional warming by the year 2100, regardless of what we do to slow the growth in greenhouse gas emissions today.[iv] That additional warmth could have a broad range of impacts, from slightly higher sea levels and coastal flooding, to increased drought in drought-prone regions, to increased water shortages in those areas dependent on winter snow deposits, and so on. Democrats and environmentalists are fond of pointing out that these disaster losses are a future cost of global warming.

But as several researchers have pointed out, the higher costs resulting from coastal disasters such as tidal surges and hurricanes are not primarily due to environmental change, but from the increased property values found on coastlines and in forest areas. And that clustering of increased property value on coastlines is enabled by state and federal governments through a variety of storm and flood insurance subsidies.

As an article in EOS, the journal of the American Geophysical Union points out, "More people are moving into coastal areas that are vulnerable to natural hazards--particularly earthquakes on the west coast and hurricanes on the east coast. Furthermore, the effect is amplified because the people who are moving into these coastal areas represent the higher wealth segment of our society, plus their wealth has been increasing.[v] Climate researchers Roger Pielke Jr. and Christopher Landsea have demonstrated that when you normalize the insurance losses to account for increases in population and wealth, the trend of increasing damage amounts in recent decades disappears.[vi]

The argument that coastal vulnerability is a government failure, not a climate problem is also shared by Joseph E. Stiglitz, former chief economist of the World Bank, who wrote,

Natural disasters, such as Hurricane Katrina and, in earlier years, hurricanes in Florida and floods along the Mississippi, have made two things clear: Large numbers of individuals facing large risks have not purchased insurance (for one reason or another); and, when disasters happen, there will be a government bailout. (The recognition of this, in turn, provides one of the reasons individuals limit the purchase of insurance; that is, if it is left as a voluntary matter.) There is clearly a role for government ex ante, but ascertaining what that role should be (requiring the provision of private insurance, providing public insurance, etc.) is not so simple...if the private sector has strong incentives to overcharge, the public sector has strong incentives to undercharge.[vii]

As Newt Gingrich and others have pointed out, Republican candidates need to find policy approaches that embrace environmental values but that secure those values with policy approaches compatible with fiscal responsibility, limited government, free markets, and personal responsibility. Two such policy options are a greenhouse gas mitigation agenda incorporating revenue-neutral, carbon-centered tax reform, and a deregulatory adaptation agenda of eliminating the insurance subsidies that have, and will continue to encourage people to live in areas that are most susceptible to small changes in the climate.

Kenneth P. Green is a resident scholar at AEI.

Notes

[i] At a presentation in Silicon Valley in 2007, Giuliani met with Schwarzenegger on the subject of climate change, and afterward expressed general agreement with Schwarzenegger's approach, saying, ""I generally agree with Gov. Schwarzenegger,'' he said. "He's a good friend and a progressive leader.'' See "100% in president race, Giuliani tells tech group: Ex-N.Y. mayor lauds Schwarzenegger in Silicon Valley Talk," San Francisco Chronicle, February 13, 2007. Available at http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/02/13/GIULIANI.TMP.

[ii] Newt Gingrich, "We Can Have Green Conservatism, and We Should," Human Events, April 23, 2007. Available at http://www.aei.org/publications/filter.all,pubID.26036/pub_detail.asp.

[iii] Kenneth P. Green, Steven F. Hayward, and Kevin A. Hassett, "Climate Change: Caps vs. Taxes," Environmental Policy Outlook, June 1, 2007. (Washington: American Enterprise Institute). Available at http://www.aei.org/publications/filter.all,pubID.26286/pub_detail.asp.

[iv] James Hansen et al., "Earth's Energy Imbalance: Confirmation and Implications," Science, Vol. 308. no. 5727, June 3, 2005, pp. 1431 - 1435.

[v] G. Van Der Vink et al., "Why the United States is Becoming More Vulnerable to Natural Disasters," EOS, November 3, 1998. Available at: http://www.agu.org/sci_soc/articles/eisvink.html.

[vi] Pielke, Jr., R. A. and C. W. Landsea 1998. "Normalized Hurricane Damages in the United States: 1925-1995," Weather and Forecasting, 13: 621-631. Available at http://www.aoml.noaa.gov/hrd/Landsea/USdmg/.

[vii] Joseph E. Steiglitz, "What is the Appropriate Role of the Federal Government in the Private Markets for Credit and Insurance? What is the Outlook," Panel Discussion, Federal Reserve Bank of St. Louis Review, July/August 2006.