President Bush's rejection of the Kyoto Protocol in 2001 was well-publicized, but most Americans are only vaguely familiar with the reasons for that decision or the administration's alternative policies. There is widespread speculation that the president will propose new policies to combat climate change in his final two years in office; whether or not that happens, momentum is building in Congress and federal action on climate change is widely regarded as inevitable. The Kyoto Protocol's approach remains a favorite of environmental advocates and their political allies, as well as a growing number of rent-seeking businesses that stand to profit under such a system. Unless the Bush administration is willing to cede the future of climate change policy to the next president, it must take effective steps now to set American climate change policy on the right path.
What new climate change policies should the federal government adopt? In Strategic Options for Bush Administration Climate Policy, Lee Lane, the executive director of the Climate Policy Center, explores options that policymakers might consider, as well as the costs and benefits of current policies. His conclusions will surprise many environmental advocates: President Bush was right to reject the Kyoto Protocol and should continue to reject calls for "cap-and-trade" programs modeled on Kyoto. Emissions trading would be expensive and ineffective; the costs would be significant but the environmental benefits would be negligible.
One reason climate policy is such a hotly contested issue is the importance of precedence in American politics: Once the federal government embarks on a given approach to curtailing greenhouse gases, future policies are likely to follow that path. With the threat of Kyoto-style cap-and-trade programs looming larger with each passing year, Lane argues that the Bush administration should consider adopting a modest carbon tax. This would be vastly more efficient than emissions trading and would cut off the growing political momentum toward reengaging with the Kyoto system. (At the very least, a cap should include a "safety valve," providing an unlimited supply of affordable credits, essentially transforming the trading program into a tax.)
Lane also argues that greater attention should be paid to ambitious approaches to climate change such as geoengineering and the development of breakthrough clean-energy technologies that could reduce emissions enough to curtail projected warming. Costly cap-and-trade programs that produce trivial reductions in greenhouse gas emissions are simply a waste of money; our resources should focus instead on actual solutions, not ineffective interim steps.
Lee Lane is executive director of the Climate Policy Center (CPC).