As President Obama prepares to deliver Tuesday's State of the Union address, observers are keenly waiting to hear what he will proclaim on the topic of climate policy. With Congress still bitterly divided, the odds of passing a substantive bill to reduce emissions are impossibly long, so we know that Obama and his advisors will have to draw on executive power to take action. We have also seen the president pull away from the economic argument for alternative energy in favor of highlighting the extreme weather events being spurred by a changing climate.
In the Sunday Review section of this week's New York Times, Washington bureau chief David Leonhardt lays out the choices confronting the new Obama administration:
The most intriguing choice facing Mr. Obama is whether to resuscitate a version of the centerpiece of the Democrats’ failed 2009 climate push: a cap-and-trade program. He has little chance of creating such an economywide program, because Republicans and some coal-state Democrats oppose it. But he may be able to create a scaled-down version specifically for power plants — no small thing, given that power plants produce about one-third of the country’s carbon emissions.
To economists, the best climate policies are those that allow market incentives to work, and the most damaging tend to be those heavy on mandates. “Telling companies they have to install this or that equipment is the more expensive way to proceed,” says Michael Greenstone, an M.I.T. economist and former Obama administration adviser. “Instead of a one-size-fits-all solution, you should allow companies to find the least-cost solution.”
Aside from the market-based cap-and-trade system for power plants, Leonhardt writes that financing for research is a second major way Washington can try to slow climate change without harming economic growth. The federal government will spend $3.8 billion this year on clean-energy research and development, according to the Brookings Institution.
Finally, the government could play a further role by making its own buildings and operations more energy efficient. Doing so could help bolster the fledgling market for alternative energy.
Ultimately, Leonhardt writes, the most powerful economic argument for taking action on climate change is not the much ballyhooed bonanza of green jobs, but "the fact that the economy won’t function very well in a world full of droughts, hurricanes and heat waves." Amen.
(via NY Times)
Photo: Coal trains idled on the tracks near Dry Fork Station, a coal-fired power plant being built near Gillette, Wyo. (Matthew Brown/AP via NYT)