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What’s Next For Climate Change Policy?

By / 1.18.2011

The new Congress is now in session, with a large GOP majority in the House and a much diminished Democratic majority in the Senate; the prospects for serious climate change legislation in the U.S. are dimmer than ever. The Republican Party has largely turned its back on science and its own conservative ideas (remember, McCain was a champion of cap and trade back in 2008), and because of the profound climate denialism of the Tea Party movement even once reasonable Republicans are now turning their backs on the overwhelming scientific evidence, and the many ways comprehensive climate policy is good for the overall economic and security interests of the nation. (To be fair, there are a few Democrats in fossil-fuel dependent states that are also opposing new climate measures, such as Senators Rockefeller and Manchin of West Virginia.)

But not all is bleak; there are still a number of reasons to be mildly optimistic that significant progress can still be made in the run-up to the 2012 elections.

  1. The EPA is set to roll out new regulations on greenhouse gas emissions from power plants, which have the potential to reduce greenhouse gas emissions from the power sector by a few percentage points over the next few years. The rules will make coal generation less economically viable, and likely spur new development in less greenhouse gas-intensive sources, such as natural gas, in addition to renewable sources. I highly recommend the work by David Roberts at Grist for details on the EPA’s actions and their consequences. On January 13th the EPA revoked the permit for a massive mountain-top removal coal plant (which had been approved by the Bush Administration in 2007), signaling that the agency is prepared to put an end to the industry’s controversial practice.
  2. The Obama Administration has given the okay for a host of huge new solar plants on federal lands and gone a long way to streamlining the process by which such plants can be built. By reducing bureaucratic hurdles and red tape for large solar installations, we are likely to witness a large increase in mega-solar plants. Aside from the higher cost of solar (relative to fossil fuel), the biggest hurdle to widespread adoption has been the huge time lags and transaction costs in the permitting process; the Administration’s moves go a long way towards decreasing these barriers. The economies of scale of these plants will likely lead to significant cost reductions, making solar much more competitive in the near future. It’s important to note that these solar plants mostly rely on solar thermal technology―an 18th century technology using mirrors to heat water and produce steam, which powers a turbine―that is fast-becoming the low-cost solar alternative.
  3. The announcement by Google that it will invest $5 billion in a massive electricity transmission line in the Atlantic will help spur the development of massive wind farms off the Eastern seaboard. These hold tremendous potential and could one day provide most or all of the power for many of the East Coast’s major cities.
  4. The G-20 is moving forward with its plan to eliminate or severely reduce fossil fuel subsidies in the “medium” term. This is extremely difficult to accomplish politically, given both the entrenched interests who will lose billions and the effect on consumer prices, but even a slow and steady removal of these subsidies will help to tilt the energy mix towards less greenhouse gas-intensive forms of energy and decrease overall emissions.
  5. California is finally moving forward with its climate legislation AB32, as the final challenges to the law have been defeated. While the legislation doesn’t go into effect until 2012, it is the most progressive and far-reaching climate change policy in the world and the results are likely to be extremely consequential for the nation, and ultimately any future international climate change regime. California is the world’s 8th biggest economy so if comprehensive climate change legislation can work here it will prove a global model; according to UC-Berkeley Professor Peter Berck AB32 is likely to lead to a net increase in jobs in California because of the major energy efficiency improvements that the legislation will force into action. We will soon see if these optimistic predictions are borne out by the reality on the ground.
  6. In 2010 private investment in green energy soared to a record high, and with the global economic recovery gaining momentum oil prices are likely to keep rising, providing additional economic incentives for alternatives. To date, much of this green investment has been outside the U.S. because of the failure to pass comprehensive national policy, but there is still time for the U.S. to catch up if we can get serious.
  7. Significant progress was made in the recent COP16 meetings in Cancun, with the major developing country emitters agreeing to verification of their emissions reductions in the future. Steps were also made to begin the implementation of the major forest carbon program, REDD, which has the potential to provide a cheap path to effective carbon emissions, while also preserving much of the world’s remaining forests.

As I detail in my new book, What Environmentalists Need To Know About Economics, the theory, facts, and ingredients for good policy, are on the side of those who want to take an aggressive and forward-looking approach to global climate change (and other critical environmental issues); hopefully, the intellectually honest and serious Republicans and conservatives will pressure the GOP to return to its pro-environmental roots and become constructive players in the national conversation. More on this soon.