issue: Energy & Environment

The Right Growth Formula

Posted on by The Progressive Policy Institute

The specter of economic decline is haunting America. President Obama seeks to banish it by making jobs and U.S. competitiveness the centerpiece of his State of the Union report to Congress tomorrow. This sets the stage for a critical contest between dueling theories about how America can get its economic mojo back.

Over the weekend, Republicans flooded the media with preemptive strikes against Obama’s expected calls for boosting public investment to spur growth. “With all due respect to our Democratic friends, any time they want to spend, they call it investment, so I think you will hear the president talk about investing a lot Tuesday night,” GOP Senate leader Mitch McConnell told “Fox News Sunday.” “This is not a time to be looking at pumping up government spending in very many areas.”

True to form, Republicans have a very simple theory for rekindling jobs and growth: Cut federal spending. That’s why they’ve tapped their leading fiscal hawk, House Budget Committee Chairman Paul Ryan, to respond to Obama’s speech. And Rep. Michele Bachmann will offer an unofficial, “Tea Party” riposte to the President online.

Now, I’m all for fiscal discipline. I’ve chided progressives for posing a false choice between deficit reduction and economic growth. Restoring fiscal stability is an essential ingredient of any credible plan for robust growth.

But cutting spending by itself won’t help us rebuild our infrastructure (which is the foundation for productivity), strengthen our comparative advantage in science and technological innovation, or produce a highly skilled workforce. As virtually all serious economists recognize, these are tasks for government.

Yet today’s Republicans are so besotted by anti-government populism that you can’t even count on them to be good capitalists anymore. Perhaps conservative think tanks should organize seminars to reacquaint House Republicans with Adam Smith, whose defense of laissez faire economics did not blind him to government’s responsibility to supply public goods like roads, ports and education. As he wrote in the Wealth of Nations:

The third and last duty of the [government] is that of erecting or maintaining those public institutions and those public works, which, although they may be in the highest degree advantageous to a great society, are, however, of such a nature, that the profit could not repay the expense to any individual or small number of individuals, and which it therefore cannot be expected that any individual or small number of individuals should erect or maintain.

As PPI maintains in Getting America Moving Again, a new Memo to President Obama, it will take both more public investment and more dynamic markets to reinvigorate our economy. We need to boost spending on research and commercialization of new inventions. We also need to boost spending on modernizing the nation’s transport and energy infrastructure – for example, by building high speed rails and smart grids that can accommodate clean energy generation. This can and must be done within a new framework for restoring fiscal stability that cuts tax expenditures, caps spending on defense and domestic programs, and most importantly, slows the unsustainable growth of the big entitlement programs.

At the same time, we also need to revamp archaic tax and regulatory policies that dampen incentives for economic innovation and entrepreneurial risk-taking. To that end we have proposed a base-closing style commission charged with culling the accumulation over time of burdensome rules and regulation.

In truth, neither party’s economic orthodoxies are equal to the challenge facing our country. That’s why President Obama needs to challenge both sides tomorrow to unite behind a bold plan for a national economic resurgence.

What’s Next For Climate Change Policy?

Posted on by The Progressive Policy Institute

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.

Congress vs. The EPA, Round II

Posted on by The Progressive Policy Institute

Everything old is new again. Around this time last year, the Environmental Protection Agency (EPA) was in the process of issuing major rules that would lead to regulation of greenhouse gases under the Clean Air Act (CAA). Many in Congress opposed these moves, and sought to delay or halt them. I wrote about these attempts in this space (here, here, here, and here) and, as I predicted, they failed—none reached the President’s desk.

But failure has not stopped EPA opponents from trying again. Since last year, some things have changed. The EPA has moved forward with regulation, implementing GHG-related permitting requirements for new and modified emitters, and announcing in December that it plans GHG emissions standards for existing power plants and refineries. But none of these moves are surprising—the EPA is not pushing any harder now than it was last year.

But of course the 2011 Congress is different from the 2010 version, particularly since Republicans now control the House. Will this Congress be able to derail the EPA?

Maybe. It depends, not just on politics, but on what avenue of attack Congress chooses. This choice will probably be made first in the House, where new Energy and Commerce Committee Chair Fred Upton (R-Mich.) will set the agenda. Four broad options are on the table. Last year, each of the first two options were pursued. All four are likely this year. Let’s briefly look at each in turn.

1) New legislation: Congress could simply pass a law modifying EPA authority. Proposals range from a short delay in EPA GHG authority to removing GHGs from the CAA entirely, effectively overturning the Supreme Court’s Massachusetts v. EPA decision.

While Republican control of the House does smooth the path of new legislation somewhat, the Senate and above all the President remain significant barriers. While modest legislation, such as a delaying bill, is likely to attract some Democratic support, it will need 60 votes to pass the Senate. Even then, President Obama is certain to veto any legislation restricting EPA authority. It seems very unlikely that any such bill could attract a veto-proof majority.

2) Congressional Review Act: Congress has the authority to cancel any regulatory action with specific legislation. This authority is only available for 60 days after the regulation is formally issued, however.

 

CRA resolutions do not require 60 votes to pass the Senate. This is relatively little help, for two reasons. First and most obviously, the President will likely veto any resolution. Furthermore, almost all of the significant GHG rulemakings made by the EPA were issued well over 60 days ago, and cannot be rescinded by CRA resolution anyway.

3) Appropriations: Congress may choose not to fund EPA programs, even if they remain legally permissible (or even required).

 

Congress has not yet passed a budget for 2011, so this Congress will need to pass two over the next year. This gives ample opportunity for restricting EPA funding. The appropriations process is ultimately subject to the same procedural requirements as other legislation, so any budget will have to pass the Senate and be signed by the President. Defunding the EPA makes either far less likely — but unlike EPA-specific legislation, the politics are hard to predict. The budget process always involves compromises. How hard are EPA’s opponents and supporters willing to fight? If Congress does pass a budget that defunds agency GHG regulation, would the President veto it – risking a government shutdown?

4) Oversight: Even if none of the above is possible, Congress’s (or often individual committee’s) subpoena power can be used to investigate and, in practice, slow EPA action.

 

While oversight measures cannot alter EPA’s legal authority, they can make regulatory life very difficult. Since individual committees can conduct hearings and investigations, there is relatively little to stop motivated members of Congress from targeting the EPA with these tools. They are unlikely to stop any regulatory program, but they will be a drain on agency resources and energy.

In short, I don’t think headline-grabbing moves to alter EPA legal authority over GHGs are much more likely of success this year than last. That’s unlikely to change until and unless there is a change in the White House. These kinds of bills are more politics than policy; I doubt their supporters really think they will pass. Instead they allow members to make statement votes, and force EPA supporters to make votes that may be used against them later.

But the appropriations process and Congress’ oversight powers are both real, though different, threats to EPA regulation. Budget negotiations this year are likely to be acrimonious, and the EPA is a small pawn in a bigger game. If EPA opponents make defunding the agency a priority, they may be able to achieve it by doing so in an otherwise-palatable budget that the President determines he cannot afford to reject. In this sense, the relative political unimportance of the EPA works to its advantage — will Republicans in the House choose defunding the agency as their line in the sand, over other measures with much larger fiscal impact? This seems unlikely, but certainly not impossible.

Committee oversight presents a different challenge to the EPA. Some level of Congressional interference is certain, but its extent probably depends greatly on the agency’s ambition. If the EPA fears Congressional subpoena, it is less likely to regulate strongly or creatively. Instead, it may slow-walk some measures, and scrap others. Unfortunately, this may have the perverse effect of making regulation less efficient, rather than simply leading to less regulation. If agency resources are stretched (because of Congressional demands, underfunding, or both), it is less able to do careful analysis. If the agency makes avoiding controversy a paramount goal, it is less likely to try innovative approaches (such as tradable GHG performance standards) aimed at more efficient regulation. An EPA that does the minimum required by law might be more costly to the economy, not less.

This piece is cross-posted at Weathervane

Tom Friedman’s Reading My Stuff on Green Tech and the Military!

Posted on by The Progressive Policy Institute

Look, I realize that Tom Friedman gets a lot of guff from the liberal intelligensia.  Matt Taibbi over at Rolling Stone has practically made a second career out of eviscerating Friedman’s sometimes tortured contortions of the Queen’s Tongue.  Certainly, Taibbi scores the odd point: “It’s OK to throw out your steering wheel,” Friedman once wrote about George Bush’s Middle East policy, “as long as you remember you’re driving without one.”  What?

Fair enough.  But Tom, a long-time friend of PPI no less, is an insightful writer who, more often than not, is on the right side of history.  Take his column this weekend on the “U.S.S. Prius“:

Spearheaded by Ray Mabus, President Obama’s secretary of the Navy and the former U.S. ambassador to Saudi Arabia, the Navy and Marines are building a strategy for “out-greening” Al Qaeda, “out-greening” the Taliban and “out-greening” the world’s petro-dictators. Their efforts are based in part on a recent study from 2007 data that found that the U.S. military loses one person, killed or wounded, for every 24 fuel convoys it runs in Afghanistan. Today, there are hundreds and hundreds of these convoys needed to truck fuel — to run air-conditioners and power diesel generators — to remote bases all over Afghanistan.

Mabus’s argument is that if the U.S. Navy and Marines could replace those generators with renewable power and more energy efficient buildings, and run its ships on nuclear energy, biofuels and hybrid engines, and fly its jets with bio-fuels, then it could out-green the Taliban — the best way to avoid a roadside bomb is to not have vehicles on the roads — and out-green all the petro-dictators now telling the world what to do.

Let’s just say I’m happy Tom’s reading my stuff.  Yep, on October 12, I wrote the following piece in the Los Angeles Times on the same topic to mark the 10th anniversary of the bombing of the U.S.S Cole in Aden harbor:

America forgets Oct. 12 as seamlessly as it remembers Sept. 11. Ten years ago today, 17 U.S. Navy sailors were killed and 39 injured in an Al Qaeda attack against the U.S. destroyer Cole in the harbor of Aden, Yemen. The Cole was relatively defenseless during a 24-hour refueling stop when suicide operatives pulled alongside in a small, explosive-laden boat and detonated a charge, ripping a 40-foot hole in the hull.

Though the lessons from 9/11 will be debated for years, Oct. 12’s message is succinct. It is best summed up by Marine Corps Commandant Gen. James T. Conway: “Energy choices can save lives on the battlefield.” The armed forces are searching for next-generation green energy technologies because they provide power at the point of its consumption, which decreases the military’s need to resupply with carbon-based fuels.
…
Mabus is setting big goals for an energy-independent military. He wants to sail a “Great Green Fleet” by 2016 — a full carrier strike group composed of nuclear and hybrid electric ships, as well as biofueled aircraft. By 2020, Mabus wants half of the Navy’s energy to come from alternative sources.

That’s why the Obama administration should consider a Pentagon innovation fund. A few well-spent dollars would help companies tackle the technological learning curve and reduce costs.

To get to where Mabus wants to go, ideas need cash. The Pentagon may have a truly out-of-control budget, but consider this: Radar, GPS and the Internet all started as military-funded projects. The next green technology could be sitting in a lab somewhere, begging for a few dollars to help produce it on a bigger scale.

With conservatives pushing this climate change denial nonsense, it’s an important point that the military is innovating on green-tech because it can’t wait for the political “debate”.  So much the better as more-and-more mainstream writers pick up on this narrative.

Knowledge Capital Writedown: Wind Turbines

Posted on by The Progressive Policy Institute

On the front page of the NYT this morning, Keith Bradsher gives a perfect example of a knowledge capital writedown, in his story about wind turbine technology being transferred to China by a Spanish company, Gamesa:

Nearly all the components that Gamesa assembles into million-dollar turbines here, for example, are made by local suppliers — companies Gamesa trained to meet onerous local content requirements. And these same suppliers undermine Gamesa by selling parts to its Chinese competitors — wind turbine makers that barely existed in 2005, when Gamesa controlled more than a third of the Chinese market.

But in the five years since, the upstarts have grabbed more than 85 percent of the wind turbine market, aided by low-interest loans and cheap land from the government, as well as preferential contracts from the state-owned power companies that are the main buyers of the equipment. Gamesa’s market share now is only 3 percent.

With their government-bestowed blessings, Chinese companies have flourished and now control almost half of the $45 billion global market for wind turbines. The biggest of those players are now taking aim at foreign markets, particularly the United States, where General Electric has long been the leader.

The story of Gamesa in China follows an industrial arc traced in other businesses, like desktop computers and solar panels. Chinese companies acquire the latest Western technology by various means and then take advantage of government policies to become the world’s dominant, low-cost suppliers.

It is a pattern that many economists say could be repeated in other fields, like high-speed trains and nuclear reactors, unless China changes the way it plays the technology development game — or is forced to by its global trading partners.

Because of Gamesha’s transfer of knowledge capital to China, GE’s knowledge capital has become less valuable, which eventually will affect wages and employment.   Gamesha’s knowledge capital has been less valuable as well, which affects the Spanish standard of living.

The correct policy prescription is for the U.S. to dramatically up our investment in knowledge capital and physical capital.  Dramatically. That may require less support for consumption now so that our children can be better off in the future.

This article is cross-posted at Innovation and Growth

Photo credit: Bonnie Tsang

Tip-Toeing Around The Elephant: US Mitigation And The COP

Posted on by The Progressive Policy Institute

The US was in an awkward position in Cancun. The administration clearly wanted to show leadership, but it was hamstrung by an inability to deliver legislation with any tangible commitments. Since that seemed unlikely to change in the new Congress, US negotiators were left playing defense on the key issue — mitigation.

This makes movement in other areas (such as finance and forests) difficult, though that is in part due to US insistence on parallel, rather than serial, treatment of issues.

The result was sometimes bizarre diplomatic displays by the US, such as Energy Secretary Steven Chu’s address — essentially a remedial crash course in climate science. Secretary Chu did not take questions, one suspects because it would have been difficult to answer the obvious one — how does the US plan to meet the President’s 17%-cuts-by-2020 goal articulated last year?

Difficult, but not impossible. The awkward position in which US officials find themselves and the effects it has on US credibility and capability make the administration’s continued avoidance of serious public discussion of EPA carbon regulations puzzling. Research at RFF and elsewhere indicates that EPA regulations, either on the books already or likely in the near future, could achieve emissions reductions in the range of the President’s goal.

I’ve studied these regulations over the past year or so, and I’ve been repeatedly surprised by their likely impact. Vehicle fuel economy standards, new power plant permitting rules, and whatever the agency decides to do for existing sources can each make a significant emissions impact. Perhaps more interestingly, coming EPA regulations ostensibly aimed at other pollutants could have a big impact on carbon by pushing a substantial portion of coal plants into retirement, and replacing them with cleaner technology.

It’s not clear why the US administration and negotiators didn’t trumpeting these regulations as evidence of a commitment to cut emissions. It’s possible it is felt that a regulatory approach won’t be understood or taken seriously by the international community, but EPA regulations are far from the only complex issue on the table (just ask your local climate finance expert for a quick summary if you suspect otherwise). And other countries are undoubtedly familiar with a regulatory approach — for many it is their preferred domestic environmental policy. One thing is certain, though — the best way to ensure that the international community (and the American public) fails to understand or appreciate the EPA’s capabilities is for the administration and its negotiators to refuse to explain them.

Another possibility is that the administration worries that hyping EPA’s powers is politically dangerous. The agency is more effective, this argument goes, if it can operate quietly and at its own pace. To put it more directly, to speak of regulation is to destroy it — perhaps because Congress would respond by seeking to cripple the agency.

But the President should not forget that his party still controls the Senate, and that he still wields the veto pen. Even if the President resigned himself to giving up EPA powers (or delaying them) as part of a compromise, it would surely be in his interest to say how strong these powers are, thus increasing their value in any bargain.

Moreover, the argument that regulatory emissions cuts are more effective if kept quiet contradicts what is arguably the central dogma of US foreign climate policy — that US action is valuable not for its small contribution to global goals, but as a tool for unlocking negotiations and prompting action elsewhere. If US negotiators can’t or won’t talk about the best policy tool the US currently has, they can’t do their jobs. This makes the long term likelihood of a meaningful international agreement much smaller.

EPA regulation is not the first, best option for US climate policy; it is above all likely to be more costly over the long run than a pricing mechanism. But neither this admission, nor the fact that EPA regulations are legally required, are good reasons not to forcefully and frequently articulate their emissions benefits. Perhaps we as a country should be embarrassed that we cannot adopt a national climate policy that more closely approaches the ideal in terms of both costs and benefits. But the administration should not let any embarrassment about what the country cannot currently do prevent them from talking about what it can.

As my colleague Dallas Burtraw pointed out in his talk here this week, US credibility on climate requires that the administration be a lot bolder — not by making new commitments that it lacks the domestic powers to back up, but simply by publicly, loudly, and clearly saying what it can and will do with the tools it already has.

This article is cross-posted at Weathervane

Making Sense of Connecticut v. AEP

Posted on by The Progressive Policy Institute

The U.S. Supreme Court agreed today to hear an appeal to Connecticut v. AEP, a court of appeals granting eight states the right to sue American Electric Power (AEP) Co. and several other utilities for greenhouse gas emissions.  The states had argued that carbon dioxide emissions were a “public nuisance,” and hoped to force the companies to reduce their emissions through litigation.

In a recent PPI memo, Philip Goldberg argued that such litigation made little sense.

Progressives should … not reflexively support climate change litigation, no matter how passionately one might favor emission reductions. We should adhere to our principles and protect due process rights of defendants, even when those defendants are large corporations. The David and Goliath analogy may score political points, but it only works in litigation when Goliath does something objectively wrong. Otherwise, any group that fails to get its way in the political arena will turn to the courts. Such an act would be an affront to democratic proceduralism that has long defined our progressive philosophy.

You can read the entire memo here.

Why Progressives Should Cool to Global Warming Lawsuits

Posted on by The Progressive Policy Institute

Environmental progressives have been urging the federal government to address climate change for more than 30 years. Many of these efforts have focused on setting limits on the emissions of carbon dioxide, methane, and other gases collectively referred to as “greenhouse gases” or GHGs. Presidents George H.W. Bush, Clinton, and Obama all negotiated international treaties on global emissions, and Congress has considered numerous climate-related bills. None of these efforts, however, has resulted in binding emission caps for U.S. operations, and Senate efforts to pass a “cap and trade” bill have been dropped. As a result, some progressives advocate a new arena for this battle: the courts, with lawsuits against a group of companies to directly force them to reduce emissions.

There are four lawsuits based on the premise that a handful of American companies, all associated with energy use and production, can be held legally responsible for “global warming.” The suits claim that the companies engaged in operations or made products that contributed to the buildup of GHGs in the atmosphere, causing the earth to warm. The cases seek either reductions in emissions or payment for injuries caused by specific weather events, such as hurricanes and flooding, allegedly caused or made worse by climate change. The liability threat for these defendants is massive: billions of dollars in the current suits, injunctions against their operations, and new filings for future weather-related injuries.

For environmental progressives, the real purpose of this litigation is to use the threat of massive liability to force the companies to accept concessions on climate change policy. These lawsuits, first filed in 2004, were born of frustration with the political process, particularly under President Bush, for failing to take steps to combat climate change. Given the seeming demise of climate change legislation in the current Congress, many progressives have found achieving the same – or perhaps more stringent – policies in the courts an increasingly appealing option.

Read the entire memo

Rupert Murdoch v. Justice Scalia

Posted on by The Progressive Policy Institute

Just like their crazy-as-a-FOX cousins, the Wall Street Journal editorial page has indulged yet again in a spectacle of tragicomical self-victimization. An especially shameless recent raving targets the Democrats’ efforts to expose the furtive corporate backing behind their array of political front groups, of the sort that Rupert Murdoch, the brothers Koch and their band of aspiring overloads have nearly perfected. Naturally, the Journal gets it wrong across the board.

Their charge was that Senate Finance Committee Chairman Max Baucus engaged in a “liberal abuse of power” against right-leaning “issue advocacy” groups recently when he asked the IRS to investigate whether “certain tax exempt 501(c) groups had violated the law by engaging in too much political campaign activity.”  But Baucus did not target “certain” groups—his request to the IRS was broad, and intended to give them wide rein to go where the facts led them and report back.

Senator Baucus, as chairman of the Senate committee responsible for the tax code, has the obligation to examine how his committee’s laws work in practice, and whether they ought to be revisited. The examples in his letter, one of which cited a local financier who paid for a pro-development referendum campaign in Washington State, represented the results of investigations by the New York Times and Time, not part of any partisan hit list as the Journal would have us believe.

Even if the IRS investigation ends up disproportionately impacting conservative groups, that is because these groups’ “issues” just so happen to coincide squarely with their backers’ financial interests, calling into question their tax-exempt status.

This is not the case with conservative bogeymen such as George Soros. While Soros and other wealthy progressives also contribute to issue advocacy groups, their personal fortunes do not turn on the agenda they espouse.  Soros would in fact be even better off financially were the Republicans to gain power and, say, extend Bush tax cuts for the wealthiest Americans. Contrast that with the Koch brothers, whose sprawling empire is one of the top ten air polluters in the United States, and who have been called the “kingpins” of climate change denial.  One can just imagine how much they have to lose from stronger environmental regulations or a cap-and-trade bill.

Now, it is all well and good if the Kochs and Co. want to keep pumping dollars into elections and carbon into the air. That is their right under the law.  But they should have to be honest about it so that the American people can judge whether this agenda coincides with their own.   We all know that the Supreme Court in the case Citizens United upheld the right of corporations to spend freely on behalf of issues and candidates they believe in.  Less well known is the court’s decision, in the same term, in Doe v. Reed.  In it, the 8-1 majority held that there is no categorical First Amendment right to anonymous political speech.

In Doe, finding against such a right to privacy was critical, said the Court, to “fostering government transparency and accountability.” Perhaps Justice Scalia explained the rationale best: “Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed…”  That is what the tax code provisions the right is abusing are supposed to reinforce, and which Senator Baucus is charged with overseeing.

Would that the Journal had Scalia’s spine. Instead it complains about businesses being made the “targets of vilification with the goal of intimidating them into silence.”   But why should consumers unwittingly support businesses that advocate interests potentially at odds with their values?   This contrast is especially striking when those same businesses can covertly advance their interests through a tax-exempt organization.  Only in the Journal’s circular world, where what’s good for the golden gooses is good for the gander, could this somehow square.  But such misdirection and obfuscation, as we well know, is the only way the far right can still pretend to have the interests of the American people at heart.

Photo credit:  cafemama

Is the Obama Administration Really Serious About Nuclear Power?

Posted on by The Progressive Policy Institute

Constellation Energy announced last weekend that it is pulling out of negotiations with the Obama administration over its pending application for Department of Energy loan guarantees to build a new reactor unit at its existing Calvert Cliffs nuclear plant in Maryland. This means that for now, Constellation has scrapped all plans to expand the plant, which would have brought 1600 megawatts of low-carbon power to the market and thousands of jobs to the local economy.

What drove Constellation to walk away from further negotiations is the position taken by the White House Office of Management and Budget over the cost of the “credit subsidy fee” Constellation must pay for the guarantee. OMB set the fee at  $880 million, or 11.6 percent of the total guarantee. OMB says this fee accurately reflects the risk to taxpayers of default by Constellation, which may or may not be accurate, even presuming that shielding taxpayers from 100% of the default risk is an appropriate goal.  The problem is that no one ever expected the loan guarantee program to be priced so high, most notably the energy companies that have spent years now tied up in the application process. Constellation had argued for a fee closer to 1-2 percent, and DOE had previously made statements that indicated it was basically in agreement with that fee level, before the Obama White House got involved in the program and indicated it needed greater protections against the risk that the company won’t repay its loans. OMB has demanded a price for those protections that is basically what private lenders would charge (which is high considering the regulatory and cost risks associated with a nuclear power plant–hence the need for the loan guarantee program in the first place).

If you are an opponent of expanding nuclear power, this is great news. It means that after years of hard-fought legislative and regulatory battles in which the nuclear industry made significant headway toward getting the federal government to clear the way for a “nuclear renaissance” in the U.S., yet another battleground has been found to effectively scuttle the entire program for nuclear loan guarantees for the time being. Apparently that new battleground is the arcane world of credit scoring within the federal budget bureaucracy, most notably OMB.

By throwing sand in the gears of this final stage of the bureaucratic approval process, the White House has let the Department of Energy’s loan guarantee program grind to a halt after years of promises of support to the industry for badly needed new projects. By all accounts, this controversy appears to be simply a fight between budget bureaucrats that needs to be hashed out publicly and resolved. But a less benign interpretation might suggest a deliberate bias among those in the administration in favor of spending loan guarantee dollars on renewable energy at the expense of nuclear projects. In either case, it is a problem that President Obama could easily fix with leadership from the White House, by making it clear that nuclear power is a national priority that is too important to lose new projects over bureaucratic delays.

Instead of leadership, the White House has responded with unfortunate lack of credible commitment to addressing this issue. According to Bloomberg news, OMB’s spokesperson said administration officials were surprised that Constellation gave up on negotiations.  It’s hard to believe they could really be that clueless. Everyone following the nuclear loan guarantee process knew this was a potential deal-killing problem for Constellation and other applicants, especially anyone who read Constellation’s executives say so specifically in the New York Times almost a year ago. This issue was raised in Jack Lew’s recent confirmation hearing to take over OMB, and Senate Energy Chairman Jeff Bingaman openly criticized the administration in a hearing on September 23 for holding up these loan guarantees. These complaints have been heard coming from several different corners in Washington and the energy industry for months. If I knew enough not to be shocked by Constellation’s move, how did OMB and the White House did not see this coming?

The administration’s handling of the Constellation loan application raises an important question that needs to be answered: just how committed is President Obama and his administration to expanding nuclear power? The president has said nuclear energy is part of his vision of America’s energy future (most notably in a speech ironically delivered in Maryland announcing a nuclear loan guarantee approval), but we have not seen many tangible results that the members of his administration are fully committed to making that vision a reality. After all, the Constellation announcement comes during the same week when the president was stumping for more infrastructure spending and his own economists released a report arguing that now is an ideal time to build large capital projects, both in terms of economic stimulus and low project costs for financing and labor. In the last week, the administration also cleared the way for two new solar energy projects on federal land and, even more notably, announced a $1.3 billion DOE loan guarantee approval for a massive new wind power project. All of these other initiatives this week are important and deserving of the president’s leadership in making them a national priority. But with the news from Constellation coming amidst all this other administration support for new energy and infrastructure projects, the overall picture is too easily misconstrued as the administration coordinating to put a thumb on the scale in favor of everything but nuclear energy.

Given the energy realities we are facing and the president’s own acknowledgments that nuclear energy needs to be part of a low-carbon response to meeting growing demand, President Obama can not afford to let a bureaucratic bean-counting snafu tie up billions of dollars in new investment and tens of thousands of jobs. Hopefully, this issue is essentially a policy glitch in the administration’s energy agenda, rather than something more problematic. But regardless of the cause, if President Obama is serious about including nuclear in our energy mix, then he needs to use the power of his office to take a hard look at these problems–and fix the glitch.

Photo credit: Let idea Compete

When National Security Means Energy Independence

Posted on by The Progressive Policy Institute

This post is the fourth in a series about the Progressive Military

The smell that will always take me and many other vets back to the old Army days is diesel exhaust fumes.  When you spend many years of your life rolling around the muddy trails of military training areas in 5-ton trucks or the bumpy roads of Iraq and Afghanistan in armored Humvees, the smell brings on instant nostalgia.  It is my hope, and the hope of many senior military leaders, that our next generation of servicemembers won’t know that smell because they won’t be using oil.

There is widespread agreement by institutions on all sides of the political spectrum that energy independence, security, and planning for the repercussions of climate change must be addressed.  Former CIA director James Woolsey has called this “the first war since the Civil War that America has funded both sides.”  However there is still opposition, mostly from the GOP Congressional minority, to taking real comprehensive steps.  Their opposition to a comprehensive energy and climate bill, such as the American Power Act, has stifled momentum on the issue.  Too many in Congress want to ensure nothing get done on the issue for quite a while.

Despite Congressional impasse, the military is looking at the issue from top to bottom and pushing forward.  The Army is investigating using the safflower as a biofuel and began its Fuel Efficiency Demonstrator (FED) program to develop new vehicle technologies in response to battlefield calls for the need to reduce the number of dangerous convoys that use and transport fuel.  The effort doesn’t extend solely to vehicles and equipment; it also extends to the power grids on it installations at home and downrange.

Navy Secretary Ray Mabus, strongly committed to the issue, has promised that the Navy and Marine Corps will get less than half of its power from fossil fuels within ten years.  As far as new energy and combat power are concerned, the electric hybrid ship USS Makin Island and the hybrid-fueled FA-18 “Green Hornet” fighter jet have already made their maiden voyages.  The Navy is also committed to making all of their installations energy self-sufficient by 2020.

Not to be outdone, the Air Force has developed an A-10 “Thunderbolt”, a ground attack aircraft, that also runs on a biofuels mixture and plans to test at least three other aircraft models this year.  This is a significant development as the Air Force is the military’s top energy consumer.  On the ground, Langley Air Force Base has installed a geothermal energy system as part of the Air Force goal to reduce its energy consumption 20% by 2020.

The Pentagon has begun to “wargame” the consequences of climate change that the military may be called upon to address.  As resources become scarce, it may lead to conflicts on several continents.  U.S. bases may be threatened by rising sea levels.  It may also lead to conflict between allies and destabilize stable states and further ruin already shaky ones.  It is also no secret that American dependence on oil from unstable regions leaves us vulnerable every time there is a hiccup in the supply caused by unrest or terror attacks.

There may be continued debate as whether we have already or will reach “peak oil”, whether the alarms raised about “foreign” oil are an overreaction, or, most of all, whether climate change is actually happening at all.  The U.S. military doesn’t seem to be willing to take the chance that these things aren’t or won’t happen.  In the words of energy security advocate and retired Army Chief of Staff General Gordon Sullivan, “We never have 100 percent certainty. If you wait until you have 100 percent certainty, something bad is going to happen on the battlefield.”

If Congress and the American people trust the military to keep them safe, hopefully they will trust the military on energy independence and climate change.  General Anthony C. Zinni, retired U.S. CENTCOM commander, has said, “We will pay for this one way or another.  We will pay to reduce greenhouse gas emissions today . . . or we will pay the price later in military terms and that will involve human lives.”

Photo credit: US Army Africa

Retooling the American Economy for Jobs, Innovation, and Competitiveness

Posted on by The Progressive Policy Institute

America is adrift and needs leadership to modernize and build a foundation for 21st century competitiveness. And while it’s a long hard to travel, there are at least a few signs of optimism.

Such were the key takeaway points from Friday morning’s panel on the question of “Retooling the American Economy,” which was part of the Progressive Policy Institute’s Second Annual North American Strategic Leadership Infrastructure Leadership Forum in Washington, DC.

The panelists were : Tom Friedman, New York Times Columnist, Pulitzer-Prize Winning Author; Jason Furman, Deputy Director, National Economic Council, White House; Roderick Bennett, Advisor to the General President of the Laborers’ International Union of North America; and John Woolard, CEO, Brightsource Energy. David Wessel, economics editor of the Wall Street Journal moderated.

In general, the panelists agreed that we’re in a difficult spot. We’re falling behind China on infrastructure, on energy, on basic research and development –  just about every measure of investing in a 21st century economy. As Friedman put it, “We can only go so long with a philosophy of dumb as we want to be.”

Part of that dumb-as-we-want-to-be philosophy is an unwillingness on the part of many to admit that government has a key role to play in creating an environment where innovation can thrive, both by making big investments and putting the right incentives in place. The solution to this, of course, is leadership.

“We have an epic lack of faith in government with a capital G, but we have an unchanging love for government at the local level when it means bridge projects and energy projects and broadband projects,” said Furman. “And that’s something you see at the bipartisan level. Some of this means we have a messaging problem, and some of that is bottom-up, pointing out what it all tangibly means.”

“But how you get the snake through the python is a big challenge,” Furman added. “You have to pass the thing through Congress, and the debate will be framed in big government terms.”

Friedman, who was openly critical of the administration’s salesmanship efforts, argued that what was needed was big-picture leadership.

“We need to make it aspirational,” said Friedman.  “That’s what the moon shot was all about. People want nation-building at home. You fly from Shanghai to JFK, and you go from the Jetsons to the Flinstones. People sense that. And the President has never made that the lodestar. He’s never leveraged all that energy.”

Woolard, who heads a large solar energy company, offered a dose of optimism. “We have a lot more projects here in the U.S. than abroad,” he said. “There are good projects, and there’s a lot moving forward.”

“But,” he added, “The thing that scares me most is the longer-term issue. Not enough students are going into engineering. We need to encourage people to go into those disciplines.”

Woolard also described the challenge at hand: In order to stabilize carbon emissions at 450 parts per million by 2050 (a commonly-agreed on target to stem global warming), “we’ve gotta build between 12,000 and 20,000 gigawatts of carbon-free power. That’s a power plant per day. We’ve built gigawatts a week before, but we don’t have the rules yet to get to this objective. We need policy.”

The consensus was that there would need to be a price on carbon. “Capital works itself out with the right rules,” Woolard said. But given the politics of energy, would the political will ever exist?

Here Friedman was an optimist: “We’re absolutely going to have a gas tax and a carbon tax,” he told the audience. “Because we’re going to run out of money, and we will need revenue and when we run into that wall, people will look around and say, what’s the best source? The sad thing is there are 535 members of Congress, and not one will propose this when it is so manifestly in the strategic and economic interest of the country.”

Bennett, whose union represents construction workers, also registered support for a gasoline tax, which he called “the elephant in the room.”

Friedman also offered a “killer app” for economic competitiveness: “An ecosystem of a national renewable standard, a price on carbon, a gasoline tax, higher building efficiency standards,” he said. “Put that ecoystem in place and you get 10,000 green garages trying 10,000 different things. Two of those will be the next green Google and Microsoft. The killer app is the enabling system.”

The Eastern European Energy Void: A Case For American Leadership

Posted on by The Progressive Policy Institute

Parts of Hungary may well still conjure drab images of the Cold War: bleak and desolate wheat fields, maybe a blue-gray sky, skeletons of Soviet-era construction.

Stereotypes, of course, often contain a grain of truth. The New York Times’ recent profile of Oroszlany, some fifty miles east of Budapest, harks back to that bygone era.  Some 3,000 of the town’s 20,000 residents work in industries related to coal; with that many directly tied to the industry, it’s not hard to imagine how deep into the economy coal’s tentacles stretch.

But that’s changing — authorities announced that Oroszlany’s coal mine would close within three years.  The mine’s closure is well-intended, as the European Union — of which Hungary became a member in 2004 — seeks to end government subsidies for carbon-producing sources of energy.  Dirty coal is, of course, a chief protagonist.

This noble clean-energy goal has created a painful short-term “bridging” problem: The coal-fired power is disappearing too fast, and Hungary is left with an energy shortfall. It simply doesn’t produce enough domestic power right now to keep up with demand.  Figuring out any role that the U.S. or EU might play as Eastern Europe makes this transition is becoming ever more important.

This energy transition is an issue Gabor Rajnai, Oroszlany’s mayor, understands all too well. He wonders how his town is going to keep warm in the winter.  He frets Russian natural gas will fill the gap.  Rajnai probably remembers New Year’s Day 2006, when Vladimir Putin, then Russia’s president, sent a shockwave across Europe when he directed Gazprom, the state energy company, to shut off the flow of gas to the Continent.  Thanks to a price dispute with Ukraine, Europe froze, as it did again when Russia slowed down gas supply again in March 2008.  To make up for this year’s drop in coal-fueled power, Hungary will again import Russia gas.

This is the latest in a deepening dependency.  In March 2008, Putin and Ferenc Gyurcsany, his then- Hungarian counterpart, signed a contract that deepened cooperation on natural gas projects, including Hungarian financing of a Russian pipeline through the country.  In other words, as NATO-member Hungary transitions to a cleaner fuel sources, it is lashing itself ever tighter to the world’s coldest petro-dictator.

Let’s hope this deal doesn’t end up putting Hungary on par with its Eastern European neighbor, the Czech Republic.  As detailed in a stunning mid-September article in The New Republic, Russia and Gazprom camouflaged a network of Czech shell companies to obfuscate the money trail that leads directly from Prague’s hand to Moscow’s mouth.

The Czech Republic faces the same bridging problem as Hungary, too: As coal plants are phased out, how will the country power itself before domestic, self-sustaining energy sources are brought online?  Nuclear power, as regularly championed by PPI, is an option, but as TNR chronicles, even the Russians are likely to win that bid too.

However, that doesn’t mean Hungary and the Czech Republic are doomed to fall in some sort of Cold War-style Soviet sphere of influence.  According to one industry expert, the region’s long-term prospects of creating secure domestic energy sources are more solid: Alex Cranberg of Aspect Energy thinks Hungary has solid reserves of its own gas yet to come online.

He told me he was first drawn to Hungary because its geological fingerprint reminded him of the southern US, and thinks the country’s natural gas industry — where Aspect has invested — is well-run and could produce a stable supply of clean natural gas over the long-haul.  The trick, he says, is getting to the tough-to-reach underground gas fields, which make up some 90 percent of the domestic supply.  That appears to be happening: in the last four years, Cranberg claims that his joint venture has gone from producing none of Hungary’s natural gas to 20 percent, and that slice of the pie should only grow.

But growing takes time, and ensuring that Hungary — and Eastern Europe — has access to a diverse supply of energy in the interim is an important policy initiative that Brussels, not to mention Washington, seems to have glossed over.  Vice President Biden was in Prague to lobby for Westinghouse’s nuclear bid, but local experts believe it might be too little too late. Helping develop domestic clean power sectors could be a productive initiative for both capitals, from economic, energy, and security perspectives.

Photo credit: Wally Gobets

Did Enviros Overreach in Ecuador?

Posted on by The Progressive Policy Institute

The plot is generic Hollywood, straight out of an airport potboiler:

U.S. oil company drills in Amazon, leaves behind contaminated pools of sludge. Activists sue on behalf of rainforest Indians ravaged by disease. Environmentalists and rock stars rush in to show solidarity with the victims. Not hard to tell how this story ends; we’ve seen this movie before.

Except that in this drama, the actors don’t quite play to type. It turns out that the “good guys” cheat, manipulating an Andean countries’ weak and corrupt judicial system in a bid to extract a king’s ransom — $27.3 billion -– from the U.S. oil company. Meanwhile, that company’s claims to be a victim of a political shakedown is getting a sympathetic hearing in U.S. courts.

So maybe this murky saga is not Hollywood material after all. In any case, here’s the real story, courtesy of Roger Parloff on CNNMoney.com:

Ecuador ended its long-time oil exploration partnership with Texaco in 1990. Texaco worked out an agreement to help clean up sites in the Amazon, and was formally absolved of further liability by Ecuador’s then-government in 1998. Nonetheless, a lawsuit was filed subsequently on behalf of Indians who said they had suffered higher rates of cancer and other diseases as a result of exposure to toxic waste. A new Ecuadoran government led by Rafael Correa, a socialist and fiery champion of impoverished indigenous peoples, strongly backs the suit.

According to Parloff, there’s strong evidence that lawyers for the plaintiffs helped to write the report of an allegedly impartial “expert” appointed by an Ecuadoran court that found Texaco – since acquired by Chevron – liable for further damages. A U.S. magistrate recently issued a scathing ruling that said the plaintiffs’ apparent collusion with Ecuador’s judicial system “would be considered fraud by any court. If such conduct does not amount to fraud in a particular country, then that country has larger problems than an oil spill.”

The plaintiff’s misconduct has overshadowed the important questions: how badly did the Indians suffer from exposure to toxic waste, and who is responsible for cleaning up the sites? It’s alleged that Texaco’s remediation efforts were inadequate, even if a compliant Ecuadoran government approved them. Yet Ecuador’s state-owned oil company has continued to drill in the area since Texaco pulled out 20 years ago.

This episode yields at least three morals. First, oil exploration is hazardous, and its full environmental and health costs must always be accounted for. Second, the end doesn’t justify the means, even if the end is to bring justice to people harmed by the effects of oil drilling. And third, it pays to greet overly familiar plot lines, with stock villains and heroes, with an extra measure of skepticism.

photo credit: Rain Forest Action Network

A Conservative Case for Public Transit

Posted on by The Progressive Policy Institute

Over at the American Conservative Magazine, William S. Lind makes a powerful conservative case for renewed investment in public transit: “For cities, conservatives’ banner should be read, ‘Bring Back the Streetcars!’”

A couple of points are worth highlighting:

1)    The current car-dependent culture we have now is not a free market outcome. Lind notes that: “it is the produce of almost a century of government intervention in the transportation market.” Highways, according to Lind, only “cover 58 percent of their costs from user fees, including the gasoline tax.”

2)    Public transit is a real driver of economic development or redevelopment. (Lind cites Portland, OR and Kenosha, WI as cities that got a real boost from putting in a streetcar line)

3)    Public transit helps advance energy independence.

4)    And if the first conservative political virtue is prudence, as Russell Kirk advised, “there is nothing prudent about leaving most people immobile should events beyond the pale cut off our oil supply, as happened in 1973 and 1979)

Lind’s piece is one of several in a symposium on transit over at the American Conservative. And in fact, “The American Conservative’s nonprofit parent, The American Ideas Institute, will launch a new center on transportation made possible by a grant from the Rockefeller Foundation. The center will work to showcase conservative arguments for a balanced transportation system in which rail and roads complement one another.”

Lind has also written a book with conservative stalwart Paul Weyrich on this subject: Moving Minds: Conservatives and Public Transportation.

This suggests real promise on a left-right consensus on the need for meaningful investments in public transit. Progressives ought to pay attention.

Photo credit: Oran Virincy’s photostream

The McClellan Principle

Posted on by The Progressive Policy Institute

It’s a familiar argument: we know that putting a price on carbon will impose economic costs, but we can’t be absolutely sure that major climate change will happen. Therefore, we shouldn’t impose a carbon price, or at least we should avoid doing so in a recession, and be very reticent to do so at any point. The argument strikes many as logical and wise.

It is neither. And it won’t help make good policy or make progress towards consensus on what good climate policy should be.

At its core, the argument claims that any uncertainty about climate change means we should either give up, or at least wait indefinitely for better evidence. I call it the “McClellan principle.” Like the Civil War general, proponents of the argument counsel doing nothing until absolutely certain of success. The principle is frequently stated or assumed to be true in climate policy debates, often but not always by professed climate skeptics. To give a few recent examples, Stephen Calabresi states the principle explicitly in a Politico debate last week, while Steve Everley of Newt Gingrich’s American Solutions outfit uses the stealth version of the principle by listing costs of a carbon price while failing to mention climate change at all. But perhaps the most common form of the principle is simply as a concluding statement, thrown in as if its implications were obvious and unworthy of debate. The Wall Street Journal does this when criticizing California’s AB32 cap-and-trade policy in an April editorial:

While almost all of AB32’s benefits are speculative and uncertain, its costs are hitting businesses and residents now. This is one more blow to jobs and growth that California doesn’t need.

The appeal of the McClellan principle may come from the fact that it is cloaked in rational language, but it isn’t a rational approach to policy at all. In fact, it’s the inverse of the familiar “precautionary principle” advanced by many Greens (at least in the precautionary principle’s strong form). The strong precautionary principle would require a policy response even if uncertainty is large. The McClellan principle requires inaction even if uncertainty is small. Both principles are simplistic, and neither leads to good policy decisions.

The reason for this is that there are both costs and uncertainty about those costs associated with climate policy and with doing nothing. Both are real choices with consequences, even if we can’t say with complete precision what those consequences are.

The McClellan principle stresses that the economic costs of climate policy—primarily higher energy prices—are certain, while there is at least some chance that all the climate science models are wrong and that there will be no costs associated with doing nothing. Holding out hope that the Earth will not warm (or that we can do nothing about it) strikes me as absurdly Panglossian, but the basic premise that we can be more confident in estimates of the economic costs of policy—particularly that they will not be zero—is probably right.

The McClellan principle’s conclusion does not follow from this premise, however. Making policy based only on which kind of costs we think are more or less likely to be zero doesn’t make sense. We should instead do the best we can in estimating the two costs, both their magnitude and precision, and make the policy we can based on those estimates. That is of course incredibly difficult in practice. It raises questions about discounting of future costs and benefits, the tensions between national policy and global risks, and distributional impacts, among others. But it has to be the basic framework for making a decision. Both the McClellan and (strong) precautionary principles try to offer shortcuts, but in doing so they obfuscate rather than clarify.

I illustrating this is hard because conversations about climate policy are, unfortunately, so loaded with politics and preconceived ideas. Instead, let’s look at another issue loaded with different politics and preconceived ideas: crime. Imagine you are on a parole board considering release of a prisoner. There is a cost to releasing the felon (he might commit another crime) and a cost to keeping him in prison (prisons are crowded and expensive, and he might contribute to society if released). You know the cost of prison is not zero. The cost of release might be zero, or it might be big. But that doesn’t mean you should release the felon— or even that you should be any more likely to. Setting moral/ethical considerations about the prisoner aside, all we should care about is balancing our best guess about the costs of both options.

Of course, the way that parole boards work in practice—or at least the way most people demand that they work—is that any real chance of repeat offense is regarded as a reason for denying parole. So why is there such a dissonance between the way many people view parole decisions and the way so many view the climate policy debate? Why does the mainstream view on releasing felons appear to be a form of the precautionary principle, while the McClellan principle, if not the mainstream view on climate, is at least a major and usually uncriticized one? Surely a big factor is that the risks of crime are viewed as more personal and visceral, even if the chances of actually being a victim of a re-offender are low. It might be as simple as saying that most of us fear criminals more than we fear the more emotionally and temporally, if not probabilistically distant risks of climate change—and that mainstream positions are defined by what we most fear. That’s unavoidable to some extent, but it’s not a rational approach to making good policy.

Others, most notably Richard Posner, have made a similar analogy between major climate change and asteroid impacts—for which uncertainty is similarly paired with catastrophic downside risk. This analogy is useful because asteroid impacts are completely politically irrelevant—there’s no party line, and little fear—and as a result few people seem to have either a precautionary or McClellan principle-style reaction. A rational approach is the most appealing, though the same lack of fear may cause us to ignore the risk entirely and do nothing.

As these analogies hopefully illustrate, precision is important, but lack of it shouldn’t keep us from acting—on climate or on other problems of risk. Precision is just another factor in estimation of risks and costs. And whether the costs of action or inaction might have a chance of being zero doesn’t provide a shortcut out of the difficult task of balancing the two and making policy. Uncertainty matters, but it does not and cannot do the work alone.

I suspect that many people who advance the McClellan principle as their argument against pricing carbon would still oppose a price even if there were much less uncertainty about climate change risks (or would simply disbelieve claims of certainty). In their case, the McClellan principle may provide cover for less politically-acceptable positions, like an economic or political interest in fossil fuels or a very large discount rate. But many people who state the principle are not being disingenuous just to score rhetorical points. You don’t even have to reject climate science to advance the McClellan principle—you just need to point to the uncertainty within it.

But even for the intellectually honest, the wellspring of the principle’s appeal is, again, fear. Especially in a recession, the downside of pricing carbon sparks greater concern than climate change does, at least for many people. To them, the economic costs of a carbon price are very real, immediate, and personal, while the costs of climate change are distant and abstract. This is to some extent true for everyone, though if you are unemployed and live in a coal state, economic costs are certainly more apparent: a recent study suggests that unemployment and some measures of concern about climate change are negatively correlated. In a democracy, these perspectives cannot and should not be dismissed. They are valuable and should be listened to when considering climate policy, and in particular its distributional impacts.

But the fact that costs are tangible—that they are feared—doesn’t mean the McClellan principle is any more logically sound. Lack of certainty about climate change risks doesn’t justify inaction any more in Ohio than it does in California—or places at great risk from warming, like Bangladesh. The McClellan principle is ultimately based on fear, not reason. Stripping the principle of its thin cloak of rationality might therefore make a difference, however small, in the politics of climate policy. As I mentioned above, I’m certainly not the first person to try to do this, but the principle remains a resilient meme. It’s worth having the counterargument in your pocket.  Next time you hear it, ask its proponent what they would do on a parole board.