Views and debates on climate change policy
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Bernard Finel
Senior Fellow, American Security Project

Bernard Finel

Dr. Bernard I. Finel is a Senior Fellow at the American Security Project where he directs research on counter-terrorism, defense policy and climate change. ALL POSTS

Only short-term gains

Opponents of climate change legislation may gain politically in the short-run, but in the long-run their stance is almost certainly going to be recognized as obstructionist and ineffective. The fundamental issue is that taking "action" on climate change is really mostly about accurately pricing carbon-intensive activities in order to allow the free market to function effectively. The problem right now is that the climate change costs of carbon-intensive activities are not borne primarily by either the industries that use carbon or by the consumers who purchase their products. We -- as a society -- continue to subsidize carbon-intensive activities indirectly -- though higher insurance payments to cover increased damage from extreme weather, massive military expenditures to protect access to foreign oil, increased health care expenditures to cover the increased spread of diseases, and enormous outlays to rebuild infrastructure damaged by rising sea levels.

In the long-run, unless we pass some sort of carbon-pricing scheme, our economy will increasingly be placed in jeopardy because the American business and consumers are not being given accurate information on inputs and outputs. This encourages a sub-optimal allocation of resources, and will tend to drive economic growth and innovations into increasingly unproductive areas. We'll continue to dominate the global market for SUVs, but cede leadership on solar panels to others.

In the long-run, we're all in this together -- Republicans and Democrats, liberals and conservatives, oil states and coal states and green states -- and in the long-run, when the costs of obstructionism now become clear, blocking action on climate change will be seen as a tragic mistake. Worse, while defeating a climate bill this year may yield increased political contributions this year, significant action is inevitable in the medium term. As a practical matter, skeptics of carbon pricing would be wiser to use their leverage now to pass a good bill, one that ensures that carbon is priced accurately and which builds a carbon market that is responsive to economic changes, but that also takes into account the significant adjustment costs of moving away from carbon-intensive industries.

By Bernard Finel  |  November 2, 2009; 1:43 PM ET Save & Share:  Send E-mail   Facebook   Twitter   Digg   StumbleUpon   Technorati  
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The problem with this fairy tale, of course, is that in addition to raising taxes tremendously, it doesn't actually, y'know, do anything for the environment.

This reminds me of a solar panel salesman 2 years ago who said that I should spend $45,000 on solar panels to reduce my energy costs about $1,800 a year.

When I pointed out that the net return on it was negative (that is, the break even point was long after the solar panels would be non-functional), he had no comeback, as if all the people buying it really thought they were saving the planet.

That's what this cap and trade plan is. It has nothing to do with the environment directly, rather it is meant to be a tool to affect the types of choices make about what they consumer, where they work, and where they live.

It's effectively a way for environmentalists to tell us that we're living wrong and more importantly, make us change our sinning ways.

Posted by: Ombudsman1 | November 7, 2009 10:22 PM
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