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Lars G. Josefsson
CEO, Vattenfall

Lars G. Josefsson

Lars G. Josefsson is president and CEO of Vattenfall, Europe's fifth largest generator of electricity and the largest generator of heat with operations in Denmark, Finland, Germany, United Kingdom, Poland, Netherlands and Sweden. He is also a member of the UN Secretary-General's Advisory Group on Energy and Climate Change. ALL POSTS

Three fundamentals of climate policy

There are three fundamentals of climate policy.

First, policies have to address the emissions from large industrial and power plants. Policy must convince these industries that it will cost too much in the long term to run a plant that emits CO2. This means either a cap-and-trade system or a carbon tax; I believe that cap and trade is more trustworthy in the eyes of business (taxes are more likely to be repealed or lowered for political reasons). The European system has received some criticism, but this is misguided. Its effectiveness cannot easily be measured over 3-4 years - the key is that expectations change long-term decision-making. This is already happening.

Second, policies must address decision-making about energy efficiency. Automobiles, buildings, and appliances can all be made more efficient without a loss of quality, and doing so would save consumers money. Yet these improvements do not happen as quickly as they could. Financial incentives can help, but some cases rules and standards should be used to complement incentives. For example, despite wasting energy and being much less cost-effective, traditional light bulbs continue to outsell their low-energy counterparts globally. Thus the European Union recently took the bold (yet sensible) decision to phase out the sale of incandescent bulbs entirely. Providing better information to consumers -- through labeling of products' energy and climate impacts -- is another useful approach here.

Finally, policies must help expensive technologies reach the market. This starts with public investment in research, but also includes efforts to 'push' technologies through public-private partnerships and 'pull' technologies through incentives for purchase. The EU has allocated some 'push' funding to carbon capture and storage, and this approach needs to be expanded. An important 'pull' policy has been subsidization of hybrid electric cars. These subsidies 'prime the pump' of demand and help manufacturers scale up their production and bring down costs.

The key is applying the right policy in the right area. For example, emissions standards for new power plants can create perverse results, as power plant operators simply prolong the life of older plants. Likewise, expecting expensive solar or battery technologies to come to market on the basis of a carbon tax is unrealistic. Smart policy does not need to be complicated, but it does need to be targeted.

By Lars G. Josefsson  |  November 11, 2009; 7:10 AM ET Save & Share:  Send E-mail   Facebook   Twitter   Digg     Del.icio.us   StumbleUpon   Technorati  
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The most important is one that all the bureaucrats are ignoring:

Any legislation must be tied to results.

Lowering or raising carbon is not "results", it has to be related to a measurable change in the climate or it seems little more than little boys playing pretend with everybody else's money.

Posted by: Ombudsman1 | November 15, 2009 1:25 PM
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Sir: your presumption that governments and their legislative assemblies contrive "policy" is misguided on two fronts:
a) it is coercive in nature and inconsistent with the (perhaps uniquely American) notion that governments serve the people and protect their rights, especially property, thus it uses intimidation and threats;
b) it presupposes the notion of costs, who pays them and to whom; in this country (the US) the Congress has never been one to wisely spend anything; market forces are the most efficient means yet devised in our evolution as a species— in other words, personal choices, and in "personal" I include business as well. Taxing something is an artificial cost which neither benefits producer nor consumer, but those in power, who are effectively along for the free ride; an efficient economy demands those who contribute nothing get nothing. This is more enlightened thinking than you may infer: history shows productivity and creativity go where there are less restrictions on thought and means, and since there is no benefit by supporting those who would strangle people of merit and honesty.

Posted by: irvnx | November 15, 2009 11:39 AM
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