In previous posts I've explained how the U.S. can reduce carbon emissions effectively and fairly. But in the real world, the best policies don't always get adopted. That's because government policies don't arise in a void. They emerge from a political process that's driven by players.
As in any competition, it helps to know who the players are. In climate policy, there are four key contenders:
• Legacy industries
• Sunrise industries
• Environmental groups
• Everybody else.
The legacy industries are the oil, coal, gas, auto, and electric industries. Their interests aren't identical, but in general, they want to reap maximum return from their past investments and the resources they control. They're happy with the status quo and favor the least demanding changes. Because they've been around a long time ? and have lots of money ? they enjoy enormous political clout.
The sunrise industries include wind, solar, and some hi-tech companies, plus venture capitalists, investment bankers and carbon traders. They're comfortable with change and hope to profit from it. In general, they favor subsidies for energy alternatives and lots of carbon trading. But they have less political clout than the legacy industries.
Environmental groups represent, in theory, the planet as a whole. In reality, they differ substantially in their tactics and alliances. Some prefer market-based policies, others favor government regulation and spending. Some will make deals with polluters, others won't.
The "everybody else" category is where most of us fit in. We drive cars, pay energy bills, and vote. We want climate solutions that are fair and effective and don't empty our bank accounts. To get that outcome, however, we must make our voices heard. The bottom line in climate policy ? as elsewhere ? is that unless the public puts pressure on politicians, special interests will rule.
At the moment, the leading climate bill in Congress is the Lieberman-Warner Climate Security Act, a complex package designed to reward many special interests, including coal companies and electric utilities. It would give some permits to polluters for free, auction others, and allocate the auction revenue to a variety of industries. According to Friends of the Earth, it would transfer nearly a trillion dollars to fossil fuel and nuclear companies over 40 years.
Some environmental groups, notably Environmental Defense, are working hard to pass Lieberman-Warner on the theory than any action on climate is better than nothing. Other environmental groups, including the Sierra Club, say we should wait till we get a new President next year. Whether that new President is John McCain, Barack Obama or Hillary Clinton, he or she will fight for a much stronger climate bill than we could ever get George Bush to sign.
In my view, as urgent as the climate crisis is, it's far better to wait till 2009 than to pass a bill now that will lock in decades of giveaways to legacy industries. Both Obama and Clinton support a descending carbon cap with all permits auctioned. They'd use some of the auction revenue (though not enough) to offset higher prices paid by households, and spend the rest on a variety of subsidies.
The question at the heart of climate politics is how much to subsidize one industry or another, and how much to return to you and me to offset higher energy prices. The matter of subsidies is tricky, because there's a temptation to think that the government should subsidize things like wind, solar and energy conservation. But the point of capping carbon is precisely to make those technologies competitive without subsidies. The technologies that need big subsidies are the ones that are too expensive to compete without them ? especially nuclear energy and coal burning with carbon captured and stored. And because of the political clout of these industries, that's where most subsidies are likely to go.
The other problem with subsidies is that someone has to pay for them. If the subsidies come from higher energy prices that everyone pays, that's like you and me writing checks to coal and nuclear companies. Personally, I prefer not to do that.
There are some areas where more federal spending is needed, mass transit being the most important. But the approach here should be to shift money from existing subsidies to fossil fuels, rather than to soak low and middle-income families.
The good news is that citizens' groups all over America are starting to demand fair and effective climate policies. If enough of us raise our voices, it's just possible that the next President and Congress will do the right thing.