Half Full

Senator McCain's remarks on climate change yesterday are drawing predictable responses from both sides of the issue. While environmentalists may see it as a collection of half-measures, climate skeptics, including the editors of the Wall Street Journal, regard it as a sellout to those same environmentalists. I'll leave it to others to analyze the Senator's remarks line by line, but I think it's worth a couple of observations that might otherwise be screened out by the partisan filters and instinctive discounting to which any presidential campaign speech is subjected. In particular, the Senator's proposals deserve to be scrutinized for how they align with the key criteria of a risk-based, cost-minimizing approach to addressing climate change. This should not, however, be construed as a political endorsement.

Start with some basic principles. If you accept that human emissions of greenhouse gases are the key driver of long-term climate change--and this is the basic conclusion of the vast body of peer-reviewed science analyzed and summarized by the Intergovernmental Panel on Climate Change (IPCC)--then any plan to address this problem must tackle those emissions head-on. With atmospheric concentrations of CO2 and other greenhouse gases well above pre-industrial levels and continuing to climb, it is no longer adequate to call for an eventual freeze in emissions. We must begin to roll them back and make deep cuts as soon as possible and practical. However, arguing at this point over whether US emissions in 2050 should be 60%, 70% or 80% below today's is a red herring. Any of these figures should be viewed as a placeholder, until we've actually begun and can see how the necessary technology is developing and being taken up. How well could we have determined our 2008 emissions in 1966?

The debate about the economic consequences of reducing emissions has barely begun, and it is already polarized. At one extreme are those who see these cuts as potentially crippling--a dead loss to the economy--particularly if the large developing countries do not follow the lead of the EU and US in this regard. Others suggest that cutting emissions will produce a veritable cornucopia of industry-seeding and job-creation, yielding high returns on our investment. While I hope the latter view proves correct, we can't bet the country on it. That means making sure that our approach to emissions puts a high priority on eliciting the most cost-effective reductions, and by definition those will come from outside the industrial sector, excluding energy-efficiency gains that will largely be self-financing. So we need to cast a wide net that includes reductions from agriculture and consumers, not just big companies. The cheaper the reductions, the more of them we can afford, and the sooner we will meet our targets. In my view, economy-wide cap and trade is the best way to make the necessary cuts at the lowest cost.

The third key aspect of a successful climate policy is that it must integrate internationally. The US is a big emitter, and we need to regain the leadership position we held on this issue when the original UN Framework Convention on Climate Change was signed at the Earth Summit in Rio de Janeiro in 1992. That means negotiating in good faith on the successor agreement to the Kyoto Protocol, and opening our doors to emissions offsets from other countries, provided they are truly additional and not incidental or illusory. But it also means ensuring that US businesses are not placed at a competitive disadvantage to companies in countries not subject to these requirements. We need to reduce emissions, not merely shift them offshore.

Senator McCain's speech matches up well on these three principles, as do the climate proposals of his Democratic opponents. They have another six months in which to debate the particulars and win over the American people on this critical issue. However, while his opponents are in the mainstream of their party on this issue, Senator McCain deserves some acknowledgement for going against the grain within his, dating back at least to his co-sponsorship in 2003 of a cap and trade bill with Senator Lieberman. This stance looks even riskier today, when the skeptics have gone beyond arguing against global warming to promote the notion of global cooling. His supporters must now reconcile that political courage with the apparent contradiction of his support for a summer gas-tax holiday that undermines the notion of taxing energy more, not less, to bring down emissions.

As I've noted previously, it is remarkable that out of two original fields of candidates that included such a broad spectrum of views on global warming, the three finalists--and thus the two parties' ultimate nominees--are not just expressing concern in the abstract, but have issued calls for concrete action to deal with climate change. This is a necessary precondition for a meaningful national debate on a set of measures that would permanently alter our economy, with implications for the entire world.