What's Cost Got to Do With It?

With health care now looking like a long shot, Washington seems likely to turn some attention back to climate change. As I’ve said, the climb to 60 in the Senate will be steep, though, largely because of how unresponsive people are to reason in its purest forms. Why do I say that? Look at the evidence. Agreeing (as did the G-8 in L’Aquila) to a rise in global temperatures of no more than 2 degrees Celsius as the environmental quality objective on climate change—or to cutting four fifths of 2005-level emissions by 2050 (as Waxman-Markey did)—is to adopt a groundless, made-up objective. Neither bears any connection to the physical realities or projected future tragedies of climate change. Indeed, from what I've read, we’re most likely to blow past 2 degrees pretty quickly no matter what we do from here on out. Moreover, even if we did somehow peg it there, there’s a whole planet worth of (tragic) variance within that seemingly diminutive average. In other words, these goals are derived from "political" needs, not the actual costs or risks of climate change. And why would leaders agree to such things? Because they know they can’t convince the Earth’s people to act in their own collective self-interest. Bravo.

So why aren’t the prospects better in the Senate with such a politically-tailored measure? Because one thing (American?) politicians do know how to do is convince people to act right now on their own selfish interests, whatever the risks to others—and that logic has no stopping point in Washington. Costs have skewed the debate on health care much like they have the debate on climate change—as if business-as-usual on either of them will be magically cost-free. "Costs" in the form of taxes or prices are easily and widely "communicated" in our national politics. Costs that have complicated and uneven distributions, of course, are not.

How much will increased energy efficiency or fuel switching "cost" the average household? That number rolled through the press on WM like a tide when it came out. But the number was only a single central estimate picked out of a hypothetical possible future and detached from the other consequences that would flow from taking climate change at least as seriously as WM does. How about when you re-integrate that figure with an expanding (instead of contracting) job-base, enhanced productivity (from the investments in green technologies), and other side-benefits — like, maybe, biodiversity? And the “cost” figures you didn’t see? The $98 million our "energy" companies spent from April to June (3 months!) lobbying to get their best deals in the bill.

Of course, the big break that got WM through the House, DoL readers will recall, was the addition of an open-ended delegation to USDA to grant greenhouse gas "offsets" to farming. This most likely gave the Ag sector credits to spare (and thus to sell, assuming the rest of the law actually drives down allowed emissions) . . . thereby jeopardizing the overall integrity of WM. The farm lobby was mollified enough (although not enough to actually endorse the bill) that it dropped its opposition and presto! The collective risk is that, if Ag doesn’t actually reduce its emissions yet still has credits to sell to those who have to buy cap room, the slack could just cancel out the reductions made elsewhere in the economy. Why don’t we have a "cost" estimate for the risk that USDA botches these offsets and renders the whole thing a wash? That would at least be a cost figure relevant to everyone.

I was encouraged this week that Senator Baucus noticed a Senate Finance Committee hearing for next week into the distribution of allowances, a key aspect of WM as passed by the House. Hearings are a way to get some press for your bill, of course. They are also a way to respond directly to particular Senators’ concerns — if you line up the right testimony. Someone ought to bring this up: the American economy is so good at wasting energy today that we could reduce non-transportation consumption by 23% by 2020 and save $1.2 trillion. Cost that.

Posted by Jamie Colburn