March 31, 2008

KUFM / KGPR

T. M. Power

The American Global Warming Strategy:

Leaving Reductions in Greenhouse Gases to Other Nations

The part of the American energy industry that is fighting to prevent the adoption of any mandatory limits on greenhouse gas emissions, argues that Americans would be stupid to accept any costs whatsoever in an effort to reduce our own emissions. The basic argument is that future growth in greenhouse gases are not going to come primarily from the US but from developing countries like China, India, Indonesia, and Brazil. Those four countries together have a population nine times that of the United States. As they aggressively industrialize in an effort to enjoy consumer affluence similar to our own, the growth in their collective greenhouse gas emissions will make any reductions in our emissions look trivial. In that setting, so the argument goes, our efforts will do no good and the costs we impose on our economy to control those emissions will be pointless: A cost with no associated benefit; pure waste; better to do nothing about our greenhouse gas emissions.

This is just a variant of the argument used by the Bush Administration eight years ago to justify not signing the first international effort to control greenhouse gas emissions, the Kyoto Protocol: That initial effort was focused primarily on reducing the emissions of rich developed countries like the United States and would not have constrained our emerging economic competitors such as China and India in the same way.

Those making this argument think they are just being hard-nosed realists: Unless we can initially get all major greenhouse gas emitters to agree to enforceable limits, we should not do anything ourselves. After all, if all of those nations reduce their emissions, we will get climate stabilization at no cost to ourselves. And if those nations do not reduce their emission, our efforts won’t matter. Doing anything proactively ourselves about greenhouse gas emissions would be a lose-lose proposition for us.

Of course, if all nations use this logic, none of them will do anything and we may well permanently damage the planet, seriously harming all of the world’s population, including ourselves. Global climate stability is what economists call a public good. Once it is available to anyone, it is available to everyone. Greenhouse gas emissions do not just affect particular localized areas. They affect the entire planet in disruptive and dangerous ways. In that setting, independent self-interested strategies are grossly sub-optimal. No one gets what they would prefer: A stable planet in which all nations have the potential to prosper.

Although popular conservative ideology usually depicts a productive market economy as being built around economic actors who behave in a perfectly selfish individualistic manner, the empirical evidence overwhelmingly contradicts that. What people consistently do is to try to avoid self-defeating races to the bottom of the well. We seek to cooperate and share the mutual benefits that are to be had from cooperative behavior. Even when individuals and firms face uncooperative competitive attacks, rather than fall back into a similar individualistic aggressive strategy, they seek to repeatedly signal their willingness to cooperate. Our market economy is actually built around a vast array of cooperative agreements, either formal contracts or informal handshakes.

Thus far the US government has aggressively opposed the imposition on American businesses of any mandatory reductions of greenhouse gas emissions. That, by itself, is a powerful signal to the rest of the world that we intend to do nothing serious about the problem of global warming.

Viewed from poorer countries, the insistence by the US that poorer countries such as China or India or Brazil should “go first” in controlling their burgeoning emissions, is simply outrageous. After all, the build up of greenhouse gasses that now threatens the planet did not come from the poorer countries. That accumulation of greenhouse gases came from the two centuries of industrialization and affluence of the rich nations. For the richest of those nations, the United States, now to say it is the poor countries that have to take the lead and slash the emissions associated with their current efforts to escape poverty is both hypocritical, insulting, and counter-productive. It is the opposite of a reasonable offer to cooperate in solving this collective problem.

The United States has an immense self-interest in seeing the world collectively get global warming under control. Our dependence on energy sources in unstable regions of the world will get more and more untenable as the global competition for those fossil fuel resources gets more intense. Global warming has the potential to force massive migrations of populations, disrupting economies and societies as people struggle to adapt and survive. Our own military recognizes the impossible challenge that could represent to American interests and our ability to protect those interests.

In addition, the development and distribution of new technologies are going to be at the heart of any effective policy to reduce greenhouse gas emissions. If we do not create a reliable incentive system in the United States to aggressively pursue that technological revolution, our people and businesses, rather than being the technological leaders, will become the passive consumers of technologies developed by others and marketed to the world.

There are substantial economic opportunities as well as challenges in the effort to slow global warming. That is one important reason we should not be letting those aging energy-intensive sectors that are afraid that they will be hurt by mandatory greenhouse gas reductions dictate our public policy. That backward-looking, defensive, world-be-damned, reaction is the opposite of the cooperative, forward-looking, entrepreneurial frame of mind that will allow us to productively adapt to this new reality.