Watching Government - After tomorrow

June 21, 2004

Climate change is not gone or forgotten as a US policy issue. The movie, "The Day After Tomorrow" has taken care of that for now. Granted, most polls suggest voters this election year are still more preoccupied about health care or terrorism than they are mulling the chances a future tsunami will topple over the Statue of Liberty.

But that hasn't discouraged trade associations, academics, and government agencies from issuing a new crop of reports, studies, and analyses, giving journalists some light summer reading. Who else, one wonders, is even reading these tomes?

As it turns out, lawmakers, or at least their staff people, are. Although no one expects this Congress to pass legislation creating mandatory greenhouse gas (GHG) emission targets, the debate soldiers on, and even a Senate vote is possible before fall.

The bipartisan team of Sens. John McCain (R-Ariz.) and Joe Lieberman (D-Conn.) want the Senate to reconsider a cap and trade system that pulls national aggregate greenhouse gas emissions back down to 2000 levels by 2010. An earlier vote failed 43-55 last October, but McCain has told colleagues he will continue to press the issue. His hope is that his persistence will eventually wear colleagues down, as it did with campaign finance reform.

Battle lines

A new study conducted by Boston-based business consulting firm Charles River Associates and sponsored by the probusiness American Council for Capital Formation, found that if the McCain-Lieberman plan became law, electricity prices would rise 7-10% and refined petroleum products would increase by 12-16%. A recent analysis by the US Energy Information Administration, meanwhile, predicts a 9% increase in gasoline prices.

"This legislation is very costly, and comes at a time when our nation can least afford it. By increasing the costs of energy, McCain-Lieberman will lead to reduced economic output, fewer jobs, and reduced household income," said Margo Thorning, an ACCF economist.

ACCF's study predicts that more than 600,000 US jobs would be eliminated.

Action needed

Meanwhile, a new Council on Foreign Relations climate change report neither opposes nor endorses McCain-Lieberman. But it notes the bill is one of many policy options that, one day, could seriously be considered. Study author David Victor, a council fellow and director of the Program on Energy and Sustainable Development at Stanford University, says experts remain divided over what, if anything, should be done to address climate change. But given that GHGs keep building, policymakers need to confront the issue head on.

Victor said that, from a policy standpoint, what is important about McCain-Lieberman is that the proposal puts a price on carbon emissions; today most companies operate under the assumption that GHG emissions come without an incurred cost. Although that may still be true in the US, in other parts of the world—most notably Europe—that is not expected to be the case, and even some US states are considering their own control measures, he noted.