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October 17, 2008

Worldwide Recessions are Bad
Just in case anyone was wondering, there is no climate-related silver lining to a worldwide recession. There's been some talk among climate scientists that the current economic crisis may have some benefits to the climate in the form of lower emissions growth. Former Clinton cabinet official and current fellow at the Center for American Progress Joe Romm says, and I'm paraphrasing, "Sadly, no."

Some of this confusion stems from mistaking slowing of emissions growth for an actual reduction. As Romm puts it:
If carbon dioxide emissions stopped growing forever, concentrations would still keep rising forever, and the climate would be destroyed. In fact, the recent rate of growth of emissions has been faster than even the most pessimistic IPCC [Intergovernmental Panel on Climate Change] model had projected. If that rate of growth were cut in half, we would still have our foot on the accelerator headed toward the cliff.
It's similar to thinking that when inflation drops, so do prices. Rather, even with decreasing inflation, prices still rise, only more slowly.

But what the recession will do, apparently, is increase calls for weakening or abandoning what little political momentum there is for emissions controls. Plus, Romm points out that the European example shows us as cap-and-trade systems get off the ground, energy companies will be demanding gigantic bribes discounts on their carbon allowances to make up for the allegedly onerous "compliance costs." But that wouldn't really happen here in America. We're not socialists. Are we?

Romm comes up with a nice laundry list of what exactly we need to do to ensure political momentum on emissions control legislation in the current (pardon the pun) climate.
  1. It must be accompanied (or preceded) by a very strong clean energy recovery/investment bill.
  2. Some of the allowances are going to have to be given to companies to help them deal with the economic impacts, at least at the beginning.
  3. Most of the revenues from the auction are going to have to go back to the public, to make the higher energy costs tolerable from both a practical and political perspective.
  4. There isn't going to be a lot of money left over, especially in the early years. The push for clean tech will have to come from the recovery/investment bill or regulations like fuel economy and appliance standards, building codes, and alternative fuel mandates.
  5. We are going to have to get real commitments from China pretty quickly after we pass any domestic climate bill or the whole thing is likely to fall apart at the first recession or first major energy price spike.
This all comes as regional carbon markets are finally getting underway in the Northeast and the West and will be coming soon to the Midwest. Once again the states are leading the way for a recalcitrant and paralyzed federal government, which is all to the good. But for all the talk about the importance of a cap and trade system, it's also becoming clear that it's no magic bullet. Increasing the price of carbon without spending billions on alternatives will just force people to spend more doing the things they need to do. So not only, as Romm points out above, do we have to worry about weak-kneed politicians wimping out on cap-and-trade, they may not be there to authorize the massive alternative energy and efficiency programs we'll need to really get ourselves out from under the carbon economy. How nice. Are you listening, President Obama?

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