The challenge of integrating environment and economy

I know that many environmental activists are looking for a "slam dunk" climate change strategy from President-elect Barack Obama. He has, after all, pulled together an energy-environment-climate change dream team led by Lisa Jackson (EPA Administrator), Steven Chu (Secretary of Energy) and Carol Browner (White House coordinator of energy and climate policy).

But wait. Mr. Obama's team of economic advisors is equally impressive and forceful in voicing their positions -- none more prominent than Larry Summers who is raising concerns about the economic impacts of aggressive climate change policies.

There are strategies that can effectively address both concerns. They will, however require a shift in thinking away from unlimited growth towards sustainability.

That is the fundamental shift that has to occur. If not now, when? (GW)

In Obama’s Team, Two Camps on Climate

By John M. Broder
New York Times
January 3, 2009

WASHINGTON — In the fall of 1997, when the Clinton administration was forming its position for the Kyoto climate treaty talks, Lawrence H. Summers argued that the United States would risk damaging the domestic economy if it set overly ambitious goals for reducing carbon emissions.

Mr. Summers, then the deputy Treasury secretary, said at the time that there was a compelling scientific case for action on global warming but that a too-rapid move against emissions of greenhouse gases risked dire and unknowable economic consequences.

His view prevailed over those of officials arguing for tougher standards, among them Carol M. Browner, then the administrator of the Environmental Protection Agency, and her mentor, Al Gore, then the vice president.

Today, as the climate-change debate once again heats up, Mr. Summers leads the economic team of the incoming administration, and Ms. Browner has been designated its White House coordinator of energy and climate policy. And Mr. Gore is hovering as an informal adviser to President-elect Barack Obama.

As Mr. Obama seeks to find the right balance between his environmental goals and his plans to revive the economy, he may have to resolve conflicting views among some of his top advisers.

While Mr. Summers’s thinking on climate change has evolved over the last decade, his views on the potential risks to the economy of an aggressive effort to limit carbon emissions have not. But he now works for a president-elect who has set ambitious goals for addressing global warming through a government-run cap-and-trade system.

It may once again prove to be Mr. Summers’s role to inject a rigorous economist’s reality check into the debate over the scope and speed of an attack on global warming.

According to a transition official familiar with Mr. Summers’s thinking, he is wary of moving very quickly on a carbon cap, because doing so could raise energy costs, kill jobs and deepen the current recession. He foresees a phase-in of several years for any carbon restraint regime, particularly if the economy continues to be sluggish, a slower timetable than many lawmakers and environmentalists are pressing.

Mr. Summers and Peter R. Orszag, the economist whom Mr. Obama has designated director of the White House budget office, have both argued that a tax on carbon emissions from burning gasoline, coal and other fuels might be a more economically efficient means of regulating pollutants than a cap-and-trade system, under which an absolute ceiling on emissions is set and polluters are allowed to buy and sell permits to meet it.

But Mr. Obama and Ms. Browner have ruled out a straight carbon tax, perhaps mindful of the stinging political defeat the Clinton administration suffered in 1993 when, prodded by Mr. Gore, it proposed one.

Mr. Obama was asked in a television interview last month whether he would consider imposing a stiff tax on gasoline, whose price has now fallen to below $2 a gallon after cresting above $4 a gallon last summer.

He replied that while American families were getting some relief at the pump, they were hurting in other ways, through rising unemployment and falling home values. “So putting additional burdens on American families right now, I think, is a mistake,” he said.

At least for the present, then, the idea of a carbon tax has been shelved, and Mr. Obama’s economic and environmental advisers are working, along with Congress, to devise a cap-and-trade system.

But difficult debates lie ahead within the White House, between the White House and Congress, and within the Democratic Party, whose deep divisions on climate change break down along ideological and geographical lines.

The fight in November between two Democrats, Representatives John D. Dingell of Michigan and Henry A. Waxman of California, for the chairmanship of the House Energy and Commerce Committee was a preview. It pitted lawmakers from auto- and coal-producing states against liberal lawmakers from California and the East Coast, Blue Dog fiscal conservatives against environmentalists, pro-business moderates against regulatory activists. Mr. Waxman, with the tacit support of the Obama camp and Speaker Nancy Pelosi, won, but narrowly.

That was just a taste of the broader and potentially more bitter fight over global warming and energy legislation, which will have profound implications for the American economy, the environment and foreign policy.

Both sides — those seeking strict enforcement of emissions limits and those concerned about higher energy costs and potential job losses — will find receptive ears in the new White House, Obama aides and outside analysts said.

“There is a diversity of opinion among Democrats over the best way to contain costs associated with a climate change plan,” said Scott Segal, a utility lobbyist in Washington, who cited rival approaches pushed by Senator Barbara Boxer of California, chairwoman of the Environment and Public Works Committee, and Senator Jeff Bingaman of New Mexico, chairman of the Energy and Natural Resources Committee.

“I think there is room within the current range of administration advisers to accommodate all those points of view,” Mr. Segal said.

The Obama transition did not make Ms. Browner or Mr. Summers available for on-the-record interviews. A spokesman, Nick Shapiro, said that Mr. Obama had appointed advisers with differing views but that ultimately he would set policy.

“At the end of the day,” Mr. Shapiro said in an e-mail statement, “the advisers will be charged with implementing President-elect Obama’s strong targets that set us on a course to reduce emissions to their 1990 levels by 2020 and reduce them an additional 80 percent by 2050. However, the president-elect appointed a cabinet with diverse views and looks forward to strong debate within the cabinet on how best to achieve those outcomes.”

Emissions of carbon dioxide and other greenhouse gases by the United States in 2007 were about 15 percent above 1990’s level, according to the Department of Energy.

In past public statements and writings, Ms. Browner and Mr. Summers have wrestled with the difficult choices posed by global warming and at times have come to different conclusions on how to minimize the impact on the economy.

Ms. Browner has been a forceful advocate for strict carbon limits for years and has said that a comprehensive cap-and-trade system is the best way to achieve swift and certain reductions in emissions. She has said that the plan could include flexibility for carbon-emitting businesses by allowing them to bank and borrow permits, but she has not supported setting a maximum price or “safety valve” cost in case permits become prohibitively expensive, as Mr. Summers and Mr. Orszag have.

She has urged Congress to take up the issue quickly in the new year. In September, in testimony before the House Ways and Means Committee, Ms. Browner pointedly noted that the Supreme Court had given the E.P.A. authority to regulate greenhouse gases under the Clean Air Act. She implied that if Mr. Obama was elected, the new administration might unilaterally seek to curb carbon emissions should Congress not act.

“Given the magnitude of the problem, and the scale of the solution required,” she said, “I believe it is important that Congress provide national leadership on this issue.”

Mr. Summers believes a cap-and-trade program can be a workable solution, provided it includes some sort of escape clause if prices rise too quickly, according to several articles he has written in the past two years. He has also expressed a belief that developing nations must also adhere to carbon limits, or manufacturing jobs will migrate to countries without them.

In a forum at the Brookings Institution a year ago, Mr. Summers said the current moment on climate change was analogous to that on health care in 1992: Everyone agreed that the current system was unsustainable, but there was less agreement on how to address the complexities and costs. There was a general expectation that with the inauguration of a new Democratic president, something would be done.

“In the end,” Mr. Summers said, “what everyone agreed needed to happen didn’t happen in 1993