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I think it all depends on just how bad the economy gets. I’ve been wrestling with this question more and more as election day draws nearer. Congressional Quarterly has a nice piece today outlining the opposite directions in which high energy prices are pulling the debate on climate policy. On one hand, $4 gas has unquestionably raised awareness about the need for smarter energy policy and stokes broader anxieties about climate change. Such worries open the door for big ambitious thinking: national programs to accelerate plug-in hyrbrids, or a national renewable portfolio standard.
Yet pocketbook issues will trump all else. Economic anxieties are skyrocketing as fast as global financial markets have been plunging. If Obama or McCain had thoughts of moving ahead with ambitious climate change policy as a first order of business, the very sick economy will certainly delay those plans. My worry is whether recession could derail US climate plans for a long while, given how hard it will be to sell cap and trade to the public or, more relevant, to overcome delaying tactics from incumbent fossil industries and their Congressional allies.
Here’s an example of the hyperbole we can expect to see. I heard an energy adviser to McCain present last night at an off the record meeting. The campaign has some solid energy policies and a track record for taking climate change seriously. Yet in defending the need to give away carbon emission credits (a McCain position) rather than auction them off (Obama’s take), the spokesman described the impact of cap and trade on the electricity industry in scary terms. Charging for carbon, he said, is sure to send power prices skyrocketing.
This is wrong in scale, as utility CEOs have told me repeatedly. Given how cheap coal is, even its price doubles, power from coal will remain cheaper than natural-gas fired power (which sets prices in most US electricity customers). Prices will rise, yes, but by percentage points. And that’s the point: higher prices steer utilities away from high carbon energy sources, encourage carbon capture and sequestration, and get businesses to invest in efficiency and consumers to buy thriftier appliances, turn off lights and so on.
Yet if McCain’s guy was factually wrong, he probably won the emotional point. I bet his assertion is what most anxious listeners will recall from the debate, instead of the more truthful, yet nuanced and complicated answer from an Obama advisor.
BusinessWeek correspondents John Carey and Mark Scott, cover the green scene, keeping on top of the business aspects of energy, the environment and climate change, as well as the technologies, policies, markets and people that are shaping how the earth's resources will be used in the century ahead.