Ahead of a U.N. summit in Copenhagen next month, scepticism is growing that an agreement will be reached on a global climate treaty to replace the Kyoto Protocol, due to expire in 2012.

The protocol set targets aimed at reducing greenhouse gas emissions, which are believed to be responsible for the gradual rise in the Earth's average temperature. Many scientists say that reducing carbon dioxide emissions is key to preventing climate change.

But authors Steven D. Levitt and Stephen J. Dubner argue in their new book SuperFreakonomics that humanity can take an alternative route to try and save the planet.

"If the goal is to stop warming then geo-engineering solutions are worth considering because they are far cheaper, probably much more do-able and easily reversible," Dubner told Reuters before a talk at the Royal Society for the encouragement of Arts, Manufactures and Commerce in London.

Related vlog: How to become a freakonomist

– Nancy Birdsall is the president of the Center for Global Development. Arvind Subramanian is a senior fellow at the Center and at the Peterson Institute for International Economics and a regular columnist for the Business Standard, India’s leading business newspaper. The views expressed are their own. –

Efforts to cut emissions of the heat-trapping gases are gridlocked over a misunderstanding about what is fair. This misunderstanding is hindering climate change legislation in Congress and threatens to torpedo international negotiations in Copenhagen next month.

We propose a new way of thinking about climate fairness that focuses not on emissions cuts but on meeting developing countries’ energy needs in a climate-friendly manner. This simple narrative can provide a framework for U.S. legislation and open the way for international collaborative efforts to avert climate catastrophe.

At present, many people in the United States focus on the large and growing emissions of the developing world, especially China, which in absolute terms is now the world’s largest source of greenhouse gases, and India, which is growing fast and like China relies heavily on coal. They argue that it would be unfair to force emissions cuts at home without similar cuts in developing countries. A recent poll found that 60% of Americans believe that in any climate agreement China should cut its emissions the most.

It is true that developing countries already account for roughly half of all greenhouse gas emissions, and that their large populations and rapid economic growth are boosting emissions fast enough to create a planetary crisis by 2050-even if today’s rich countries had never existed.

But meanwhile a quarter of humanity — including millions in China and India — live without any electricity, and one-in-three people on the planet rely on straw, brush, charcoal and animal dung for their cooking needs. The resulting indoor air pollution kills 1.5 million people a year — about 4,000 per day — mostly children. Power for small businesses, irrigation networks, clinics and schools is sorely lacking.

Developing countries point to these unmet energy needs and to large disparities in per capita emissions to argue that the rich world must move first. They note that the 20 tons of CO2 that Americans emit annually is five times the world average, well above both China (5 tons per capita) and India (below 2 tons per capita).

They see emissions as inseparable from economic growth and argue for the developing world’s “right to pollute.” Some argue that because most of the extra heat-trapping gasses in the atmosphere were put there by the United States, Europe, and other industrialized countries, wealthy nations should pay “reparations” for the damage inflicted on poor countries.

Rarely in history have we seen constructive solutions come out of such blame games.

We believe that both sides should shift their focus from negotiated emissions cuts to a joint effort to find ways to rapidly meet the developing world’s legitimate energy needs at low cost in a carbon-constrained world. How can we change to this mindset, adopt a story line that would lead ordinary people in rich and poor countries, and the politicians and negotiators who do their bidding, to do the right thing?

Wealthy nations, starting with the United States, should affirm that, for any given income, people in developing countries have the same rights to energy-based services as those in the rich world-and then offer to help them obtain those energy-based services at the lowest possible cost and with the lowest possible CO2 emissions.

This should apply not only to existing technology, but to a war-footing approach to the development and deployment, at home and abroad, of new emissions-reducing and efficiency-enhancing technologies — solar, wind, tides, algae-based biofuels, smart grids and buildings — similar to the technology push of World War II.

The long-overdue climate speech by President Obama, explaining why action is urgently needed and why the U.S. must lead, would be a good place to start, and could help to open the way for progress in Congress and in Copenhagen.

For their part, developing countries should stop talking about a “right” to emit CO2, emissions are after all merely a waste product. Instead, they should insist on their right to energy-based services appropriate to their level of development — to light, and heat, and refrigeration, for starters, and then, as per capita incomes rise, to elevators, climate-controlled homes and workplaces, computers and, yes, flat-screen TVs.

To make this level of energy services possible without destroying the planet, developing countries should press the rich world for massive public funding of green energy research, and for full and rapid access to all resulting new technologies.

Framed this way — in terms of a U.S.-led push for equality of energy opportunity — it’s hard to see how Americans and others in the rich world could fairly object. We think they would agree, because it’s the fair thing to do and because it’s in their own best interest.

- Bjorn Lomborg is adjunct professor at the Copenhagen Business School. He is the organizer of the Copenhagen Consensus Center, which brings together some of the world's top economists, including 5 Nobel laureates, to set priorities for the world. The opinions expressed are his own. -

In this blog, I would like to share with you some of the best – and worst – ways to fix climate change. This is important because the Earth is warming up, increasing concentrations of carbon dioxide are contributing to this warming, and humankind is dumping ever-increasing amounts of CO2 into the atmosphere.

Of course, this is a point that is made by many campaigners, politicians and the media every single day. But I think that in our discussions on global warming, we actually often miss a really important question: not if we should do something about global warming - but rather how best to go about this. Just like with any other problem we face, there are many possible remedies, and some of them are a whole lot better than others. Not just cheaper (although cost is one very important criteria), but more effective, more efficient and - crucially - more likely to actually happen.

We need to focus on the cost of the solutions and the real-world benefits we should expect from them. Why? Because I believe it is nothing less than morally unconscionable to spend enormous sums of money making a minor difference to long-term global warming and human well-being, if we could achieve a lot more impact – and leave future generations better-off – with a smaller investment through a smarter solution.

This year, my think-tank, the Copenhagen Consensus Center, commissioned 21 new research papers – you can read them all here along with summaries and op-eds on them – that examine the costs and benefits of a multitude of responses to global warming. Each research paper carefully examines one response to global warming, and highlights the costs and benefits of that approach.

The research in itself is very important, and is groundbreaking in many respects. It answers such questions as what can we achieve through climate engineering? What happens if the entire world signs up to stringent, immediate carbon cuts? Are we on the right path to achieving the technological breakthroughs needed to shift away from reliance on fossil fuel? How much can we achieve through adaptation? How much global warming damage can be prevented if we focus first on cutting methane or black carbon emissions, or if we put more emphasis on expanding forests?

The papers are written by top climate economists – many of whom are heavily involved in the work of the United Nations climate change panel, the IPCC. I believe we should pay attention to their findings, because these economists are experts in calculating costs and benefits and in looking at the ramifications of different climate policy approaches. Their work definitely fills a void in the climate debate.

But having a list of feasible responses to climate change is not actually enough. We have scarce resources, and we surely have an ethical obligation to address climate change the best that we can. That means that we need to work out which approaches could play a serious role in fixing climate change.

To help achieve this, the Copenhagen Consensus Center convened an expert panel of five of the world’s leading economists, including three recipients of the Nobel Prize. Last week, this impressive team deliberated on the research and engaged with the research authors. The expert panel was asked by the Copenhagen Consensus Center to answer the question:

If the global community wants to spend up to, say 250 billion dollars per year over the next 10 years to diminish the adverse effects of climate changes, and to do the most good for the world, which solutions would yield the greatest net benefits?

They have now come up with their answer – a prioritized list representing their consensus opinion, showing the best and worst possible responses to global warming. (A summary of all of their findings is available to download at the same website).

I believe that the expert panel’s findings highlight the problems with the world’s current political fixation on carbon taxes, and – equally importantly – underscore the vast promise shown by alternative responses to global warming.

The expert panel concluded that the most effective use of resources would be to invest immediately in researching marine cloud whitening technology. (This, fundamentally, is where boats spray seawater droplets into clouds above the sea to make them reflect more sunlight back into space, reducing warming). They also highlighted a need to immediately boost research into non-carbon energy sources to ensure that we can move away from reliance on fossil fuels.

The first of these policy options, climate engineering, could provide a cheap, effective, and rapid response to global warming. Remarkably, the research considered by the expert panel, written by lead author Dr Eric Bickel, suggests that a total of about 9 billion dollars spent developing marine cloud whitening technology might be able to cancel out this entire century's global warming. That is a remarkable finding, and shows exactly why this is deserving of further, serious consideration.

I think it’s instructive to quote one of the Expert Panel members, Nobel Laureate economist Thomas Schelling, who said that “climate engineering has great promise. Even if one approaches it from a skeptical viewpoint, it is important to invest in research to identify the limitations and risks of this technology sooner rather than later.” In other words, regardless of your starting point about this technology – whether you are optimistic or pessimistic or plain cynical – there’s a really strong argument to start researching it now.

The finding that greater investment is needed in energy research came after the Expert Panel considered an excellent research paper by economists Professor Chris Green and Isabel Galiana of McGill University showing that non-fossil energy sources will – based on today’s availability—get us less than halfway toward a path of stable carbon emissions by 2050, and only a tiny fraction of the way towards stabilization by 2100. That’s a very significant finding. In other words, they are saying that there is a need for a total technology revolution which has not yet even started.

The expert panel’s findings don’t just show what we should be doing – they also highlight the policy responses that are not effective. In doing so, they really reveal the problems with the world’s current approach, which is of course a narrow focus on carbon taxes. The Expert Panel found that expensive, global carbon taxes would be an expensive, ineffective way to reduce the suffering from global warming, and placed these at the bottom of their list.

This finding was based on a groundbreaking research paper by renowned climate economist Professor Richard Tol, who showed that a high, global CO2 tax starting at 68 dollars could reduce world GDP by a staggering 12.9 percent in 2100—the equivalent of 40 trillion dollars a year – costing many times the expected damage of global warming.

There are really important implications for policy-makers here. Although carbon taxes and a ‘cap-and-trade’ scheme should, in theory, have very similar outcomes, the latter produces a much higher opportunity for pork-barrel politics and waste. So cap-and-trade schemes – which many politicians are considering implementing today – would be even less effective than taxes.

All of this is crucial knowledge, because we do not have the money to waste, nor the time to spend pursuing bad strategies. The reason for gathering the Expert Panel of economists now was that, this December, world leaders will gather here in Copenhagen to negotiate a successor to the Kyoto Protocol.

Their current path – of making ever-bigger promises of carbon cuts – is not likely to work. As the Expert Panel highlighted, it is flawed economically. Carbon taxes will cost a fortune and generate very little temperature reductions in a very long time.

It is also flawed politically, because negotiations to reduce CO2 emissions will become ever more complicated, pitting developing nations – which rely on burning fossil fuels to lift billions of people out of poverty – against richer nations.

And even if lofty promises are made in Copenhagen, the experience of past agreements in Rio de Janeiro and Kyoto shows that they are not likely to be fulfilled. The reason for this isn’t because of any lack of good-will, but because cutting carbon emissions this way is incredibly difficult and expensive.

I believe that if world leaders don’t change track ahead of Copenhagen, they will be doing us – and future generations – a huge disservice.

If we care about the environment and about leaving this planet in the best state that we can, we actually have only one option: we all need to start seriously focusing, right now, on the most effective ways to fix global warming.

–- Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. –-

Next Thursday, just in time for the July 4 holiday weekend, America’s unemployment rate is forecast to rise from 9.4 percent to 9.6 percent, well above rates in other industrialized countries.

Yet today the House of Representatives is rushing to pass the American Clean Energy and Security Act of 2009, even though the bill was incomplete yesterday and congressmen have not yet had the opportunity to analyze it. The bill would send America’s unemployment rate even higher.

The 1,200-page bill, cosponsored by Henry Waxman, Chairman of the House Energy and Commerce Committee, and Edward Markey, Chairman of the House Energy and Environment Subcommittee, would increase the price of energy by setting allowances for greenhouse gas emissions and mandating new standards for energy production and use.  The bill would raise $846.6 billion over 10 years while adding $821.2 billion to federal spending.

The bill requires that greenhouse gas emissions in 2012 do not exceed 97 percent of 2005 emissions, declining to 17 percent of 2005 emissions by 2050.  Meeting these standards now is technologically impossible without radically reducing our standards of living, but Congress is hoping that technology will magically appear as needed.

The mechanism for this is a “cap-and-trade” program under which allowances to emit greenhouse gases would be issued by the Environmental Protection Agency at a steadily declining rate through 2050.  When emissions exceed a firm’s allowance, or cap, it would have to purchase allowances from the government or other firms, a tax under another name, driving up costs that would be passed on to consumers.

Electric utilities have been given free allowances to encourage them to support the bill.  Oil and gas would be particularly hard hit, because they are responsible for 35 percent of emissions yet are allocated only three percent of the free allowances.

Just as the increases in oil prices in the 1970s brought about an increase in unemployment, the energy provisions in the Waxman-Markey bill could usher in years, perhaps decades, of lower economic growth and higher unemployment than would be the case otherwise.

The effects of the oil price increases between 1972 and 1988 have been extensively analyzed by economists Steven Davis of the University of Chicago and John Haltiwanger of the University of Maryland.  Although their research deals with the effects of oil price increases, it is also applicable to increases in the price of energy, which would be the effect of Waxman-Markey.

Davis and Haltiwanger find that oil price increases resulted in more jobs lost than jobs gained in almost every industry sector of the economy.  The largest oil shock, in 1973, caused an estimated eight percent decline in manufacturing employment over the following two years.

Oil price increases have larger effects on economic activity than oil price declines, Davis and Haltiwanger calculate, a finding shared by other economic studies.  In other words, when energy prices increase firms lay off workers, but when prices decline the workers are not hired back as fast.

Davis and Haltiwanger also find that higher energy prices are more likely to suppress employment than monetary shocks. Many politicians fret over the harmful effects of recent American monetary policy, but overlook the even greater danger to employment from the Waxman-Markey bill.

Supporters of the bill claim that the new regulations will create jobs, because people will have to be employed to produce the new technology.  But the funds for the new expenditures have to come from somewhere, and money spent on new products is money that cannot be spent on other activities, such buying clothes or food, or anything else that Americans would otherwise buy.  This would drive down employment in those industries.

In fact, not only does the bill penalize American firms through higher costs, it gives firms a financial incentive to move abroad through “offsets,” activities that supposedly lower carbon emissions elsewhere.  Since Congress knows that firms cannot meet the standards in the bill, legislators are allowing firms to meet 30 percent of their 2012 greenhouse gas reduction obligations, increasing to 60 percent by 2050, by buying offsets. Half of these offsets can take place abroad.

The offset provisions allow firms to shift economic activity abroad to countries with laxer emissions standards, further damaging U.S. job creation. A plant’s emissions might exceed its U.S. allowances, yet its technology might produce lower emissions than the norm in a developing country, allowing the relocation to count as an offset.

The American unemployment rate now exceeds those in France (8.9 percent) and Germany (7.7 percent). With unemployment climbing even without the Waxman-Markey bill, the question for Congress is the following:  how high do you want the rate to go?

Rob Sisson is president of Republicans for Environmental Protection. All opinions expressed are his own.

(Politico) News flash: Republicans believe in protecting the environment. And we believe in playing it straight with the facts.

There are plenty of us green Republicans out here, including leaders like Utah Gov. Jon Huntsman — President Barack Obama’s nominee to be ambassador to China — Sen. Susan Collins of Maine and Rep. Mark Kirk of Illinois, to name a few.

As Huntsman said last year, “If we’re going to survive as a party, we need to focus on the environment.”

But protecting the environment isn’t just political expediency; it’s core philosophy. We don’t think it’s a coincidence that “conservative” and “conservationist” sound so much alike. And we don’t think it’s a coincidence that many of our landmark environmental bills — the Clean Air Act, the Endangered Species Act and the Clean Air Act amendments of 1990 — were signed into law by Republican presidents.

It was President Ronald Reagan who negotiated the 1987 international treaty to safeguard the Earth’s protective ozone layer by phasing out the use of chlorofluorocarbons.

That’s why it is so frustrating when my fellow Republicans today play games around one of the most important environmental issues of our time.

Climate change is real, it’s caused by humans, and it will create serious risks for our nation’s security, economy and quality of life — and sooner than we think. That’s the unmistakable message from scientists who have devoted their professional lives to understanding how human activities affect climate. One of them is Dr. Katharine Hayhoe, a climate research scientist at Texas Tech and a devout evangelical Christian.

She is co-author of a forthcoming report that will document the stunning effects climate change will have throughout the United States — such as the climate of my own state of Michigan becoming like what North Texas experiences today. I’m not kidding — look at the report, from the U.S. Climate Change Science Program, when it comes out shortly.

This is serious business and deserves a serious debate. Some Republicans — Reps. Mary Bono Mack of California and Bob Inglis of South Carolina come to mind — are thoughtfully engaged, but many on our side of the aisle have chosen politics over prudence. That’s why I reluctantly have to call out those Republicans who continue to spread the false claim that capping greenhouse gas pollution will — supposedly — cost American families $3,100 every year.

The National Republican Congressional Committee started playing this game in March. It claimed this bloated cost figure was based on an MIT study.

But the author of the study — who surely ought to know — said the NRCC was way off base. Here’s what the author, professor John Reilly, said about the NRCC claim: “It’s just wrong. It’s wrong in so many ways it’s hard to begin.”

In letters to House GOP leader John Boehner, Reilly asked the NRCC to stop using this false number. He said that a correct estimate of the costs was far below NRCC’s number, which was based on a sloppy analysis that was riddled with errors a freshman economics major would have caught in a heartbeat. Reilly also pointed out that his study analyzed a generic cap-and-trade bill without any cost mitigation provisions.

The House is now looking at a very different bill to fight global warming pollution. What do we know about what that bill would cost?

A recent EPA study estimates the cost at $98 to $140 per year for each household. Even with the legislation, however, total household spending would still increase nearly 20 percent by 2020.

The economy will be bigger in 10 years than it is today, which climate legislation critics often fail to point out. We can afford to invest in energy efficiency upgrades, develop more renewable energy and take other important steps to stabilize the climate that we all depend upon.

So to my fellow Republicans, I say: Act like real conservatives. Be honest about the science and about the facts. Take responsibility for fixing a real problem. And let the world know that today’s Republicans want to be remembered the way we recall President Theodore Roosevelt — as people of honor who stood up to conserve the world we live in for our kids and grandkids.

(c) Capitol News Company, LLC 2009

– John Kemp is a Reuters columnist. The views expressed are his own –

House of Representatives Energy and Commerce Committee Chairman Henry Waxman will this week publish a full text of proposed climate change legislation, including details of a cap-and-trade scheme for regulating and pricing emissions of greenhouse gases.

Press reports suggest the Waxman bill will give away as many as 75 percent of the permits free to power utilities, coal-producers and other industrial users in the first stage of the plan to defuse opposition and buy support from congressional Democrats representing industrial and coal-producing states.

Free allocations would be phased out eventually, but only after a lengthy transition period that could last as long as 10-15 years.

Free allocations will undermine the immediate impact — and demonstrate the depth of opposition — to cap and trade but the real question is whether any transition to full permit auctions is automatic or requires further congressional action.

Commentators have focused on the budgetary implications of giving away permits for free. The president’s own budget plan anticipates revenues of $646 billion from permit auctions over 8 years from fiscal 2012 to fiscal 2019. The White House has already “spent” these revenues on tax breaks for low-income families as well as energy research and development.

Critics allege that giving away permits for free will blow a hole in the budget calculations and lead to even worse deficits over the next decade.

This is wrong. The White House included revenues from permit sales in its budget plan for symbolic reasons — to show it was committed to implementing cap-and-trade; it would spend the political capital needed to get legislation through Congress; to showcase the benefits auctions could bring; and to show how low-income groups could be protected against the impact of rising permit and energy prices by redistributing the proceeds.

But officials have been careful not to rely on the anticipated revenues too heavily. The president’s plan allocates the money to discrete tax breaks and research spending rather than general government revenues. If the permit revenues do not materialize, the tax breaks and research funding will be cancelled, and there will be no implications for the deficit.

SALAMI SLICING

Instead, the decision to give away most permits for free demonstrates that the shallow political consensus surrounding climate change and emissions pricing is forcing even supporters to take a very cautious approach to the issue.

Giving away 75 percent of the permits and phasing in a full auction system over a decade or more will limit the program’s effectiveness early on. But it is probably the only way to build support from Democrats in the industrial Midwest and Appalachian coal states needed for a House of Representatives majority and a 60-vote super-majority in the Senate.

More importantly, the administration wants to get agreement on the principle of cap-and-trade so that it can start building the necessary infrastructure (an inventory of emissions sources, supplementary regulations, and permit exchanges).

Once the infrastructure is in place, free allocations can be gradually reduced and the permit system can be tightened over time. Crucially, once trading starts, it will create vested interests among traders and permit owners, making it almost impossible to reverse or relax the scheme. So even a small-scale limited program will benefit from a ratchet effect.

The administration and its supporters in Congress are employing “salami tactics” — slicing a big controversial decision on which it may not have sufficient support into lots of small steps which are not objectionable in themselves but which, taken together, will eventually accomplish the same goal.

CAP-AND-TRADE NO MORE?

In another sign of increasing political sensitivity, the Wall Street Journal reported the administration is consulting on how to rebrand its cap-and-trade program to lessen opposition from voters and legislators.

Until recently, advocates of emissions control favored cap-and-trade rather than an emissions tax because it was seen as more “market-friendly” and obscured the impact of raising the cost of both permits and energy paid by consumers.

For political reasons, cap-and-trade has been favored even though research by the non-partisan Congressional Budget Office suggested a tax would be a better choice because it is more straightforward and offers the certainty about emissions costs that utilities and other heavy energy users need to make long-term investment plans.

But as voter awareness of how cap-and-trade will work and will increase energy prices has grown, popular support has eroded. According ecoAmerica President Robert Perkowitz, interviewed in the WSJ, less than half the respondents in a voter survey said they would support a cap-and-trade policy. So the administration is keen to rebrand the process.

AUTOMATIC OR NOT?

When the full bill is published, the focus will be on the number of permits given away free in the first stage. The real interest, however, is how quickly the free permit allocations will be replaced with permit sales and whether the transition is automatic or will require further congressional action.

Environmental groups will support a fairly substantial allocation of free permits in the first phase to get the bill through Congress, provided there is a clear timetable for moving to a full auction system and the transition is automatic and not subject to further congressional votes. In contrast, coal producers and power utilities will lobby hard to ensure Congress must vote again before free allocations are reduced and the trading program is tightened further.

Crucial points to watch out for:

(1) Whether the actual text of the legislation sets out a timetable for withdrawing free permit allocations in binding language, or whether a move to full auctions is set out in a non-binding “sense of Congress”.

(2) If the legislation mandates a transition to full auctions in binding language, is it conditional on further congressional approval or automatic?

(3) If the phase out of free permits is conditional, does it require positive action by Congress (legislators would have to vote in favor of reducing free allocations, something which could be hard to achieve) or negative approval (free allocations reduce automatically unless Congress specifically votes to block the reduction, which would be equally difficult)? Positive approval would make a full auction system hard to achieve. Negative approval would make it hard to block.

– Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute.  The views expressed are her own. —

Chairman Henry Waxman of the House Energy and Commerce Committee announced yesterday that his American Clean Energy and Security Act of 2009 “will create millions of jobs, revive our economy, and secure our energy independence.”

The 648-page bill, co-sponsored by Waxman and fellow Democrat Edward Markey, Chairman of the House Energy and Environment Subcommittee, has been the subject of four days of committee hearings this week.  It would set new limits for greenhouse gas emissions, and prescribe radically new standards for energy production and use.

The most surprising word in the 648-page bill is one that isn’t there, not even once.  That word is “nuclear.” To discuss clean energy and security without mentioning increased development of nuclear energy, now powering 20 percent of America’s electricity with no greenhouse gas emissions, shows that Chairmen Waxman and Markey are not taking the issue seriously. They’re just trying to raise taxes on Americans and enhance the power of Congress and the agencies it oversees.

Over 100 pages in the bill are spent on measures to reduce greenhouse gases.  The bill requires greenhouse gas emissions in 2012 to be no more than 97 percent of 2005 emissions, 58 percent in 2030 and 17 percent in 2050.  This last target, four decades into the future, is incompatible with our present standard of living—and illustrates the arrogance of politicians who think that they can micro-manage the economy far beyond anyone’s capacity to foresee events.

The mechanism for this is a “cap-and-trade” program, proposed by President Obama in his budget, under which allowances—the number and price as yet unspecified—to emit greenhouse gases would be issued by the Environmental Protection Agency.  If a firm’s emissions exceeded its allowance, or cap, it would have to purchase more allowances, either from the government or from other firms.

As allowed emissions decline over time, firms would have to buy more allowances, driving up costs that inevitably would be paid to consumers.  The Obama March Budget forecast that revenues of $646 billion over eight years would be collected from cap-and-trade.

Representative Joe Barton of Texas, ranking Republican on the Energy and Commerce Committee, offered his version of candor at yesterday’s hearing.  “Ladies and gentlemen, if you like the idea of reducing your carbon footprint to the size that this legislation proposes, you can test drive these carbon emissions levels by living in Nigeria,” he said.

Cap-and-trade is only one part of the bill that would drive up prices.  Consider energy production.  The bill would require doubling in three years of the share of electric utility output that comes from renewable sources—wind, solar, geothermal, biomass—from three percent now to six percent in 2012.  In a further leap of central-planning arrogance, the bill would raise that standard in stages to 25 percent in 2025.

Sounds good? Maybe, but the technology to do it doesn’t exist. Nor do transmission lines to deliver wind energy from where it is likely to be produced,  in the central states, to the population centers on the coasts, where it would be consumed.

Solar energy might be produced in the southwestern desert and California, yet exporting it to Rhode Island and foggy Washington State is practically impossible.  The bill could address this problem by giving the Federal Energy Regulatory Commission additional authority to site transmission lines, yet it does not do so.

Or, take energy efficiency. If people don’t conserve energy voluntarily, the bill would require them to do so.  Existing federal energy efficiency standards for commercial and residential buildings would rise by 30 percent until 2016 for new buildings, and 50 percent thereafter. EPA would set by next year new emissions standards for cars, trucks, trains, and aircraft. Electricity distributors would be required to achieve energy savings beginning with one percent in 2012 and reaching 15 percent in 2020.

If this bill would create millions of jobs and revive our economy, why not make the standards tougher and create even more jobs?

With the global economy in the depths of the worst recession since the Great Depression, according to the International Monetary Fund, now is not the time to raise the cost of energy and consumer goods.  Chairmen Waxman and Markey should reconsider.

– Jeffrey W. Rubin is professor of history and a research associate at the Institute on Culture, Religion, and World Affairs at Boston University, where he directs the Enduring Reform Project. Emma Sokoloff-Rubin is a Yale undergraduate and an associate editor of The Yale Globalist. The views expressed are their own. –

As leaders of the world’s 20 largest economies debated stimulus packages and financial regulation at the G20 in London in early April, policemen kept at bay protesters’ calls for attention to inequality, hunger, climate change, and human rights. The leaders talked economic shop as the protesters demanded new visions — and the disconnect did not offer much hope for addressing the ravages of crisis worldwide.

The Summit of the Americas this week is where leaders could link the issues discussed in G20 meetings to the concerns of citizens protesting outside. The Summit brings together the largest regional group of democratically elected, progressive leaders in the world today. By adopting a broader view than that taken at the G20, leaders of the United States, Canada, and Latin American countries could look for ways of responding to the economic crisis that also tackle the deep inequality facing nations across the hemisphere. As elected representatives of majorities seeking inclusion and change, these leaders have the unique opportunity to begin a conversation that will transform the terms of debate and action in the global public sphere.

In Latin America, economic crisis has started nations on the path to social and political transformation before. While memories of the depression in the United States focus on hardship, the 1929 global depression in fact ushered in an era of dramatic positive change in Latin America. No longer able to count on a stable world market, Latin American governments abandoned their reliance on agricultural and mining exports and instead began to stimulate dramatic and ultimately successful processes of industrialization. At the same time, populist leaders articulated new notions of nationalism, accepting and even welcoming long-excluded groups of rural peasants and urban workers onto the scene and granting them new citizenship rights.

In response, Franklin Roosevelt attempted to reverse a history of U.S. military intervention in Latin America with his Good Neighbor Policy, emphasizing trade and cultural exchange as a means for peaceful coexistence. This commitment to inclusion and alliance was crushed in subsequent decades by elite opposition to socioeconomic reform within Latin America and anti-communist operations on the part of the United States, which together produced military coups and state policies of repression and torture. By the late 1980s, however, dictatorships across Latin America were overthrown by a second wave of commitment to democratic citizenship.

Since then, as democracy has endured and deepened, leftist parties have won elections across the region, taking over from right-wing and centrist governments from Chile to El Salvador. In the process, Latin America’s leftists have reclaimed some of the social visions of the early days of industrialization, when development economists and political reformers alike spoke of humane capitalism, of growth with equity, and of governments as arbiters between capital and labor. Such a balanced approach has been literally unthinkable over the past two decades of free-market ideology, as Washington pressed Latin American governments to leave economic affairs to the market and inequality became yet more entrenched.

Today, once again, the idea of equitable development doesn’t seem radical, but rather makes common sense. And the potential for a hemispheric alliance is stronger than ever. Democracies in Latin America have already produced innovative strategies for tackling tough problems, from racial exclusion to urban poverty to migration, and they have forged progressive coalitions to support these new approaches. In Buenos Aires, factories run cooperatively by workers - factories that were taken over when the owners ran them into bankruptcy - compete efficiently in the market. In Rio de Janeiro, kids in shantytowns join music groups to fight drug trafficking and violence, while in San Cristobal, Chiapas, Mayan Indians organize transportation systems and marketing networks in urban neighborhoods where 30 years ago they would have been forbidden to live. And through hometown associations in the United States, Mexican migrants send back money to their communities of origin, where remittances are matched three-for-one by the Mexican government in an investment program overseen by the migrants themselves.

This is the face of democratic innovation in our hemisphere. For the first time ever, the vast majority of key actors in Latin America, from businesspeople to militaries, middle classes to grassroots social movements, play by the democratic rules of the game and respond to disagreement with counterproposals rather than violence. And for the first time ever, a U.S. President speaking a language of cooperation and dialogue could transform a century of distrust into a forward-looking hemispheric alliance.

There’s no better place to begin a broad conversation about economic recovery and social change than at the Summit of the Americas. President Obama and the leaders of Latin America and Canada have different backgrounds and strategies, but they bring many of the same concerns to the table. They all want educated populations, jobs that enable people to support themselves, secular governments, equality for all citizens, and societies free from violence. They also want to support what is perhaps our hemisphere’s greatest resource for the long term: the democracies that exist across North and South America today. To pull this off, they need to start looking simultaneously towards and beyond the economic crisis, within their own countries and across national boundaries.

That means talking about the economic crisis and about violence, women’s rights, hunger, the environment, drug policy, trade and immigration. Rather than silencing protesters, as the London police attempted to do, the heads of state at the Summit of the Americas — many of them former union leaders and community organizers — need to speak loudly and act boldly to address their citizens’ demands.

Prospects for enacting a cap-and-trade program regulating U.S. greenhouse gas emissions later this year have receded following a vote in the Senate exposing deep divisions within the Democratic Party.

On April 1, 26 Democratic senators broke with the majority of their colleagues and both the party’s Senate leaders to join all 41 Republicans voting for an amendment to the annual budget resolution forbidding use of the budget reconciliation process to pass climate change legislation involving a cap-and-trade system.

In effect, the amendment ensures approval of a cap-and-trade system will require a minimum of 60 votes rather than a simple majority of 50 in the 100-member chamber. Since Democratic leaders do not currently have anywhere like that number of votes for the measure, and little time to build popular support, it is going nowhere in the near term.

BUDGET RECONCILIATION

Budget reconciliation is a two-stage process intended to expedite passage of important spending and taxing bills the federal government needs each year to maintain its operations:

* First, reconciliation instructions are included in a budget resolution instructing one or more congressional committees to recommend legislative changes to bring levels of spending, taxation or debt into conformity with overall totals laid out in the budget resolution itself.

* Second, committee recommendations are packaged into one or more “reconciliation bills” considered under special procedures on the floor of the House of Representatives and the Senate.

Reconciliation is especially important in the Senate, where the tradition of unlimited debate allows even one senator to block passage of legislation by threatening to filibuster it.

Proponents of controversial legislation need to muster 60 votes to invoke Senate Rule XXII (cloture, or motion to proceed), in order to cut off debate and move to a vote on the substance of the legislation.

Contentious bills therefore require two majorities: a super-majority of 60 votes to prevail on the motion to proceed, then a simple majority of 50 votes to prevail on the substantive motion. In practice the real battle centers on the motion to proceed because it is harder to win.

The reconciliation process is crucial because it curbs unlimited debate. In the Senate, debate on a reconciliation bill is limited to 20 hours, after which the chamber can continue to consider amendments but without further debate. Because there is no filibuster, the effective majority needed to pass legislation drops from 60 votes to 50.

Reconciliation was originally intended to expedite passage of tax and spending bills. It was never intended for other legislation, and the process contains safeguards to prevent it being misused to pass other bills. But the safeguards are flexible. In the past, reconciliation has been used to force through controversial measures that would not otherwise be able to secure the 60 votes needed to stop a filibuster.

Cap-and-trade could easily have been presented as a budget measure subject to reconciliation because permit sales would raise revenue for the federal government — and those revenues have already been included in the president’s outline budget.

Alive to this risk, opponents have moved to exempt cap-and- trade from the reconciliation process, ensuring it will still need 60 votes to pass.

DEMOCRATIC DIVISIONS ON SHOW

The Democratic Party currently controls the Senate with a majority of 58 (56 Democrats and two independents caucusing with them).

But the party is deeply split on proposals to implement a cap-and-trade program that would raise prices for consumers and penalize states with a heavy industrial base or large fossil-fuel resources.

Party leaders and the Obama administration cannot count on 60 senators to overcome a filibuster — which is why proponents were hoping to leave open the option of presenting it as a reconciliation bill that would need only 50 votes.

The extent of the Democratic Party’s divisions was on display in last week’s vote line up:

* Voting for the amendment (and therefore against using reconciliation) were 26 Democrats from Midwestern and industrial states (10) plus Democrats from conservative states and those in the heartland (16).

* Voting against the amendment (in favor of using reconciliation) were 31 Democrats from the west and east coasts (23), plus senators from grain states that would benefit from any move away from fossil fuels (2), the party’s floor leaders (2), and only a handful of others representing the interior (4).

The vote illustrates the fault line within the Democratic Party between legislators from coastal and liberal states who favor cap and trade, and those from industrial and conservative areas in the Midwest and rest of the country worried about a popular backlash in response to higher energy prices and the implications for local industry.

The administration will need to buy off many of these Midwestern and conservative senators to have any chance of enacting a program.

President Barack Obama foreshadowed this effort when he told reporters recently the administration would probably have to give permits away free to some industries in the early stages to build support. It will also have to mount a major public relations campaign to build popular support.

But given the crowded congressional agenda and the competing demands on the president’s time, it will almost certainly be impossible to mount a major lobbying effort and get cap-and- trade enacted in 2009, which puts the effective date of any scheme back until at least 2012 or 2013.

Megan McArdle is unhappy with the state of green consumption:

When I look back at almost every "environmentally friendly" alternative product I've seen being widely touted as a cost-free way to lower our footprint, held back only by the indecent vermin at "industry" who don't care about the environment, I notice a common theme: the replacement good has really really sucked compared to the old, inefficient version.

(Scare quotes Megan's, natch.)

The problem, as Megan admits, is that she's looking at the "cost-free" replacements: the bottom-of-the-line green products which can be used to replace legacy products which are the result of decades of development and economies of scale. It's hardly surprising that these first- and second-generation products can't compete on price.

But my feeling is not that the new products are too expensive, so much as that the old products are too cheap. That's certainly the case with food: chicken, beef, and other corn byproducts -- including the famous high-fructose corn syrup -- are so underpriced that their cultivation is destroying the planet and causing mass obesity.

And more generally, the story of both Greenspan bubbles is that the Fed was happy to bring interest rates down to extremely low levels because of the massive amounts of disinflation being imported to the US by China (again, at huge environmental cost).

My hope is that the world which emerges from the present crisis will be one where goods, in general, have a price which is commensurate with their cost. I remember walking down Broadway last year, in Soho, and overhearing a woman coming out of H&M explaining to her friend that the clothes there were great: they were so cheap that you could wear them once and simply throw them away, without having to worry about how they stood up to washing or dry-cleaning. And although it was easy to conjure up lots of high moral dudgeon to direct at the woman in question, the fact is that incentives matter, and the prices at H&M were clearly incentivizing her to feel that way: as a general rule, it's not good for the planet when a frock costs roughly the same as the cost of dry-cleaning it.

So it would be great to have some targeted inflation here: not just to help solve the housing mess, but also to bring the cost of many everyday products up to a point at which people become much more careful about using them -- and much more inclined, too, to pick a green alternative.