Friday, November 16, 2012

Obama’s Second Term Challenges Must Include Tackling Climate Change

First Lady Michelle Obama applauds the staff m...
Michelle Obama at the EPA (Wikipedia)
by Dr Barry Naughten, Energy Economist at Australian National University, The Conversation:

In his acceptance speech of November 6, Barack Obama at long last reaffirmed the need to address global warming.

But unfortunately he also reaffirmed the spurious goal of US oil independence, which can be at odds with climate policy when used to promote CO2-intensive options such as tar sands and shale oil.

The fate of the Keystone tar sands pipeline will be an early test of Obama’s bona fides on climate change as distinct from his being hostage to the “oil independence” goal and Big Oil.

If US climate change policy is to be more than cosmetic, the real questions should be about its part in an internally consistent set of fundamental policies within a “whole of government” approach.

Pricing and regulating emissions

In the 2008 presidential elections, both Obama and John McCain supported cap-and-trade as a means of meeting designated abatement targets by 2050. But pricing US greenhouse gas emissions has been abandoned since the advent of the Tea Party’s power in the Congressional elections of 2010.

However, such political difficulties need not preclude regulatory policy action, such as by the Environmental Protection Agency. The EPA has closed down emissions-intensive, coal-fired power stations and blocked new ones. Total CO2 emission reductions have also reflected federally subsidised growth in wind-power and tightened vehicle efficiency standards.

The aggregate level of US CO2 emissions has in fact declined to mid-1990s levels.

This is due also to the glut of natural gas which has displaced some coal-fired electricity generation. It is also an unintended side effect of the 2008 economic crisis, “off-shoring” (“deindustrialisation”) and the tripling of oil prices since 2003.

An integrated approach can address the above-noted political obstacles. Fiscal policy is a case in point.

“Green” investment and fiscal policy

To be effective, fiscal policy in the present deep slump needs expansionary investment programs but also to address the public debt concerns. Resulting sustainable economic growth helps the latter by augmenting tax revenues.

Additional revenues can also be sourced from taxing the super-rich, as Obama is seeking to do, and by taxing beneficiaries of infrastructure programs. Retrenching wasteful military expenditures (especially foreign) will also help.

To facilitate such investment in assets that are both productive and ecologically sound, the US also needs institutions such as Skidelsky and Martin’s proposed National Investment Bank.

Such a Bank (as the authors claim) “could take the lead in financing green technologies such as wind and geothermal power by evaluating and incorporating into its appraisals the value of their benefits to the broader economy”.

This proposal includes explicit criteria about due process and transparency, to prevent the kind of pork-barrelling evident in “Big Oil” and corn-based ethanol fuel supports.

A Republican-dominated House will no doubt seek to block such measures in favour of concessions to big business based on dubious “trickle down” or “sound finance” ideologies. The solution is not deals with economic libertarians in the re-arranged Tea Party.

Rather, the political challenge for the presidential arm would be to ensure that these elements bear the electoral consequences of seeking to grant further fiscal privileges to the rich at the expense of a sound macroeconomic strategy.

Effective policy and politics also need to include structural adjustment assistance to ensure fair burden-sharing as well as effective information programs about extreme climate events, imminent climate system “tipping points” and so on.

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