By blocking climate-change legislation, the U.S. power and fossil fuel industries have driven the Obama administration to impose high-cost, inconsistent regulation that will cost them -- and all Americans -- dearly in the end. National cap-and-trade remains the best alternative, says Eric Bettelheim of Floresta Holdings.
This article originally appeared on Ecosystem Marketplace. Click here to read it.
5 August 2015 | The Obama administration is finally trying to deal with climate change in a comprehensive way. Distracted in his first term by the recession and health care the President did not have the capacity to push the Waxman-Markey bill through the Senate. It is only in his second term that the President has returned to climate change as a key issue to be faced by the United States, the rest of the world and our children. His legacy will hopefully be better than his performance on this topic in his first term.
The Clean Power Plan is an effort to do what the current Congress could never do given its present political balance. The presence of so many climate deniers, advocates for the fossil fuel industry and general legislative gridlock in Congress prevents any serious legislative response to the most pressing issue of our and future generations. Regulatory initiatives, of which this is the latest and most far reaching to date, are the only way forward coupled to efforts already under way in various states notably California. The emphasis in the Clean Power Plan on state driven solutions should appeal to states-rights advocates even as it infuriates those who continue to believe that climate change is a myth or conspiracy.
The thus far successful effort to block national legislation since Waxman-Markey has not only forced the administration to regulate where legislation, like the Clean Air Act, would be far more preferable, it has created a situation for the power industry which will prove to be its worst nightmare: regulation state by state instead of a uniform national system. The threat of a multiplicity of state systems, each establishing its own compliance rules, is what previously persuaded the more thoughtful members of the industry to support, however grudgingly, a national system of “cap and trade”. Now they will pay the price of not seeing it through when they had the chance.
The irony, of course, is that the bi-partisan, free market solution of cap and trade worked extremely well from the power industry’s (as well as the public’s) point of view in the case of sulphur-dioxide. The compliance cost was far below that of other solutions, particularly top-down regulation, and the national system created a level and predictable playing field for the industry A clear cost curve was established to which all could and did, adapt. No one went out of business, the cost was passed on to consumers painlessly and coal fired power continued to fuel the economy.
Every rational observer, including the Chinese and the Europeans, knows that cap and trade is the best, fairest and lowest cost solution given that an international carbon tax system is a non-starter. But the US power and fossil fuel industries, intoxicated by their success in blocking GHG legislation, have now caused a high cost, inconsistent system to be put in place instead. Their compliance, let alone their lobbying, costs are set to sky rocket and with no doubt multiple unintended consequences almost all of them bad from a business point of view.
The issue of climate change and greenhouse gas reduction will not go away and public concern rises with every “unexpected” natural disaster predicted by those oft-derided climate models. We are already experiencing what were discarded just a few years ago as “worst case” “extreme” scenarios and well on the way to irreversible change and repair and adaptation costs beyond our wildest imagination just a few years ago. As Bill Gates has recently put it, the key to a manageable future is emissions reduction and technological innovation. We already have a proven tool for emissions reduction, cap and trade, which needs to be rehabilitated by the power and fossil fuel industries from the evil talisman they made it if they are to have a coherent and manageable future themselves.
Eric Bettelheim is Executive Chairman Floresta Singapore and Soluxe Europe. He can be reached at eric@ericbettelheim.com.
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