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Better Late than Never: Obama, Climate Change and the Renewable Economy

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Five years into his presidency, his reelection secured, President Obama has finally given up on Congress and decided to use the powers of the presidency to promote renewable energy and mitigate climate change. He is also set to announce programs to make our communities and farms better able to adapt to the impact of climate change. While it is clear he's given up on our dysfunctional Congress, it is also clear that he has not given up on the American public. His build up to a major address at Georgetown University, is an indication of his intent to use this issue as a major theme of his second term. His videotaped "preview" of the speech is a clear sign that he considers the transition to a renewable energy economy to be a legacy issue. With gauzy music in the background and natural landscapes in the foreground, Obama observes that: "There's no single step that can reverse the effects of climate change. But when it comes to the world we leave our children, we owe it to them to do what we can."

According to the Supreme Court, the president has the authority under the Clean Air Act to regulate greenhouse gasses as air pollutants. While such regulations on new power plants are less controversial, the administration will at long last announce plans to regulate existing power plants. In addition, the president will announce new rules on energy efficiency and initiatives to fund research in new energy technologies. I hope he also adds the immense purchasing of the federal government to the effort to build a renewable energy and energy efficiency industry. Perhaps most important, he needs to continue to use the White House bully pulpit, or immense propaganda machine, to promote this agenda, and build public support for these important policies.

While we have wasted five years getting to this point, better late than never. The fossil fuel industry's war against renewables will only become more intense, and I hope the administration is prepared for the onslaught. Even before the Georgetown speech was delivered, the counterattack had begun. As reported by New York Times reporter Peter Baker:

As word of Mr. Obama's plans spread in recent days, Republicans criticized the president for risking an already fragile economic recovery. "I think this is absolutely crazy," Speaker John A. Boehner said earlier in the week. "Why would you want to increase the cost of energy and kill more American jobs at a time when the American people are still asking the question, where are the jobs?"

Boehner's remarks are particularly disingenuous since he knows it will be many years before these regulations are promulgated, let alone implemented; and the short-term impact on energy prices will be nil. Moreover, if renewable energy technology investments pay off, the result will be lower rather than higher energy costs.

The idea that regulations are "job killing" is not factual. Under the federal Regulatory Right-to Know Act, the Federal Office of Management and Budget is required to report on the costs and benefits of all federal regulations. According to the 2012 draft report:

The estimated annual benefits of major regulations reviewed by OMB from October 1, 2001, to September 30, 2011... are in the aggregate between $141 billion and $700 billion, while the estimated annual costs are in the aggregate between $43.3 billion and $67.3 billion."

This does not mean that the costs and benefits of regulation are evenly distributed and that some businesses and communities do not feel more costs than benefits. Communities benefiting from coal mining will be hard hit by greenhouse gas regulations. While I agree we have no reason to believe that the federal government is competent enough to transform resource extraction based economies to renewable economies, I have to believe that a locally based public-private partnership should be able to do that. Moreover, it is critical that we learn how to bring about these economic transitions; and that federal funds be available to help.

There are lessons available to us to make the transition to a new economic base. Some of the lessons are not easy to learn. Transitions can be painful. My home city of New York is a case in point. When I was growing up in New York, it was a commercial and small manufacturing city. The West Side of Manhattan was a viable port; we made and shipped clothes, cars, bicycles, and a wide variety of consumer products. I remember when we packed meat in the Meat Packing District. Nowadays, the district's meat is consumed in the neighborhood's fancy restaurants rather than processed in its now closed factories. Today our livelihoods depend on the brain-based economy. Finance, communication, education, health care, software, tourism and entertainment dominate our economy. The transition was not fun and in the mid 1970's we nearly went broke; but New York City's government and private sector created a partnership that brought New York back from the brink of disaster to the thriving metropolis you see today. New York City continues to have deep problems of poverty and inequity, but it has made a remarkable comeback over the past several decades.

Environmental regulations need to be seen as investments in our future. In that respect, President Obama is correct in noting that our children will be the largest beneficiaries of climate regulation. The costs of the clean water regulation have taken decades to produce benefits, but safe drinking water and waterfront real estate developments are among those benefits. I often say that there is a reason why Riverside Drive is ¼ mile from the Hudson River -- because until the 1980s all of the West Side's raw sewage was dumped into the river. The river was often disgusting to see and smell. Building and maintaining the North River sewage treatment plant costs billions; but a cleaner river allowed New York to redevelop its waterfront for people and play. Lower air pollution emissions from factories and vehicles have reduced health care costs and improved our ability to breathe and live longer, healthier lives. A more crowded planet requires smart regulation to facilitate sustainable economic growth.

The right-wing "job killing" regulation rap is really a call to short-term selfishness, like a child complaining about bed time. The absence of rules is no better than unfair and even poorly administered rules. Regulations can level the competitive playing field, eliminate unscrupulous business practices and promote fair economic competition and growth. Moreover, they can also force the modernization of outmoded facilities, making them more efficient and competitive in the long-term. As noted above, regulations can harm specific firms and communities; but the benefits tend to outweigh the costs. As a society, we are not suicidal. We tend to enact rules that benefit us rather than harm us. Still, there are always forces in society that fight new rules. A half century ago, the auto industry considered seat belt regulations some kind of communist plot. In many communities, including my own, local bar owners have fought anti-smoking regulations, until they found out how many people avoided bars to avoid second-hand smoke. Smoking bans increased business, even though bar owners thought it would drive them out of business. Seat belts did not destroy the auto industry. Energy efficiency rules create jobs while improving economic efficiency. Traffic rules do not reduce the number of vehicles on the road; they actually increase the volume and safety of travel.

Technologies and economies change; and to ensure public health and economic well-being, we need rules and regulations to evolve over time. It is extraordinarily dangerous for our society to freeze regulations in place and not develop new ones. The financial impact of Hurricanes Sandy and Katrina are indicators of the bills we will pay if we do not learn to mitigate climate change and build infrastructure more resilient to climate impacts.

Done correctly, climate and energy regulation coupled with investment in research can have a positive effect on our economy, our environment and our quality of life. I admit that I do not trust the federal government to do this particularly well. My hope is the programs the president proposes leaves the heavy lifting to state and local governments working in partnership with the private sector. I am encouraged that President Obama is ready to deliver on the promise he made during his second inaugural speech. Still, while policy pronouncements and soaring rhetoric are important, the details of sustainability policy and management are even more important.