Gore Essay: Climate Change Policy Revisited

Former Vice President Al Gore has written a 7,000-word essay for Rolling Stone magazine posted online Wednesday in which he criticizes President Obama for failing to take “bold action” on climate change. Gore contends the Obama Administration has made little progress on the issue. The former VP is a strident believer carbon dioxide created from burning fossil fuels is the overwhelming cause of climate change, an undeniable scientific fact according to him. I am not going to debate the science, the reasons of changes in weather, finger pointing at climate change deniers, discuss climate data fabrication or the plight of the polar bears. The interesting question raised: Is Gore right or he is wrong on the President’s actions or lack thereof?

 The history of climate change policy or global warming legislation in this country and attempts to address it are far more complicated and involved than the 7000 words penned by Gore. By way of disclosure, let me say, I worked on climate change legislation and greenhouse gas (GHG) emissions for the past 5 years.

 The heart of GHG emission restrictions was to be a “cap and trade” system (CAT) under which the government sets a limit (cap) on the total amount GHG that can be emitted. Companies subject to the cap (covered facilities) buy or sell permits to emit these gases with the overall cap reduced each year to reduce total carbon emissions. In theory, those entities emitting more GHG face higher costs as they must pay for the permits from someone else or face steep fines.

 The Democrat-controlled House of Representative passed in June of 2009 by a vote of 219-212 a version of CAT with 44 Democrats voting against the bill, and 8 Republicans voting in favor, thus this bill known as Waxman-Markey became the first climate change bill to ever pass one of the chambers of Congress.  In essence, the bill sought to reduce GHG emissions by 83% over 2005 levels by 2050. Of course, the mechanics and scheme are much more complicated than the simple goal put forth.  

 The vote in the House was the “high water mark” for climate legislation. Despite a 18-month long effort, the Senate failed to form a consensus and no bill ever came up for a vote. With the election of 2010 and strong Republican opposition, the issue was dead, a lost chance for environmentalists and Gore to save the planet and humanity from itself. 

 Once CAT passed the House, the opposition galvanized but a number of high profile organizations including major manufacturers, utilities, public interest groups and Wall Street traders, supported the concept, if not a specific bill.

 However, this is the part Gore and the Administration did not get.

 Reducing emissions to the level required by the cap would be accomplished by stemming demand for carbon-based energy by increasing its price. Since there was- and is- no non-subsidized economical substitute for this energy from other sources, U.S. industry in order to comply with a CAT, would see energy costs go up. Even politicians figured out if companies’ costs go up, there will be less money for companies to compete and therefore fewer jobs. Furthermore, households under CAT would pay higher utility rates, thus having less disposable income. In the middle of a recession, incredible unemployment, no one, including survival-mode politicians, really cared what would happen in 2035.

 Gore seems to fault the President somehow for not getting CAT passed. Part of that is true, as there was no great push from the White House other than lip service and a series of endless and useless meetings and briefings. However, I am not sure if intense Presidential involvement would have made a difference.

 The initiative failed because, fundamentally, it was a flawed concept, put together by stringent environmentalists and failed to recognize the adverse economic impact it would impose. No one really understood the 1400 pages of Waxman-Markey. It was complicated; riddled with exceptions; carve outs; regulations; red tape; new bureaucracy and contradictions. It was virtually a takeover by the Government of energy use with the bonus of funneling hundreds of billions of dollars to the Government through the sale of permits. Naturally, the Government designated ways to redistribute the money--- and it was not debt reduction.

 Democrats could have passed a climate bill (like health care) but Democrat Senators from states heavily dependent on coal-based electrical generation or having large manufacturing bases were put in particular quandary and were reluctant to go along. Simply put, energy costs were to go up and up. Promised technologies to solve many of the concerns were that--- just mere promises. The pie-in-the sky statements wishing renewable energy would fill the gap with clean energy did not seem credible. There would not be in any reasonable time period enough renewable energy to take up the slack for an economy reliant then, now and the foreseeable future on oil, gas and coal.

 In reality, climate change presents a global problem that requires global solutions.  There were and are real concerns that China, India, Mexico and the developing countries will not implement any restrictions on their own emissions. Thus, these economies would have an even bigger competitive advantage for their produced goods in the global market. What politician would want to face the charge at election time that by supporting cap and trade their vote did not reduce worldwide emissions but cost countless domestic jobs? It was tantamount of walking the plank voluntarily.

I am not defending President Obama but I do not think there was anything that could have been done to pass such ill-conceived policy. It was great to give political speeches on global warming but once the reality was exposed, politicians looked for a way out—do nothing. Any mistake made by the Administration was made on the front end of the process by not understanding the realities and then putting out an over-reaching plan.

 I also disagree with Gore that the Administration has not taken enough action to protect the environment. The EPA has been quite active, has moved to impose GHG restrictions administratively in what they could not get legislatively. EPA is the number one villain and “job killer” to a wide segment of American business.  In fact, I hear quite frequently that EPA has adopted the motto that “ We will not rest until the last working man has lost his job” Probably not that bad.

 Climate change or however it is labeled will continue to be an issue. It needs to be addressed in a global manner, in a way that recognizes the costs for consumers and industry. There will not be any major program until the economy is vastly improved and technology can provide substitute clean energy at a reasonable cost to help make a transition to a reduced GHG environment.