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Answers or hot air on global warming?

Sam Eaton Aug 20, 2007

Answers or hot air on global warming?

Sam Eaton Aug 20, 2007


KAI RYSSDAL: Environmentalists went toe to baton with British police near London today. Heathrow Airport’s planning a big expansion, adding a third runway. Climate change activists have been protesting all week. They want the growth in international air travel cut back, and the carbon dioxide from all those extra airplanes stopped before it gets started.

Of course, the U.K.’s not the only country trying to come up with a solution for global warming. When Congress gets back to work next month lawmakers will plow through more than a half-dozen proposals that would put a cap on greenhouse gas emissions. But there’s another idea that industry leaders and economists are starting to pay attention to. A carbon tax. We asked Sam Eaton from the Marketplace Sustainability Desk to look into the differences between tax and cap.

Sam Easton: California Democrat Barbara Boxer is the Senate’s gatekeeper for any proposals that would mandate cuts in greenhouse gas emissions. And she knows exactly what she wants.

BARBARA BOXER: I think cap-and-trade makes the most sense.

Most politicians who support federal action on global warming favor a cap-and-trade system. It would set a limit on the total emissions U.S. industries can spew into the atmosphere. Those that find affordable ways to cut pollution would be able to monetize those cuts and sell them as credits to industries that can’t change. That’s music to the ears of Sun Microsystems. Boxer recently toured the tech company’s new, super-efficient server farm in California’s Silicon Valley.

We enter a room the size of a supermarket. It’s filled with rows of computer servers. Cooling them takes lots of electricity. But Sun has found a way to cut its power use in half. Boxer says under a cap and trade system, the company could cash in on these changes.

BOXER: When we pass legislation to combat global warming, we will not be hurting this economy. We will be helping it.

But the gatekeeper for global-warming legislation in the House, Democrat John Dingell, doesn’t share Boxer’s rosy outlook.

JOHN DINGELL: This is going to be tough. And it’s gonna cost, and its gonna hurt.

Dingell’s Michigan constituents are a long way from California’s high-tech economy. The Rust Belt’s automakers and other heavy industries see only losses in a cap-and-trade scenario. Cutting vehicle and industrial emissions can cost a lot more than redesigning server farms. Dingell says, to be fair, the economic pain must be shared all the way down to the consumer. And he says the way to do that is to tax anything that produces too much CO2.

DINGELL: In my view, probably the only thing that will really work. In all honesty, I’m not convinced that if you don’t change people’s behavior, you’re going to change the way they behave.

The idea is gaining an ideologically diverse group of followers — everyone from Al Gore to Exxon Mobil. The potential volatility of a carbon market scares some businesses. It’s much better, they argue, to pay a steady and predictable price for polluting in the form of a tax. Vicki Arroyo with the Pew Center on Global Climate Change says that misses the point.

VICKI ARROYO: The price is not what we’re trying to achieve. It’s the environmental goal that we’re trying to achieve.

Arroyo says taxes don’t set any limits on how much industries can pollute. But under a cap-and-trade system, firm targets for emissions reductions are built in, ensuring a more predictable outcome. She says there’s even room for surprises.

ARROYO: It encourages continuous innovation. You don’t just meet a standard and stop. You want to actually meet the standard and beat it because then you’ll end up being in a position to sell those credits on the market.

And Arroyo says that’s a carrot many businesses might just bite.

I’m Sam Eaton for Marketplace.

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