The new Democratic majority in the Senate has wasted no time getting down to business concerning global warming. With at least four bills in the hopper, and hearings already under way, conservatives are worried that the Congress will finally produce real legislation to restrict greenhouse gas emissions. But the odds that global warming hysteria will transform the modern industrial economy in any significant fashion are zero.
Putting a stop to global warming would require Herculean social and economic change, and the economic costs associated with those changes are steep – an annual $1,154 per household in the United States, according to the recently released Stern Review. While the public increasingly thinks that something must be done about global warming, most people don't want to spend anywhere near that much money to turn wish into reality.
Environmentalists have four ways out of their box, none of which is very attractive.
First, they could echo the argument of the Stern Review and note that the costs associated with stabilizing global temperatures are less than the costs associated with doing nothing. But when was the last time that a majority of voters anywhere in the world voluntarily agreed to incur major economic costs today in order to reduce the chance of incurring even larger economic costs later? A single glance at America's lavish commitments to future retirees in the form of Medicare, Medicaid, and Social Security should disabuse everyone of the notion that the voting public will willingly make major sacrifices for future generations – even when the case for sacrifice is mathematically indisputable.
Second, environmentalists could curtail their policy ambitions in order to reduce the price tag of action, which means accepting more warming than they might otherwise prefer. Of course, they may have no choice in the matter. Claude Mandil, head of the International Energy Agency, reported in August that even the most ambitious policy scenarios they've run through the computer models would be unable to keep global temperatures from rising at least 3.6 degrees Fahrenheit above pre-industrial levels. But many in the environmental movement are unwilling to accept any warming at all.
Third, environmentalists could try to find ways to bury the costs associated with change in hopes that the public wouldn't notice how much is being spent to stabilize global temperatures. CAFE standards, for instance, are politically attractive because they impose relatively invisible costs on car buyers whereas gasoline taxes result in very visible costs on motorists. In the context of global warming, however, this is difficult to pull off because there is no way to hide the cost of effective greenhouse gas emission controls, particularly if we define "effective" as "that which would significantly reduce future atmospheric temperatures."
Fourth and finally, environmentalists could argue that putting a halt to global warming will cost your average voter nothing at all and that relatively modest programs will get the job done. This represents abject surrender, however, because nothing short of fairly radical – and costly – economic change is likely have much impact on future warming. On this point, the Stern Report – like all other serious economic investigations of the matter – is clear.
Environmentalists have chosen a combination of political options number two and four. And what do they have to show for it? Not much. Signatories to the Kyoto Protocol are finding that their low cost, free lunch compliance strategies are yielding squat. The United Nations reported late last month that greenhouse gas emissions from countries that promised emissions reductions under the Kyoto Protocol increased by 4.1 percent from 2000 to 2004 (the most recent year for which we have reliable data). U.S. emissions, by contrast, were up only 1.3 percent over that same period.
While "free lunch" compliance strategies aren't really free – price tags are associated with all the items on that buffet – they do not represent the existential threat to capitalism that some fear might be on the political horizon. The worry that free lunch policy failures will give birth to emissions controls with teeth, however, runs into the problems noted above. If a President Hillary Clinton or John McCain were ever to try such a thing, we'd likely see a replay of the Clinton Health Care fiasco of 1993.
In short, no matter how events play out, there's a limit to how much damage a global warming control policy might wreak on the economy: The point at which voters begin to notice significant costs. While promises to do something about global warming may well become more popular with time, it's unlikely that policies that would actually do anything consequential about it ever will.