The Kerry Lieberman bill

America lags dangerously behind Europe in its commitment to environmental goals. In fact, there is little consensus about the urgency or desirability of establishing an ethos of environmental responsibility in America. Not so long ago, in response to a question about gasoline, former President George W. Bush’s White House spokesman Ari Fleischer said that there would be no compromise when it comes to the American lifestyle. By this he meant that President Bush would not broach any change in America’s reliance on automobiles, gasoline-based or not. That kind of intransigence has changed in recent days. However, the delay has been caused and the damage has been done. Whether or not history will remember Bush as the Nero of America’s environmental tragedy remains to be seen. The worst-case scenarios of global warming are scary. However, finally, many years after Europe seriously got down to addressing the environment-economics conundrum, Rip Van Winkle has awoken in Washington DC. The basic contours of the Kerry-Lieberman that deal with the future of America’s environmental policy have been unveiled. The Bill promises to reduce steadily the quantity of United States greenhouse gas emissions such that — ‘‘(1) in 2013, the quantity of United States greenhouse gas emissions does not exceed 95.25 per 20 cent of the quantity of United States greenhouse gas emissions in 2005; ‘‘(2) in 2020, the quantity of United States greenhouse gas emissions does not exceed 83 percent of the quantity of United States greenhouse gas emissions in 2005; ‘‘(3) in 2030, the quantity of United States greenhouse gas emissions does not exceed 58 percent of the quantity of United States greenhouse gas emissions in 2005; and ‘‘(4) in 2050, the quantity of United States greenhouse gas emissions does not exceed 17 percent of the quantity of United States greenhouse gas emissions in 2005.

The instinctive reaction of this writer, an engineer by profession, is one of skepticism. In fact, since this is the first American Bill that I have studied in any great detail, I can’t escape the suspicion that American politicians, as a species, have a way of papering over crucial problems, and then leave for their golf vacations or their speedboat sprees, thinking that they have achieved something great. How exactly do senators Kerry and Lieberman propose to achieve these goals in a capitalistic economy like America ?

Before going into this question, let it be understood that Europe has achieved certain important goals within a capitalistic framework. But, there are crucial differences between America and Europe. Europe has an enthusiasm about government and governance, whether it comes to running a welfare system, or subsidizing new environmental technology. And Europe does not balk at establishing high tax rates to achieve these crucial social goals. On the other hand, a significant section of the American population believes in tax-cuts as a religion. The American government is being crushed under the weight of a budget deficit. Sustaining existing welfare programs like Social Security and Medicare is a challenge in itself in this fiscal scenario. The chances that the US government will have the necessary funds to bring about meaningful changes in the energy market through subsidies or loans to achieve ambitious environmental goals are low.

One way a capitalistic economy can be steered towards specific end-points is by subsidizing new technology, providing low-interest loans to specific infant industries etc. The other way is through regulations. The problem with regulations is that if you make them too restrictive, you run the risk of killing the goose that lays the golden eggs. If you make them too lax, they are useless. What is the right level of environmental regulations ? And that too over a 40 year period. Nobody knows.

As for subsidies, once again, what are the senators basing their projections on ? What level of subsidy will lead to what amount of investment in mitigation technologies or novel clean technologies ? How many small recessions and deep recessions will America see between now and 2050 ? How will you enthuse the private sector to invest heavily in environmental technology during these recessions ? Or do the senators think that the recent near heart-attack of the American economy is a one-time aberration that will not recur in the future ?

The senators need to explain to the public the basis of their assumptions when they project specific CO2 emission goals. And if it is a fact that these stated goals need to be taken with a huge grain of salt, as this writer suspects, then the senators need to come clean about that too. The last thing the American public needs from an underperforming political elite is false assurance.