The Balancing Act: When Carbon Pricing Isn't Enough
Right now, Congress is debating climate change legislation. And while the focus is on GHG reduction, a lot more than pollution is on the line, including America's economy, our national competitiveness and our energy security.
That's why we called our recent study on policy leadership in the quest to address climate change The Balancing Act: because it addresses the three key areas of climate change, energy security and a sustainable economic future. Our policy recommendations are rooted in an econometric study that explored several different climate change policy scenarios. We started off with the fundamental assumption that we must take steps now to reduce GHG emissions and address the risks of global climate change. We asked: how can America maximize emission reductions while minimizing the possible negative impact on the economy?
The short answer: carbon pricing isn't enough.
We found that if Congress wants to successfully address climate change and reduce GHGs, they must promote a balanced portfolio of technologies and eliminate barriers to technology development and deployment. As Carl Pope noted recently on Huffington Post; "technology + policy reform + price = a package that is four times as effective as price alone."
Business Roundtable's study shows that without this policy leadership, imposing a price on carbon will cause real GDP to drop by 2 percent by 2050. In contrast, policies that advance a balanced portfolio of technologies can deliver almost twice the GHG reductions at roughly half the economic cost. In fact, a balanced portfolio approach is the only one that has the potential to achieve the large-scale reductions in GHG emissions that many policymakers are targeting.
While we're happy to see that Congress is prioritizing climate change legislation, the recently passed House bill falls short. To achieve the GHG reductions Congress is targeting now, without seriously impeding the economy, they must not only put a price on carbon and promote energy efficiency, but they must also advance a balanced, comprehensive portfolio of new low-energy technologies.
If they get this bill right and succeed at lowering barriers to technology development and deployment, America will not only be able to cut GHG emissions, but we'll have a chance to re-emerge as a global leader in innovation by http://www.nytimes.com/2009/07/05/opinion/05friedman.html?_r=2/">creating the energy-efficient, emission-reducing technologies that the rest of the world needs.