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Op-Ed

Power of the market can meet global warming challenge

David B. Sandalow and Stuart E. Eizenstat

Sir, Paula Dobriansky, the U.S. undersecretary of state for global affairs, is right to argue that new technologies are essential to the fight against global warming (“Only new technology can halt climate change”, December 1). She is wrong to suggest that the patchwork of government subsidies put together by the Bush administration represents a serious effort to develop and deploy such technologies. Indeed, Ms Dobriansky’s argument demonstrates once again just how far out of the political and scientific mainstream the Bush administration remains in its approach to global warming.

Start with the basics. Heat-trapping gases are steadily accumulating in the atmosphere, mainly from the burning of fossil fuels. Unless we change course, such gases will, during the lifetimes of children born today, reach levels unknown on this planet for millions of years. Although there are uncertainties, we know more than enough to take reasonable steps to tackle this problem.

Do existing technologies have a role to play? Ms. Dobriansky is wrong to argue that existing technologies can be used only at the expense of economic growth. In the US, lack of information and regulatory barriers prevent widespread use of energy- and money-saving technologies. Reasonable increases in vehicle fuel efficiency standards could conserve as much oil as we import from Saudi Arabia with existing technologies while saving consumers money.

But new technologies are certainly needed. The question is how to bring them forward. The Bush administration offers scattered government subsidy programmes some support for hydrogen, a bit for nuclear. Although government-subsidised research has a role to play, the power of the market holds the key to the solution.

There is no more powerful force for innovation than the private sector. But when it comes to limiting greenhouse gas emissions, most businesses have traditionally had little incentive to innovate. Government’s role is to provide that incentive, correcting a classic “market failure” by setting reasonable limits on emissions of greenhouse gases and letting businesses devise the best ways to meet those limits. Even as the Bush administration delays, around the U.S. many are moving forward in the fight against global warming.

Bipartisan legislation to limit greenhouse gas emissions gained 43 votes in the US Senate this year, winning support from influential sources including Senator Richard Lugar, the Republican chair of the foreign relations committee. Republican governors of the nation’s two largest states, New York and California, have each supported serious measures for tackling global warming.

Although Ms. Dobriansky criticises the Kyoto protocol, her administration has failed, after almost three years in office, to bring forward an alternative approach that puts the world on a path to lower greenhouse gas emissions. The Kyoto protocol would strongly encourage new technologies, in part by providing companies in industrialised countries an incentive to transfer such technologies to the developing world. By harnessing the power of the market, we can meet the challenge of global warming.

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