Monday, April 7, 2008
Weathering the storm of bad economic news over the past few months has been trying. I've found myself quickly reaching for the tuner nob at the first mention of "marketplace report" or anything akin thereto to avoid the latest in the unrelenting stream of dire economic updates. Throughout, I have tried to comfort myself by imagining that a recession would carry with it a silver lining -- a reduction in GHG emissions. Experience suggests that a sure route to dramatic GHG reductions is economic downturn (see the former U.S.S.R.) and, conversely, that explosive economic growth frequently spikes GHG emissions (see China). Indeed, the fact that the Bush Adminstration climate change strategy, see http://www.whitehouse.gov/news/releases/2002/02/20020214.html, focuses on reducing "greenhouse gas intensity" (the ratio of greenhouse gas emissions to economic output) as opposed to overall GHG emissions seems driven by a recognition of the close connection between economic output and GHG emissions.
Ultimately, however, I haven't found much comfort in the idea that a recession could reduce domestic GHG emissions. I suspect that this is so because in my heart of hearts I think that any short-term reduction in GHG emissions caused by a recession would likely be outweighed by the increased GHG emissions that will result if a recession derails the adoption of meaningful domestic GHG-reduction measures.
A recession would likely pose at least two problems for the adoption of a meaningful domestic program to reduce GHG emissions. First, a recession makes it less likely that a federal measure requiring deep GHG reductions will be enacted. In the past week, both EPA, see http://www.epa.gov/climatechange/economics/economicanalyses.html, and the American Council for Capital Formation, see http://www.accf.org/nam.html, have released analyses of the Lieberman-Warner cap-and-trade bill that forecast that the bill will have negative eonomic impacts. Putting aside arguments that these analyses overstate costs and undercount benefits, opponents of federal climate change legislation are going to have a receptive audient to their claims about the devastating economic impacts of climate change legislation in the context of a recession. During a recession, these opponents don't have to win on their argument that climate change legislation will hurt the economy doesn't have to prevail -- all they need to do is sow a seed of doubt. Second, even assuming that votes could be found to pass a perceived-to-be-costly GHG-reduction measure against the backdrop of recession, I fear that concerns about the economy would result in a very weak measure. Finally, a recession could also play havoc with the baseline caps that have already been incorporated into the Regional Greenhouse Gas Initiative and the Lieberman-Warner bill because any cap calculated prior to a recession will be bloated with "hot air" during a recession. And a recession could imperil the flow of financial support to renewable energy research and development.
So for now I'm left looking for a silver lining to the bad economic news. If you think of anything, let me know.