Two headlines caught my eye last week. “Summit Leaders in Climate Deal” read the one on the front page of the Wall Street Journal Europe. Above it was a picture of 10 smiling heads of state—the leaders of the G8 plus China and India. Below was an article that in contradiction to the cheerful photograph, described how the world’s political leaders had failed, once again, to halt climate change by decree. The group could not agree on short-term emissions targets, could not agree on how developing countries would be compensated for meeting the targets, and, indeed, could not decide from what base line any targets would be calculated.
Buried on Page 21 of the same newspaper was another story. “Ill winds blow for clean energy” was the headline; the picture was of oil billionaire T. Boone Pickens, who has just decided to postpone, until further notice, an investment in a big Texas wind farm. Natural gas prices have fallen so low, it seems, that once-promising investments in alternative energy no longer make sense. Banks that once might have financed such large-scale investments are now unwilling to do so. And thus are business leaders also failing, once again, to halt climate change through technology and entrepreneurship.
Is taxation the answer to climate woes?Let me be clear: I do not doubt the reality of climate change. I have long accepted that human use of fossil fuels has caused it, and I agree that great efforts should be made to reduce carbon emissions, as well as our politically risky dependence on oil and gas. But I do doubt the wisdom of assuming that eight or 10 politicians will ever solve this problem during a meeting at an Italian conference center—or any conference center, for that matter. I also question whether even several hundred politicians—plus their scientific advisers, assorted environmentalists, and lobbyists—will solve this problem at the Copenhagen climate super summit due to be held in December. At that time, the original signatories of the Kyoto Protocol are supposed to renew their vows, and the U.S. delegation is supposed to bow its head and rejoin the club. If everyone can agree, new emissions targets will be set. And they will be just as unenforceable as the emissions targets in existence right now.
The truth is that carbon emissions will not be reduced by international bureaucrats, however well-meaning, sitting in a room and signing a piece of paper. Nor will they be reduced by public relations campaigns or by Oscar-winning documentaries. Above all, they will not be reduced by a complex treaty that neither the United Nations nor anyone else can possibly supervise, particularly not a treaty that effectively punishes those countries that abide by it and ignores everyone else. They can be reduced, however, by the efforts of entrepreneurs like Pickens. If he and others can find economically viable ways to produce clean energy, the problem will solve itself without the aid of a single international conference. To put it differently, the first solar-power billionaire will have many, many imitators.
American politicians who really care about climate change—I’m assuming this includes our president, as well as a congressional majority—should therefore skip the summits and ask themselves instead why the oil and gas prices that started rising a couple of years ago (creating a boom in alternative energy research) have once again dropped to an artificial low. Why artificial? Because the price of fossil fuels has never reflected their true cost, either environmental or political. It doesn’t reflect the cost of the U.S. military presence in the Middle East. It doesn’t reflect the cost of treating asthma. And, of course, it doesn’t reflect the cost of rescuing bits of the Florida coast that will be submerged by rising sea levels. Raise the taxes on fossil fuels to reflect those costs, and Pickens’ project—along with many others—will once again be viable.