Tuesday, February 16, 2010
The President's Economic Report & Climate And Energy Policy
Feb 11: Last week during the near-shutdown of Washington, DC due to blizzards and record-breaking snowfalls, the White House released The Economic Report of the President, an annual report written by the Chair of the Council of Economic Advisers, Dr. Christina Romer. An important vehicle for presenting the Administration's domestic and international economic policies, it provides an overview of the nation's economic progress with text and extensive data appendices. Somewhat buried and under-reported are 27-pages within the 462-page report entitled, Chapter 9: Transforming the Energy Sector and Addressing Climate Change. This chapter, provides some significant information relating to facts and policy considerations in the Administration's strategy on energy and climate change.
In the President's message which accompanies the report, the President sets the stage and says, "It's not enough to move the economy from recession to recovery. We must rebuild the economy on a new and stronger foundation. . . we have begun to build a new clean energy economy. The Recovery Act included the largest investment in clean energy in history, investments that are today creating jobs across America in the industries that will power our future: developing wind energy, solar technology, and clean energy vehicles. But this work has only just begun. Other countries around the world understand that the nation that leads the clean energy economy will be the nation that leads the global economy. I want America to be that nation. that is why we are working toward legislation that will create new incentives to finally make renewable energy the profitable kind of energy in America. It's not only essential for our planet and our security, it's essential for our economy."
While the President's message does not address climate change specifically, Chapter 9 addresses it in great detail. That chapter begins by stating, "The President has called climate change 'one of the defining challenges of our time.' If steps are not taken to reduce atmospheric concentrations of carbon dioxide (CO2) and other greenhouse gases, scientists project that the world could face a significant increase in the global average surface temperature. Projections indicate that CO2 concentrations may double from pre-industrial levels as early as 2050, and that the higher concentrations are associated with a likely long-run temperature increase of 2 to 4.5 °C (3.6 to 8.1 °F). With temperatures at that level, climate change will lead to a range of negative impacts, including increased mortality rates, reduced agricultural yields in many parts of the world, and rising sea levels that could inundate low-lying coastal areas."
Considering the above information the report indicates, ". . .policy should take steps to ensure that the market provides the correct signals to greenhouse gas emitters about the full cost of their emissions. Second, policy should actively promote the development of new technologies. One way to accomplish these goals is through a market-based approach to reducing greenhouse gases combined with government incentives to promote research and development of new clean energy technologies. Once policy has ensured that markets are providing the correct signals and incentives, the operation of market forces can find the most effective and efficient paths to the clean energy economy. The Administration's policies in this area are guided by these principles."
The level of detail of the discussion is revealed by the titles of the various sections and subsections of the "must-read" chapter including the following: Greenhouse Gas Emissions, Climate, and Economic Well-Being (Greenhouse Gas, Temperature Change, Impact on Economic Well-Being, with sidebars on Climate Change in the United States and Potential Impacts and Expected Consumption Loss Associated With Temperature Increase); Jump-Starting the Transition to Clean Energy (Recovery Act Investments in Clean Energy; Energy Efficiency, Renewable Generation, Grid Modernization, Advanced Vehicles and Fuels Technologies, Traditional Transit and High-Speed Rail, Carbon Capture and Storage, Innovation and Job Training, Clean Energy Equipment Manufacturing, Total Recovery Act Energy Investments); Short-Run Macroeconomic Effects of the Clean Energy Investments; Other Domestic Actions to Mitigate Climate Change; Market-Based Approaches to Advance the Clean Energy Transformation and Address Climate Change (Cap-and-Trade Program Basics, Ways to Contain Costs in an Effective Cap-and-Trade System [Banking and Borrowing, Price Ceilings or Floors, Offsets], A significant sidebar on the European Union's Experience With Emissions Trading, Coverage of Gases and Industries, The American Clean Energy and Security Act [Projected Climate Benefits, Projected Economic Costs]; International Action on Climate Change Is Needed (Partnerships with Major Developed and Emerging Economies, Phasing Out Fossil Fuel Subsidies); and Conclusion.
The chapter concludes saying, "Today's economy is dependent on carbon-intensive fuels that are directly linked to an increase in global average temperature. Continued reliance on these fuels will have a range of negative impacts, including increased mortality rates, reduced agricultural productivity in many locations, higher sea levels, and the need for costly adaptation efforts. For these reasons, a clean energy transformation is essential. Through his comprehensive plan, the President has set the country on course to achieve this goal. He has taken several significant and concrete steps to transform the energy sector and address climate change through the American Reinvestment and Recovery Act and through targeted regulation. To address externalities associated with greenhouse gas emissions, the President has proposed a market-based cap-and-trade approach. These combined efforts will stimulate the research and development necessary to advance new clean energy technologies. Because of the global nature of the climate change problem, the Administration is also actively pursuing partnerships with other countries to advance efforts to transition the world to clean energy and reduce greenhouse gas emissions."