Academic journal article Current Politics and Economics of the United States, Canada and Mexico

U.S. Global Climate Change Policy: Evolving Views on Cost, Competitiveness, and Comprehensiveness *

Academic journal article Current Politics and Economics of the United States, Canada and Mexico

U.S. Global Climate Change Policy: Evolving Views on Cost, Competitiveness, and Comprehensiveness *

Article excerpt

INTRODUCTION: THE THREE CS

The nature of greenhouse gas (GHG) emissions (particularly carbon dioxide (CO2) emissions) makes their control difficult to integrate with the U.S. economy and traditional U.S. energy policy. There is a strong linkage between industrialization and GHG emissions, particularly between energy consumption and GHG emissions. In 2008, energy-related activities contributed 86% of U.S. greenhouse gases. Despite the obvious interrelationship between energy policy and greenhouse gas (GHG) emissions, the United States has struggled to integrate the two. For a country that has traditionally used its cheap supply of energy to substitute for more expensive labor and capital costs to compete internationally, this linkage is particularly strong, as witnessed by the nation's high GHG emissions per capita. The country continues to increase how efficiently it uses energy to create economic goods and services, thus reducing energy-related emissions per unit of output. Two factors contributing to this trend are a two-decade preference for using natural gas (rather than coal) for new electric generating facilities and a steady structural change in the economy away from heavy manufacturing and toward high technology and services. Overall, however, U.S. GHG emissions rose from about 6 billion metric tonnes in 1990, to about 7 billion metric tonnes in 2008 [1].

In the face of this economic reality, along with continuing scientific uncertainty, debate over a greenhouse gas (GHG) reduction program can be categorized by three inter-related Cs: Cost, Competitiveness, and Comprehensiveness. In the debate each of these terms frequently represents a -sound-bite" for a concern; but in program development, each represents an interwoven complex of issues.

Cost, as a sound-bite, commonly refers to some monetary estimate of what a GHG reduction program would require, typically expressed as a gross dollar amount or as a percentage reduction in gross domestic product for some period of time. Costs most often are cited by a number or percentage, but costs actually embrace a multifaceted set of changes in economic relationships, involving producers, consumers, and government entities. At a program level, -costs" have many ramifications: federal outlays for research and monitoring; regulatory program operation and oversight; potential public and private sector increases in expenses (for example if energy prices rise); and so on. Furthermore, in a nuanced view, costs would be offset by benefits. But benefits, such as commercialization of breakthrough technologies and reductions in related, more conventional pollutants (e.g., sulfur dioxide, nitrogen oxides, and mercury), can be difficult to quantify (and are frequently ignored).

Competitiveness, at the simplest level, most typically reflects concerns about what firms would be disadvantaged by cost increases as a result of GHG reduction requirements. More broadly, however, competitiveness reflects changes in the competitive relationships of producers of goods and services- some facing serious product cost and product substitution issues, others seeking to capitalize on new markets or new cost advantages resulting from legislation. Moreover, competitiveness concerns arise at both the domestic and international levels, depending on the details of the proposed legislation.

Comprehensiveness, in the debating arena, relates to the disconnect between individual national responses and a problem that is global in nature- particularly as an individual country's action or inaction affects international competitiveness and growth in GHG emissions. Specifically, if the United States were to require GHG reductions that impose costs on its industry while some other countries do not, domestic firms might be competitively disadvantaged, perhaps substantially, and global GHG emissions would not be significantly affected. Only a -comprehensive" GHG reduction requirement- all nations having to meet comparable GHG reduction requirements- would result in a -level playing field" in which no nation would be at a competitive disadvantage in world markets [2]. …

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