GLOBAL warming is as difficult a challenge as public officials have ever faced. Despite inadequate knowledge, we must make decisions that could involve more than a trillion dollars and many lives.
But we do know enough that the correct course of action is clear if, instead of first focusing on an international agreement, as we have been doing, we focus on what type of long-range energy policy makes sense.
A real problem
Concern about the accelerating buildup of carbon dioxide as a result of increased burning of fossil fuels is legitimate. Reputable scientists, using sophisticated computer models, have calculated that increased concentrations of carbon dioxide in the atmosphere could cause changes in temperature that would have devastating results.
For example, rising ocean levels could wipe out low-lying coastal areas; changing weather pattens might make prime farmland useless; and killer storms could become more frequent.
While no valid evidence exists that these will occur, an overwhelming majority of scientists believe that climate change poses enough of a threat that the time to start stabilizing carbon-dioxide emissions is now.
Unfortunately, any effective action will be very costly. Our economy thrives on the cheap energy provided by fossil fuels. Thus, to decrease fossil-fuel use, it is necessary either to deprive ourselves of the benefits of energy or derive energy from more expensive alternatives.
That bridge is another huge unknown: the cost of providing energy without burning fossil fuels. Someday, a new source may provide cheap energy, but we cannot count on that happening anytime soon.
So policy-makers are faced with an agonizing question: Do we impose large costs on the economy now to protect against what may be a catastrophe 50 or 100 years from now?
The correct choice is made easy by a fact that has been largely ignored in the debate.
Fossil-fuel supplies are finite and irreplaceable; within two centuries, almost all energy will need to be derived from other means. Even if increased carbon-dioxide emissions do not cause serious problems, the cost of converting to other energy sources will need to be incurred soon.
By starting now, we would be able to make the transition more efficiently and less costly than if we wait.
Public policies can decrease use of fossil fuels by three approaches: regulations, subsidies and market forces. The first two have the disadvantage that they depend on decisions by bureaucrats who seldom have the background to make the best decisions and often are influenced by politics.
Nevertheless, the $6.3 billion package that President Clinton has proposed to "mobilize cutting-edge technology in the fight against global warming" relies on targeted tax incentives.
Forgotten is experience. For example, billions of dollars went to a few companies to develop synfuels using technologies that proved worthless.
Tax credits to homeowners for installing solar-heating units to provide hot water spawned an industry that died when the subsidy was removed.
The most economically efficient approach is to use market forces. However, this requires that fossil fuels be heavily taxed, which runs counter to public opinion.
However, energy taxes sufficient to decrease use could be enacted if all the proceeds were distributed to individuals and corporations in a way that was fair and created more individual winners than losers.
For example, if fossil fuels used in power plants were taxed so that the cost in 1997 dollars increased by 4 percent to 7 percent a year for 20 or 30 years, alternative forms of energy -- such as photovoltaic cells, nuclear energy, windmills and biomass -- would become more and more competitive and increase market share.
That, in turn, would increase the chances of innovations, which would make one or more of these technologies far cheaper.
Likewise, a commitment to increase gasoline prices gradually over many years would result in more fuel-efficient cars and would make cars that run on electricity or fuel cells more competitive.
Change is necessary
Opinion polls show that Americans are willing to make modest cutbacks now for future benefits. But in a transition of this type, there will be short-term losers, some of whom will campaign to maintain the status quo.
Unfortunately, our political system allows the interests of a large majority to be subordinated to the special interests of a few when the majority are not sufficiently concerned.
Ideally, climate change will not be such a case.
James L. Hecht is a senior fellow at the Center for Public Policy and Contemporary Issues at the University of Denver.
Pub Date: 2/11/98