…In listening to the exchanges between the Senators and the three witnesses (Stern and two academic economists), three points stand out:
First, both Republican and Democratic Senators raised questions about whether we should be spending more time worrying about adapting to climate change than mitigating it.
Second, members from both parties suggested that China and India were irresponsible members of the global community because they were not taking climate change seriously, a reason to question whether the U.S. should take any major steps to reduce carbon emissions without the participation of the world’s two largest nations (by population).
Third, the Congress of the United States, with its multiple overlapping committee jurisdictions and two very different bodies is going to be sorely pressed to come up with legislation that will create the innovative, flexible, dynamic framework that Stern says is needed to deal with climate change.
Sir Nicholas Stern’s report, the Stern Review of the Economics of Climate Change, broke new ground by making the best possible estimate of two critical costs:
What will it cost to deal with climate change now?
What will it cost if we do NOT deal with climate change now?
The Stern Review concluded that the cost to the world economy for dealing with climate change now would be 1% of the global domestic product.
But the cost of NOT dealing with climate change now was considerably higher, at least 5%, and perhaps as high as 20% of the global domestic product.
…Stern, the other witnesses, and the Senators of both parties were all in agreement that we would be relying more and more on coal as an energy source. This conclusion rests on a rather frail assumption: that we are going to quickly discover low-cost methods for sequestering carbon from coal-burning processes, piping the CO2 to some underground cavern where it will remain and not leak out into the atmosphere.
…The Senators spent a fair amount of time reviewing various options with the witnesses. In an almost plaintive way, they kept asking about this option or that, as if there were a single policy. Stern and the two economists, on the other hand, emphasized over and over again that the best approach would combine regulations with carbon taxes with cap-and-trade markets in carbon. Both economists emphasized how unfortunate it was that Congress was so tax-averse, given that carefully targeted taxes were a great fiscal tool for steering investments.
