Friday, March 26, 2010

The Climate Change climate is changing

At last week's POWER conference at UC Berkeley, hosted by Severin Borenstein of the Haas business school and my own department, I sat at a table of PG&E folks responsible for planning the energy sourcing for the largest utility in the state. I felt sorry for these people who face such tremendous uncertainty about the future of carbon regulation. They seemed hopeful that federal legislation would be forthcoming and that it would put some of the uncertainty to rest. I regretted to tell them that I didn't think they were likely to see anything coming out of Congress anytime soon. As the Economist summarized last week, aggressive climate change regulations face an uphill climb:

The mess at Copenhagen is one reason. So much effort went into the event, with so little result. The recession is another. However much bosses may care about the planet, they usually mind more about their bottom line, and when times are hard they are unwilling to incur new costs. The bilious argument over American health care has not helped: this is not a good time for any bill that needs bipartisan support. Even the northern hemisphere’s cold winter has hurt. When two feet of snow lies on the ground, the threat from warming seems far off. But climate science is also responsible. A series of controversies over the past year have provided heavy ammunition to those who doubt the seriousness of the problem.
To this I would add only that the now legislated and signed health care reform has likely saited American's appetites for government expansion. Combined with the stimulus and financial bailout, Americans must be just about ready for a hiatus from "hope and change." As Charles Khrauthammer colorfully noted two years ago, a takeover of carbon is bigger than a take over of health care:
And having proclaimed the ultimate commandment -- carbon chastity -- they are preparing the supporting canonical legislation that will tell you how much you can travel, what kind of light you will read by, and at what temperature you may set your bedroom thermostat.
My sympathy for all the green investors (who are sitting on the sidelines) and for utility planners amid the policy mailaise is heightened upon review of climate change policy in a climate progressive state like California. The leading contender to replace Governor Schwarzenegger in November has advocated putting on hold the main provisions of AB32--the Global Warming Solutions Act. And a state ballot initiative proposes to repeal it entirely. And when the state's renewable fuel standard was enacted in 2006, it gave utilities until 2020 to generate 20% of load from renewables. A year or so later, the Governator upped that deadline to 2020 and established a 33% RPS by 2020.

If public opinion on climate change is tied to weather outcomes, like snowy winters, then policy prognosticators are in for a rough time--and an even rougher time if the earth is warming and that warming will bring more extreme weather, as the scientists tell us it will. Earlier this month, Gallup polling found that Americans are more skeptical about the seriousness of climate change than they were last year and the year before--48% think climate change claims are exaggerated, up from 31% in 2007.

Even in California, global warming ranks last among twelve issues voters think the Governor should focus on. Not surprisingly given the recession, they think jobs should be job number one for the Guv. But it is surprising that even in California, more people think climate change is not an important issue than think it is "among the most important" issues, according to a new Field poll (link opens pdf). The numbers that think it is either among the most important issues or merely "an important" issue, however, dominates the number of skeptics, 64% to 35%. Importantly, however, the Field poll allowed voters to pick several issues to be "among the most important," so a strong showing for jobs and the budget deficit as top issues did not preclude big numbers for climate change, too. Nevertheless, while 69% and 68% thought jobs and the budget were top priorties, respectively, only 23% felt that way about global warming. And this in California! I hope the nice folks at PG&E aren't holding their breath waiting for Congress to act.

Finally, The Economist also makes the point that uncertainty about the science and its predictions should not lend itself to inaction:
If it were known that global warming would be limited to 2°C, the world might decide to live with that. But the range of possible outcomes is huge, with catastrophe one possibility, and the costs of averting climate change are comparatively small. Just as a householder pays a small premium to protect himself against disaster, the world should do the same.
I'll discount catastrophe, but agree with them on the rest.

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