"The High Cost of Staying the Course"
Delay = Dollars.
That is the message from many, even in the utility industry, as made clear in a recent New York Times article centered on the economic implications of postponing action on climate change. The rationale echoes what we learned from the Stern Review Report: “Staying the course”–continuing the U.S. policy of inaction–is expensive.
While seemingly unlikely as advocates of carbon pricing, smart utility companies realize that the financial risks in coming decades mandate some form of insurance policy now. That means taking small steps to prepare for a carbon tax or a cap-and-trade scheme and then to make necessary business adjustments.
James Rogers, chief executive of Duke Energy, says:
Climate change is real, and we clearly believe we are on a route to mandatory controls on carbon dioxide. And we need to start now because the longer we wait, the more difficult and expensive this is going to be.
Looking at the big picture, the Stern Report concludes that acting now to address climate change will require 1% of the global economy. The U.S. share would be about $120 billion, roughly what we spend on the efforts in Iraq and Afghanistan in one year. And this money would go towards energy technologies and strategies that would simultaneously reduce our dependence on Persian Gulf oil.
Talk about a “new way forward.” Those of us concerned with climate change and clean energy are a little jealous of even the lip service that a new strategy in Iraq has gotten. Global warming and energy dependence are intertwined threats to national security that must start to get more attention and a bigger slice of the national budget.
Solutions exist now. Clean energy has been found to save energy costs. We have to pursue energy efficient technologies. As previously noted, in the McKinsey report and the blog, energy efficiency could save millions and it’s already sitting at our doorsteps.
Still, further investment in these solutions require government action. The convergence of interests by utilities, economists, and climate scientists could not be more telling: Climate policy desperately needs its turn at a “new way forward.”