Post columnist Sebastian Mallaby, in an absurdly titled column, “Obama’s Missing Ideas,” proves once again that a little knowledge is a dangerous thing. Obama’s ideas about climate solutions are probably the very last place one can find something missing.
Obama has a terrific climate plan, full of winning ideas, as I have blogged many times. Yet Mallaby, claims that “good ideas are actually quite scarce. Just take a look at climate change.”
Mallaby’s “case” is based on two climate ideas many people have always thought were lame (which he never actually bothers to link to Obama), one climate problem that is pretty straightforward to solve, and one idea Mallaby thinks is new that is in fact quite old, is not really a climate idea, and as such has limited climate benefits.
First he says, “A couple of years back, ethanol was touted as a good answer to global warming.” Uhh, no. Corn ethanol, which is what he attacks, was not considered a “good answer to global warming” by any energy or climate expert I have ever met. To the extent climate advocates even tolerated the fuel, it was strictly as a bridge to cellulosic ethanol. To the extent that corn ethanol was supported on policy grounds by politicians [as opposed to support for the farmers or a desire not to offend Iowans], it is primarily from people who are concerned about our dependence on imported oil, not global warming.
Does Mallaby even know that Obama supports “a National Low Carbon Fuel Standard” which would block any fuel that increases greenhouse gas emissions — or that he supports accelerating the development of cellulosic (i.e. low-carbon) ethanol? These are good ideas.
Next Mallaby complains about “carbon trading with developing countries”:
The system developed under the Kyoto Protocol allows companies in the rich world to pay companies in the poor world to reduce emissions. This sounds like another smart idea: Emissions can be cut cheaply in developing countries, so we get to reach our climate goal without too steep a financial penalty. But emissions trading with developing countries has been a bust. China has deliberately designed factories to release prodigious quantities of greenhouse gases, then pocketed billions for redesigning them.
Well, first off. This is not, as Mallaby claims, “carbon trading with developing countries” — since they don’t buy any carbon permits from us. This is the Clean Development Mechanism (CDM). Second, lots of people, including me, always thought this was a dumb idea. I don’t know what Obama thinks of the CDM — among his dozens of climate ideas, he does support “international offsets under the carbon cap to promote the transfer of low carbon energy to developing countries.” That is perfectly reasonable.
Mallaby’s conclusion: “So two apparently excellent climate-change ideas have been rudely pierced.”
My conclusion: “Two lousy/dubious ideas in theory have been shown to be lousy/dubious in practice.”
In either case, I don’t see how this reflects badly on Obama’s climate ideas. As if to underscore my point, Mallaby veers his SUV off the road entirely….
He points out that “Obama favors a cap-and-trade regime.” He then immediately says, “This is indeed a good idea, and the candidates are right to back it.” But then he says it has a flaw : It will raise the domestic price of carbon-intensive products but not the imported price from “countries in which carbon isn’t taxed or capped.” He claims:
… it will push what remains of carbon-intensive U.S. manufacturing to other countries. Given Obama’s threats to withhold tax breaks from firms that shift American jobs abroad, he must admit this is a quandary.
Mallaby presents this as some new, unsolvable problem. It isn’t. Heck, even the Lieberman-Warner bill, “America’s Climate Security Act,” authorizes the President to require importers of “GHG-intensive manufactured products from that nation to submit emissions allowances of a value equivalent to that of the allowances that the U.S. system effectively requires of domestic manufacturers” starting in 2020. I have little doubt Obama would endorse that approach or something similar — so this isn’t much of a “quandary” for him. We’ll find out this spring, since I assume he’ll vote for Lieberman-Warner if it doesn’t get too watered down.
Also, Mallaby fails to acknowledge the many climate proposals Obama has that would boost U.S. competitiveness. Finally, I would note that if a President Obama cannot get major developing country manufacturers (i.e. China) to agree to put in place a carbon cap that kicks in by 2020, then the climate problem is essentially unsolvable, and this whole trade “quandary” is moot.
That is the extent of Mallaby’s evidence we don’t have “all the good ideas we need — at least not on climate change” and that therefore Obama should not “dismiss the importance of fresh thinking.” So what is Mallaby’s idea of “fresh thinking.” He offers only one:
As it happens, a publication called Democracy: A Journal of Ideas has a neat climate proposal in its next issue. Instead of charging drivers for car insurance at a fixed rate, why not link the insurance cost to the number of miles driven? That would create a new incentive to drive less, cutting carbon dioxide emissions by around 130 million tons per year, according to author Jason Bordoff. Obama should be celebrating this sort of creative thought, not pretending that we have enough of it already.
[One minute pause to give policy wonks time to finish laughing.]
Mallaby’s fresh thinking, is, yes, “Pay-As-You-Drive Car Insurance” or, as it used to be called back in the day — my old boss Amory Lovins was touting a variation of this in the early 1990s — “Pay at the pump Auto Insurance” (Here is an RFF Discussion paper on the fresh idea from 1998; Andrew Tobias wrote a whole book on this in 1993; and one 1997 paper opposing the idea says it was developed “about twenty years ago.”)
“Pay-As-You-Drive” (PAYD — yes, it is old enough to have its own acronym) works by linking insurance costs to your odometer. The more you drive, the more you pay. Certainly that makes economic sense, but I seriously doubt such a charge would have much impact. The author claims a whopping 2% drop in total U.S. emissions, but I think the small price effect on driving is simply too indirect to motivate even that much behavior change. Heck, gasoline prices have almost tripled in the last few years, and the impact has been incredibly minor, even though people saw the price effect directly.
Still, PAYD is not a bad idea, which is why a UK insurance company adopted it in 2003 and a number of states have begun experimenting with it. Indeed, in 2005, Congress authorized a small set-aside for such programs and “Eleven states have already applied for funding to study or pilot PAYD insurance policies,” as Environmental Defense noted two years ago.
In any case, this is not either a new idea or a climate idea, it is an old insurance idea, that would have some secondary climate benefits.
What bothers me most about Mallaby’s column is that had he spent maybe 15 minutes on Google researching this piece — reading Obama’s plan, the McCain Lieberman bill, and the vast literature on PAYD insurance — he would never have written such an uninformed piece. Is that too much to ask of the traditional media?