Regardless of what is decided on climate change at this week's G8 summit in Japan, United States' policy on global warming is about to be transformed as a result of the presidential election. Both candidates have placed great importance on the issue. The Republican, John McCain, believes that it presents "a test of foresight, of political courage, and of the unselfish concern that one generation owes to the next". The Democrat, Barack Obama, calls it "one of the greatest moral challenges of our generation".
It remains far from clear, however, whether the shift in rhetoric and policy from that of the Bush presidency will move the planet any closer to embracing the best response. Both McCain and Obama could leave future generations burdened with the costs of major cuts in carbon emissions - without major cuts in temperatures. Both politicians are keen to tap into voters' concerns about global warming. McCain launched a television commercial declaring that he had "stood up to President George Bush" on global warming. If elected, Obama plans to count on the former vice president and passionate campaigner Al Gore to help "lead the fight" against warming.
Each would introduce aggressive targets for reductions in greenhouse gas emissions. Obama's plan would reduce emissions by 80 per cent below 1990 levels by 2050, while McCain aims to ensure that emissions are 60 per cent lower by then. Both would achieve these ambitious cuts by the same method: a cap-and-trade system that imposes limits on industry emissions and forces businesses to buy rights to any additional emissions.
A cap-and-trade system can seem like a neat market solution. In fact, it is worse than a straightforward carbon tax. With a tax, the costs are obvious. With a cap-and-trade system, the costs - in terms of jobs, household consumption, and economic growth - are hidden, shifted around, and not easy to estimate, though models indicate that they will run into trillions of dollars. Not everybody would lose. Some big businesses in privileged positions would make a fortune from exploiting this rather rigged market. And politicians would have an opportunity to control the number and distribution of emission permits and the flow of billions of dollars in subsidies and sweeteners. This is a very expensive, unwieldy way to achieve a very small reduction in temperatures.
The Warner-Lieberman bill on climate change - a piece of legislation that was recently abandoned in the US Senate but is seen as a precursor of future policy - would have postponed the temperature increase in 2050 by about two years. Recently, the Copenhagen Consensus project gathered eight of the world's top economists - including five Nobel laureates - to examine research on the best ways to tackle 10 global challenges: air pollution, conflict, disease, global warming, hunger and malnutrition, lack of education, gender inequity, lack of water and sanitation, terrorism, and trade barriers.
Their goal was to create a prioritised list showing how money could best be spent combating these problems. The panel concluded that the least-effective use of resources would come from simply cutting CO2 emissions. A lead author of the Intergovernmental Panel on Climate Change - the group that shared last year's Nobel Peace Prize with Mr Gore - told the experts that spending $800 billion over 100 years solely on mitigating emissions would reduce inevitable temperature increases by just 0.4 degrees Fahrenheit by the end of this century. Even accounting for the key environmental damage from warming, we would lose money, with avoided damages of just $685 billion for our $800 billion investment.
The expert panel concluded that investing in research and development into low-carbon energy (as epitomised by the Masdar project in Abu Dhabi) would be a much sounder, more effective option - an effort that both McCain and Obama support. This, not carbon emissions, should be the core of their climate change policy. Currently, low-carbon energy solutions are prohibitively expensive. The typical cost of cutting a ton of CO2 is now about $20, but the damage from a ton of carbon in the atmosphere is about $2. So we need to reduce by roughly 10-fold the cost of cutting emissions. We can achieve this by spending dramatically more researching and developing low-carbon energy.
The US could provide leadership by committing to spending 0.05 per cent of its GDP exploring non-carbon-emitting energy technologies - wind, wave, or solar power - or capturing CO2 emissions from power plants. It would then have the moral authority to demand that other nations do the same. By focusing more on research and development, and less in carbon cuts, both candidates could embrace a solution that encourages the best of the American innovative spirit and leaves the best possible legacy to future generations: a high-income, low-carbon energy world.
Bjorn Lomborg, the author of The Sceptical Environmentalist and Cool It, is director of the Copenhagen Consensus Centre and adjunct professor at the Copenhagen Business School. ©Project Syndicate, 2008.
