Hoff Stauffer should not be so apologetic and tenuous in his proposal for performance standards. If and when the world decides to become serious and really do something about global warming (and the considerable lag times normally encountered between decision and action suggest we are fast running out of time), I doubt the Kyoto Protocol will have anything to do with what emerges. Kyoto and its flexible mechanisms may represent an idealized vision of how pollution might be controlled in a perfect world, but the real world is far from meeting those conditions. The question we should be asking is: why would the world want to experiment with untried theory for this critical and time-sensitive problem?
As Stauffer notes, there is almost no experience with global cap and trade and no reason to believe it can work. Analysis coming out of India suggests that the Kyoto Protocol’s Clean Development Mechanism (CDM) is already subject to manipulation and it is not possible to be confident that genuine carbon reductions are being achieved. There is some experience with taxation, but its success has been very site-specific: consider the fate of the gasoline tax in the United States compared with European efforts. No one promoting either the emission-trading or the carbon-tax solution has convincing answers to such concerns. Of course, it is indisputable that putting a price on something helps control behavior—look at what has happened as gas prices have shot up in the United States over the past year—but few domestic elected officials are brave enough to vote for a gas tax. Only a very grave sense of urgency might reverse this impasse.
The climate debate has been dominated thus far by a single-minded focus on efficiency as the most important criteria for a remedial program. No one disputes that money and resources should not be wasted, but the focus should be efficacy, experience, and practicality, with the hope that, when we find a system that can really work, we will be as efficient as possible under the circumstances. Efficiency has never been the sole driver of any environmental requirement. We need to get beyond arguing for and against market instruments and the spectacularly ill-labeled “command and control” and focus instead on devising a whole menu of solutions, flexibly keeping what works and abandoning what does not.
It is true that very little environmental regulation—neither market instruments nor performance standards—has worked in the developing world and many parts of the countries in economic and political transition. A serious effort would employ social science techniques to understand what approaches and arguments would be genuinely persuasive and effective in specific places like India and China, rather than continuing to have debates about theory. There is no reason why the architecture for addressing climate has to be consistent everywhere—only the commitment to making reductions and carrying through on that commitment need be part of a global plan.
Stauffer says it would be relatively easy to determine whether a coal plant has the required control technology. Experience shows that turn-key industrial plants are being built in China, but the operators save on running costs by turning off the pollution control equipment or only using it at their convenience. In Russia, we saw plants with the requisite air pollution control equipment but no one cleaned the bag house and thus the discharge was unabated. These are among the reasons why I am dubious about a faith in technology without at the same time changing the mind-sets of the people who run it. Incentives are complex things and they are different in different societies.
Stauffer is right to focus on new sources, particularly power plants. In the United States, industry has announced that approximately 20 applications covering 28 units could be filed with the Nuclear Regulatory Commission in late 2007 and 2008.
But at the same time, utilities are planning many more coal-fired plants and doing little or nothing about conservation. In China, it is said that unrestrained coal-fired plants are going on line at the rate of one a month. An idea to address the U.S. problem would be a dual program to educate state utility commissioners (who mostly consider the short-term cost to the rate payers) and to fund rate-proceeding interventions state by state to advocate for conservation and sequestration.