Clinton: Carbon market better than carbon tax

Today's press conference with former President Bill Clinton was pretty interesting. Asked about his motivation for running the Clinton Global Initiative, he gave two boilerplate goo-goo reasons, and then said:

And the third reason is: Because I like it. I feel like I should look for someone to pay money to every day for the privilege of being able to do this work. I mean, it's a wonderful thing; it's more interesting than anything I can imagine doing.

Another reporter asked Clinton if he preferred a carbon tax or a carbon market:

PRESIDENT CLINTON: Well, first of all, I think that--while we should all be personally impatient to do more on climate change--we should recognize that in the great sweep of history, typically people propose changes that are not embraced right away... People ask me all the time, you know they say, "Well, you failed to get healthcare reform, and you failed to make peace in the Middle East." Well I say, "It's a very good thing to fail in the right cause, because it keeps free people stumbling in the right direction." You know, politics is an inexact Pilgrim's Progress.... You just do these things because you know they have to be done, and sooner or later if you get really fortunate, the circumstances and the attitudes meet....

On the carbon market, we wanted one, and we had hoped to be able to persuade everybody to participate. Now, more and more economists in the U.S. and around the world believe that a carbon tax is a better policy because it is an incentive to individuals to use less carbon-producing substances, whatever they are, and to conserve more. In theory, that is right. Plus, it's hard to develop a carbon market that you can't evade and gain. On the other hand, I still believe that  ... the green market, the market for averting the worst consequences of climate change, is underorganized, undercapitalized, with low levels of consumer understanding. Therefore I still favor the carbon market as opposed to the carbon tax. Keep in mind: Al Gore and I passed the carbon tax through one house of the Congress in 1993 and that also got beat; we got a long way on that. But I think the carbon market is better because I think it will energize all these investors and idea people and will create the kind of multifaceted change that will be really necessary to prove that we can reduce greenhouse gas emissions and grow the economy at the same time.


Power companies: Regulate us, please

I spoke today with Jim Rogers, chairman, president, and CEO of Duke Energy, and Tom Kuhn, president of the Edison Electric Institute (EEI), which represents shareholder-owned electrical utilities. Along with leaders of seven other utilities, Rogers announced an initiative "seeking regulatory reform and approvals to increase [the utilities'] investment in energy efficiency by $500 million annually to about $1.5 billion annually." His group's commitment will mean the equivalent of taking nearly 6 million cars off the road, Rogers says, and "avoid the need for 50 500-megawatt peaking power plants."

FP: What is motivating Duke Energy, and why aren't more utilities getting on board?

Jim Rogers: Well, I think the seven utilities who are here today are all very progressive with respect to energy efficiency and addressing the climate issue. And in fact, our entire industry—and Tom Kuhn's here, president of the EEI—as you know, early this year our industry changed our policy position on this and really said, "We support regulation of CO2 consistent with a set of principles." So we are going to work, because we realize our industry has about 35 to 40 percent of all the emissions of CO2, and our assignment is to find a solution. And so we turned our attention to finding the right regulatory framework and finding the right technical solutions so that we can solve the problem.

FP: Does that mean lobbying on Capitol Hill for mandatory emissions caps?

JR: We are now—There's a rich debate going on on the Hill today, and we are very involved.

Tom Kuhn: We're very much in favor of establishing a price for carbon. And I think that we are very strongly behind the whole idea that the only way you're really going to accomplish it ... is also to move these technologies together aggressively. And that means all the technologies, starting with energy efficiency, which is the fifth fuel (but maybe we call it the first fuel, too), but then renewables, moving the transmission that it takes to get the renewables to market; moving nuclear energy forward, which is a zero-emission technology ... We now generate 50 percent of our electricity with coal. If we want to maintain coal as an important option for the future, we've got to move forward aggressively with carbon capture and storage. So, it is the full basket of things that we need to do, the full toolset that we need to make our global climate goals, but we fully agree with the need to get a price for carbon.  

JR: President Clinton really said it pretty well today with respect to this whole energy efficiency issue. While we call it the fifth fuel, it's really the number one option right now. And while people and politicians are debating how to move forward with climate regulation and how to develop an international framework, we can go today to work in implementing these energy efficiency regulatory changes and investing in energy efficiency as a way to reduce our carbon footprint right now. And what we need is action right now.

Make no mistake: Self-interest is motivating these guys, who are uneasy about patchwork, state-level regulation and fear the uncertainty that could come from not having a seat at the table. EEI opposes, for instance, a federal renewable portfolio standard that would require a certain percentage of electricity to come from renewable sources. Moreover, it's far from clear what, exactly, the proposed regulatory reforms entail. They certainly deserve scrutiny going forward. Still, the fact that they're seeing the light on energy efficiency is a good thing.