Climate Change Executive of a Company Re:

Climate Change

Executive of a Company

Re: Implications of different approaches for the U.S. To implement and address climate change.

Anthropogenic climate change is that which is dominated by human influences, in particular human contribution to atmospheric composition. It is established that anthropogenic climate change is like to continue for many centuries. The effects of climate change on the planet, and on the U.S., will be far-reaching, affecting all aspects of human life on earth (Karl & Trenberth, 2003).

Climate change is a global problem, but each nation has the ability to make its own contributions to addressing the problem. There are three main areas where nations can address climate change. The first is to adopt national strategies to stem the pace of climate change; the second is to work within the international system to foster global efforts to stem the pace of climate change; and the third is to adopt national strategies to mitigate the negative effects of climate change on America. This memo predominantly describes options for domestic policies to stem the pace of climate change.

Policy Options:

There are a number of policy options for stemming the pace of climate change that can be implemented at the national level. These options begin with the recognition of reality that burning fossil fuels is the critical contributor to anthropogenic climate change. The burning of fossil fuels have proven to be a critical driver of economic progress, starting in the late 19th century, so for the time being it is impossible to make dramatic, immediate reductions in fossil fuel usage. There are alternatives that can help to set such reductions in motion, however. These include policies that encourage the development of alternative energy sources and policies that will encourage the more efficient use of fossil fuels.

The first alternative therefore is to flow development funding to alternative energy sources. One such example is with solar panels, which can be substituted for fossil fuels in certain instances, such as home heating. Economic incentives in countries like Germany for the purchase of solar panels have resulted in far greater market penetration of the technology than exists in the United States. The climate many parts of the United States is ideal for solar technology, yet as a nation we have low penetration of solar technology. Further incentives can be used to spur the development of these alternative energy technologies. China has superseded the United States as the leader in solar technology, for example, and Europe has done more with wind power. The system of economic incentives with respect to energy affords substantial tax benefits for hydrocarbon firms, which only exacerbates the problem from the supply side. If the supply side incentives are adjusted to reflect a move towards alternative energy forms, the reliance on hydrocarbons will be reduced.

A second alternative is to address the issue from the demand side, not by encouraging the use of substitutes (alternative energy) but by encouraging greater efficiency in our use of hydrocarbons. One such system that has been proposed is the cap-and-trade system. This system places a mandatory cap on emissions while providing sources flexibility in how they comply -- mainly by trading carbon credits (EPA, 2013). Producers of emissions who are going to go over their cap will face penalties, or they can trade for overages from producers who are under the cap. Those carbon credits, therefore, have value, creating an incentive for polluters to reduce the amount of polluting that they do. According to the EPA, a cap and trade system already exists for acid rain-causing emissions and has been successful.

As a policy instrument, cap and trade requires the government to do two things. The first is that it must have caps, wherein the government sets emissions limits, penalties for violating those limits, and enforcement mechanisms to ensure that the penalties are imposed. The second is that the government would then need to set up a trading system for carbon credits, wherein polluters would be able to sell those credits to those who choose to go over their limits.

From a practical point-of-view, the government would also need to determine what polluters would be subject to this system. This is where it gets interesting for hydrocarbon emissions. While acid rain pollutants were almost always emitted at the industrial level, all levels of American society are affected by hydrocarbon pollution. Individual Americans waste hydrocarbons driving, for example. Indeed, our cities are built on a model of hydrocarbon usage that will be difficult to change without physical reconstruction of our living environment. Thus, who is liable to participate in the cap and trade system, what the limits allowed will be and what the penalties will be are critical and highly contentious implementation issues.

Given this, we must consider the different stakeholders, and they are not all institutional. The American people, the world's people and the environment are the most important stakeholders. Forgetting that is an unforgiveable error in thinking. Among institutional stakeholders, Congress, the White House and a variety of government agencies including the EPA are all key stakeholders. A variety of lobbying interests will undoubtedly become involved, but their interests must be balanced against those of unorganized stakeholders like the American people.

Taking action will be difficult. The EPA is poised and ready to act as an enforcement agency and to run a carbon trading system, but it will require an act of Congress to bring about a cap-and-trade system. Such an approach would be challenging indeed as it would involve voluntarily -- for just about every stakeholder -- sacrificing in the short run for gains in the very long run, beyond our lives even. Good luck with that. Another option might be to sue the EPA for not enforcing the Clean Air Act. A somewhat more desperate move, it would not bring about a cap and trade system in its entirety, and the Supreme Court may prefer not to become involved. Moreover, the EPA relies on Congress for funding, so could be challenged to meet this mandate regardless of a court decision.