Say "global warming" in Washington, and you set off a firestorm of ideological outrage. Conservatives see global warning as a hoax designed to limit growth and expand government. Liberals see an imminent catastrophe that demands drastic action. The truth, as usual, is more complicated. Though we don't know the long-term consequences, we do know that the world is warming -- the '90s were the warmest decade in centuries. We know that businesses can save money and increase efficiency by cutting energy costs. And we know that a national policy that cuts fossil fuel consumption converges with a geopolitical policy of reducing energy dependence on Middle East oil. Reducing carbon dioxide emissions is no longer just a "green" thing. It makes business and foreign policy sense, as well.
Agreeing on how to cut fuel use and CO2 emissions is another matter. Companies such as BP (BP) and DuPont (DD) are using "cap-and-trade" systems to set up internal corporate markets in emissions permits. They are building on the successful Clean Air Act, which reduced acid rain by lowering sulfur dioxide emissions from utilities through a similar cap-and-trade system. The Kyoto Protocol was supposed use a global cap-and-trade system to curb CO2 worldwide -- but failed to impose carbon constraints on China, India, and other fast-growing countries. China's oil imports alone are up sevenfold since 1998, and the country is now one of the world's biggest air polluters. If any emission-trading system is to work, China must be part of it. Europe, for its part, is going ahead with a cap-and-trade system that all global corporations will soon have to address. Intel (INTC), for example, is researching new chemicals to replace PFCs which are potent greenhouse gases.
In the end, the only real solution may be new energy technologies. There has been little innovation in energy since the internal combustion engine was invented in the 1860s and Thomas Edison built his first commercial electric generating plant in 1882. Now, General Electric (GE) is investing in wind and solar technologies, and the Bush Administration is putting several billion dollars into hydrogen-based energy systems. General Motors (GM) is working on hydrogen-powered cars, but Detroit trails Japan in technologies such as electric-gas hybrids.
Any serious attempt to shift from fossil fuels to alternative energy demands greater national and global efforts. Nuclear, the one new energy technology that held so much promise in the '60s and '70s, deserves a second look. New reactor designs are safer and cheaper. Dealing with nuclear waste, however, awaits a solution.
The good news on global warming is that individual corporations are taking their own steps to curb CO2 emissions because it makes business sense. Detroit, for its part, could do a lot more to raise fuel efficiency, perhaps with help from Washington in the form of tax credits for hybrids. And short of a global agreement, individual states are taking the lead in demanding reduced emissions. Washington would do well to step up before companies are faced with 50 different standards.
Few dispute the actual science of global warming today. Reasonable people are beginning to act on it.