Global Warming: The Heat's On Bill
During the 1992 campaign, Bill Clinton and Al Gore vowed to have the most environmentally friendly administration in history. Five years later, after pledging to lead the world in the fight against global warming, the Administration has gotten cold feet. In a June 26 address to the second U.N. Earth Summit, Clinton planned to duck setting specific targets for reducing greenhouse gases in the U.S., though he has to set a number by December. His dithering has prompted European leaders to cry foul. In his first U.N. speech, British Prime Minister Tony Blair warned: "No country can opt out of global warming or fence in its own private climate."
Why are Clinton and Gore dawdling on an issue they once championed? In a word: politics. Privately, the Administration worries that the cost of cracking down on emissions will be greater than business, labor, Congress, and the public are willing to pay. "Unless we move slowly and educate the American public, there could be a huge backlash," says an Administration official. "No one wants to put the President in that position."
TARGETS LOOMING. The Clinton Administration has yet to release its analysis of the costs of meeting an unofficial world goal of at least stabilizing emissions at 1990 levels by 2010. But a draft of the report obtained by BUSINESS WEEK spells out the Administration's math (table). While the overall impact on the U.S. economy would be negligible, the energy sector would be hit hard: By 2010, coal prices would more than triple, to $80 a ton. Gasoline at the pump would jump 26 cents a gallon, to $1.54 a gallon.
But time is running out for the Administration. The U.S.--which alone emits 20% of the world's greenhouse gases--will be faced with specific emission targets in December, when representatives from 167 industrialized countries meet in Kyoto to forge a binding plan to counter global warming. European governments are pushing to reduce emissions by 2010 to 15% below 1990 levels, but the Clintonites consider that goal unrealistic. Their position is not vastly different from the stance assumed by Clinton's predecessor, George Bush, who refused to sign a similar greenhouse treaty in Rio de Janeiro five years ago.
Since then, scientific evidence of the greenhouse effect has been piling up. A 1995 report by the U.N.'s Intergovernmental Panel on Climate Change found that "the balance of evidence suggests that there is a discernible human influence on global climate." The scientists, who called for immediate action, predicted that the atmosphere would warm by 1.8 to 6.3 degrees Fahrenheit by 2100. That could cause disastrous flooding, food shortages, and extinction of plant and animal species. That prospect has even some business leaders concerned by the Administration's waffling. "It's frightening that this is being handled like a regular political issue," warns Paul H. O'Neill, chairman and CEO of Aluminum Co. of America.
WANNA TRADE? Clinton, who faces far more business leaders who oppose any emission treaty, is trying to broker an alternate deal. Under his strategy, companies in industrialized nations would buy and sell "carbon reductions." Like the pollution credits that are already traded in the U.S., they would allow a country whose emissions exceed its ceilings to buy rights from countries whose emissions are below their limits.
The Administration claims this could produce big savings: Without a trading scheme, it says, the cost of reducing a ton of carbon would be $100, but the price falls to $56 per ton if the U.S. trades with industrialized countries. The credits allow the U.S. to avoid the drastic emission cuts. But the plan is being met with skepticism abroad since it would allow industrial nations to continue polluting at unacceptable levels.
Environmentalists still want the U.S. to show leadership on the issue. "Clinton needs to stand up to special interests--expend a little political capital and do the right thing," says Daniel Lashof of the Natural Resources Defense Council. Ultimately, whatever Clinton decides to do about global warming, he's likely to get the cold shoulder.