Monday, October 20, 2008

Now what?

With the economic down-turn, there are rumblings from both Europe and the United States that climate change policy has to be put off. Reinvigorating economic growth is the priority. Some are arguing that policies like cap and trade are growth promoting and hence there is no conflict. This strikes me as naive. The Polish economy's dependence on its domestic coal supply is not going to benefit from such a program even if others do. And even if others do, those economic benefits are not going to operate in the short term. I think the more telling policy is that all climate policies are long term policies. They are irrelevant to short term economic interests and neutral in their short terms effects. The worst thing one can do is to mix up the two. Relying on climate policies to promote short term economic growth simply leads to the temptation distort what needs to be done over many years into an excuse to spend a lot of money now. The result may benefit the economy but will disappoint when it comes to controlling greenhouse gas output.

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