Green Project

Climate Change and Security

High Noon in the Arctic

A fascinating article by Scott Borgerson in the current Foreign Affairs examines the security implications of global warming in the Arctic. With the Artic summer ice cap on track, tragically, to disappear as early as 2013 having lost over a third of its summer mass since 2001 alone, a gold rush is on in the Arctic with potentially dangerous strategic consequences.

The stakes are huge. A glance at the top of the globe reveals that, absent its blockage with ice, the Arctic is a sort of 21st Century Mediterranean, linking up some of the wealthiest parts of the world, principally the United States, Canada, Russia and Northern Europe. With the opening of the once fabled northwest passage to sea traffic, the trip from Seattle to Rotterdam will shrink by 20% while the much longer trip from Yokohama in Japan to Rotterdam will drop by 40%.

Apart from the promise of high speed sea lanes, the Arctic also holds immense mineral treasures. Scientists estimate that the Arctic may harbor over a quarter of the world's oil and natural gas reserves. Indeed, last year in a brazen assertion of rights, the Soviet Union dispatched a submarine to plant a flag on the sea floor below the North Pole to defend its claim to about a half million square miles of the Artic region. The estimated oil reserves in this region of 586 billion barrels of oil are over twice the proven reserves in Saudi Arabia!

Borgerson points out that the US remains a laggard in grasping the value of the Arctic and securing it. Despite having the world's largest navy, the US only has one seaworthy icebreaker compared to Russia's 18. And the US has held off on signing the reigning convention governing stewardship of the Artic, the UN Convention on the Law of the Sea out of fears it limits our options. Unfortunately our options are receding every day.

Borgerson lays out a plan for how to create a multilateral regime to govern the Arctic. But US leadership is required.

Environmental Migrants

The Arctic is just one of many security challenges global warming is raising. A new EU report scheduled for release this week highlights the risk to security of environmental migrants as increasingly extreme weather and higher sea levels potentially displace millions of people in Africa, the Caribbean and Latin America. The US would probably be the destination of choice for Caribbean and Central American environmental refugees, adding to current immigration pressures. The refugee crisis in and around New Orleans would pale before what we would be likely to behold if sea levels continue their rise, particularly, in the event of a hurricanes, storm or other major weather catastrophes.

Clearly the security challenges of climate change and implications for other issues such as immigration are only now being recognized. We are a long way away from understanding them let alone devising solutions.

Pigou and Climate Change

When you dislike something, it makes sense to tax it right? Taxing bads or undesirable goods is as old as recorded history. The abstemious Roman, Cato, the Elder, imposed a ten fold tax on goods costing more than 1500 drachmas, Plutarch tell us, to discourage luxury spending. Over the centuries, people have taxed luxuries (sumptuary taxes), alcohol and tobacco (sin taxes) and, recently, pollution.

Modern economic theory calls those taxes Pigovian after the British economist Arthur Pigou who formalized their study. However, to survey taxation today is to find that more often than not government taxes not bad things but good ones! Government taxes income, communications, housing and even jobs through payroll taxes. Since jobs are something we ought to subsidize, the obvious question is why tax them? The answer is that there are rarely enough bad things to go around so government ends up taxing things that are good.

With the realization that CO2 in the atmosphere creates a greenhouse effect that threatens life on the planet, it is now clear that CO2 in the air can be a bad thing. In 1993, this led Al Gore to propose a BTU tax-an indirect tax on carbon--that ended up dying on the congressional budget room floor, replaced with a small increase in the gas tax. More recently, however, it has led to serious efforts to explore the merits of a carbon tax. Indeed in his Nobel Prize acceptance speech last year, Vice President Gore called for just such a tax to put a price on carbon

The benefits of a carbon tax are obvious. The major challenge that a carbon tax is, after all, a tax and therefore would raise the price of energy at the expense of business and consumers. But what if the revenue from the tax were used to offset taxes on a good thing-for example, jobs? The result would be a revenue neutral shift from taxing good things to bad things and a net gain in social welfare.

NDN's Rob Shapiro has been studying the carbon tax for some time. Last year, drawing on research by William Nordhaus at Yale, he found that a carbon tax would compare favorably with other policy options in limiting price volatility in the energy sector. Recently, Rob co-founded the U.S. Climate Task Force to explore climate issues together with former Clinton Administration official, Elaine Kamarck who will be speaking on this and other issues at NDN's March 12th Forum.

Can a carbon tax regime find global acceptance? Other approaches to cutting CO2 such as a cap and trade system have their advantages as well. But whatever the final mix of policy levers, it is clear that a carbon tax coupled with a payroll reduction is gaining traction. Stay tuned.

Making Cleantech Happen

For those wanting to take a break from the campaign, here is a report on climate change and clean technology....

When it comes to addressing climate change how do we do more than play at the margins? That was the challenge posed by San Francisco Mayor Gavin Newsom at the latest Cleantech conference bringing together venture capitalists, hedge fund managers, clean tech entrepreneurs and others seeking market solutions to climate change. Noting that San Francisco has the largest fleet of plug in hybrids in the country-three, Newsom warned that despite all the promise of new clean technologies, rollout has barely begun A lot of low hanging fruit is out there, Newsom exhorted, but mayors, governors, corporations and people need to do reach out and pick it.

At the latest Cleantech, a conference that has gone from filling a room to an entire hotel in just three years, a host of visionaries and venture capitalists looking to cash in on what John Doerr says is a bigger opportunity than the Internet, exchanged the latest news on thin film solar technologies, biofuels, windmills and electric cars as oil economists predicted gas prices of over $4 per gallon this summer and higher prices ahead. With global oil production at close to full capacity and China and India just beginning their consumption trajectories, oil prices (as well as those of natural gas) seem almost certain to continue to climb. Falling prices of batteries, solar power and other renewables have made clean technologies the obvious solution to a looming energy and climate disaster. But first costs have to drop and acceptance has to increase.

Concentrating solar power through mirrors is one promising way to bring the cost of solar power down. So are thin films-the use of sun absorbing foil and other materials--in place of expensive silicon. To store intermittent wind, water and solar energy, better and cheaper storage, whether mechanical or chemical in the form of lithium ion batteries, will be critical. Finally, new business and pricing models will be important to the rollout of electric cars, home generation of electricity and other consumer methods of creating power.

While the technologies on display were impressive, they are not developing quickly enough to stop, for example, the melting of the summer Arctic ice cap. That's where policy will be critical. The easiest lift is efficiency. California consumes only one half the energy of the country as a whole at no loss to consumers. Speakers agreed on the need to "put a price on carbon" whether through a carbon tax or cap and trade system with several projecting that the United States would have a cap and trade system in place within 24 months. A "feed in" tariff such as that employed in Germany that pays consumers for producing power, predictable instead of on-and-off subsidies and decoupling of production from purchase markets were also mentioned as critical levers.

Blocking progress has been the stodgy nature power utilities-the largest customer for many products--that operate under a web of regulation. Absent in the industry so far has been the adrenaline of cost reduction through mass production-the driver of the consumer electronics, cell phone and Internet revolutions.

While no one has yet figured out a way to marry the speed of the Internet to clean technology, next month Vice President Gore's Alliance for Climate Protection will begin a multi million dollar ad campaign to raise awareness of the danger of climate change and hopefully accelerate action.

Indeed, other countries are arguably outpacing the United States. At the conference, Dr. Sultan Ahmed al Jaber of the UAE accepted an award for the UAE's $15 billion clean tech initiative, Masrad. If the US has one strength it is innovation and high tech companies are rushing to get into the game with Google, in particular, making a huge push to reduce its carbon footprint and offering $10 million to companies making a plug-in hybrid car. Google has installed one of the world's largest collections of solar panels the Googleplex.

I'll be back in California later in the month to meet with clean tech participants and NDN members to learn about your efforts and insights regarding this challenge. Or email me at

Climate Change and Europe

Traveling in Europe, last week, I got a first hand impression of the urgency with which Europeans view the climate change issue. While climate change is just now breaking through as an important political concern in the US, in Europe it is a mainstream concern, popping up in advertising in the London Tube, on television in France and in speeches across the continent. Europeans are--after years of wringing their hands--optimistic if not ecstatic that with the three leading US presidential candidates, Obama, Clinton and McCain all favoring major action on climate change, the US will again engage on this issue.

At the ULI Europe conference in Paris, former UK chief scientist, David King spoke about the multi-billion dollar investments, the UK is making in flood and drainage control in anticipation of erratic weather and a new billion dollar private-public fund to develop technologies to combat climate change. The author of the forthcoming book, The Hot Topic, King, like others I spoke with, is optimistic that the US is now poised to reassume a leadership role. Some of the points he raises are indeed alarming. The summer size of the Arctic ice cap is now a fraction of what it was a mere 20 years ago. Seeing the thousands of square miles of former summer ice that are now open water on a map brings the magnitude of warming home. While the melting of the northern ice cap is alarming, since the ice is formed from ocean water, it is unlikely to have the devastating impact of the melting of the Greenland Ice Shelf which would send land-trapped water flowing into the ocean, raising sea levels by many meters, but that too is accelerating. Were the shelf to melt, some of the largest cities in the world, among them New York, but also many of the megacities of Asia would become uninhabitable. What King's work shows is that even at current levels of carbon dioxide production, there is a 20% chance of disaster. Major action is needed to reverse far worse odds. Thus the importance of the US again showing leadership on this issue.

Key members of the environmental community such as Michael Jacobs, Gordon Brown's special advisor on climate change whom I met with at 10 Downing Street, view US engagement as critical to a globally integrated approach to reducing emissions. The European cap and trade system which got off to a rocky start is, nonetheless now up and running and central to European climate change policy. Trading of carbon permits has created about five thousand financial jobs in London, according to one knowledgeable observer. Environmentalists I spoke with suggested a number of ways that a US system such as the ones proposed for California, the Northeast and, even for the US as a whole in the Warner Lieberman legislation, might learn from the European example. For example, they stressed the importance of auctioning off credits-as opposed to handing them out to polluters--and imposing tight limits. Both Senators Obama and Clinton support the 80% reduction by 2050 and full auctioning of credits recommended by the environmental community.

European environmentalists also support outright mandates and a carbon tax of the type recently endorsed by Vice President Gore.

In coming months, I am excited to be leading NDN's Green project to create a policy framework to combat climate change and working with the NDN community, the emerging clean technology community and other stakeholders to achieve real results. Please email me at with your ideas and suggestions.

The other thing one notices visiting Europe after a hiatus, is the comparative absence of sprawl. With high speed rail now ubiquitous on the continent and gas about twice the price here in the States, the spawl gap between Europe and the US could not be more striking. The Eurostar linking Paris and London now makes the trip in just over two hours. Traveling from Paris to Nice or Bordeaux, once an eight hour tip, is now a two hour blur. Paris has municipal mountain bikes for rent using a credit card at stands across the city. The first half hour is free. In cafes, waiters print out receipts using a handheld printer at your table rather than walking back to a cash register. Half size smart cars from Mercedes that one can easily park and maneuver are the rage.

One is reminded that while the US has been preoccupied with the Iraq war over the last eight years, Europe has been investing and advancing. Nothing stands still and, if the US is to regain its leadership position, it must again discover the future.


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