Climate Change: A Political Assessment

I am pleased to be part of your program, and especially pleased to be among so many people who share a common belief in the benefits created by market forces and who reject the limits imposed on progress by “worst-case” scenario policies and a “command and control” philosophy. In reality, people who promote such approaches fear innovation and have a deep distrust of human ingenuity.

As I was sitting here, it dawned on me that we are the largest collection of endangered species not protected by the Environmental Protection Agency or the Department of Interior.

My remarks will focus on a political assessment of climate change policy in the United States. They represent my personal views. Since, I have my own business, I have had neither the benefit nor the burden of the normal staffing process. I wish that I could give you an optimistic assessment. Unfortunately, I will probably leave you with a case of indigestion. The current outlook is not encouraging but it is not so bleak that we should concede defeat.

Now, let me tell you why I hold this view. I will focus on four major political forces-environmental organizations, the Clinton-Gore Administration, the U.S. Senate, and the business community. I will end by offering some views on what business needs to do if it wants to see policy on these as well as other environmental issues driven by a defensible scientific foundation, hard-headed analysis, and economic reality instead of polls, fear, and political expediency.

The climate change debate over the past decade has been driven by everything except sound science and economic reality. It has instead reflected H.L. Mencken’s observation that “the whole aim of politics is to keep the populace alarmed and hence clamoring to be led to freedom by menacing it with an endless array of hobgoblins. Most of which are imaginary.” And, he said that about 70 or more years ago.

The fact of the matter is that I do not know, nor does anyone else, whether human-induced climate change is a serious environmental threat or a scientific curiosity. I admit to not knowing and advocate policies that reflect a state of great uncertainty. To me, developing climate policy is analogous to driving in a dense fog. Our speed should be governed by how far our headlights let us see. We must adjust our speed and course to reflect risks and uncertainties and adapt to new information.

Advocates of the Kyoto protocol and environmental advocates in general give lip service to uncertainty. But, their actions are more like: let’s pretend the road is straight and the day is clear. Full speed ahead and forget about new information. We’re right, so new knowledge has little value. They are just as confident that we face a climate Apocalypse as they were in the 1970s that we would exhaust oil reserves by 2000.

For many–but not all–environmental groups, climate change is the issue for advancing their long-standing goal of more top-down control of environmental policy and for an industrial policy. Since the climate system is chaotic, it regularly deviates for the “norm.” Each deviation is a ready-made basis for blaming industry. In the phrase of one observer, freeze or fry, wet or dry, the problem is always industry and fossil fuels; the solution is always more regulation. So for them, climate change is a Trojan horse that masks their agenda and lust for power.

They also know that there isn’t a prayer of ratifying the Kyoto Protocol anytime soon. They also realize that climate change is unlikely to be a cutting edge issue in this year’s presidential campaign. But those realities don’t deter them. They are committed, they are persevering, and they take the long view. “Taking the long view” involves actions designed to gradually–but surely–bring about a change in public attitudes.

Presently, most polls show climate change ranked at or near the bottom of the public’s environmental concerns. The objective of Environmentalist Elites-and I stress environmental elites — is to erode healthy skepticism and ultimately persuade the public that it is a “clear and present danger” that requires dramatic action both nationally and internationally. Last year, they spent about $11 million on advertising and advocacy attempting to link CO2 emissions to children’s health and asthma. This was on top of the free media they are given by the networks and many in the press.

Their long view strategy also involves intimidating business, one company at a time, while offering the false promise of constructive collaboration, if only industry will commit to do more. But the promise is false. They keep moving the marker for a sufficient commitment. Business keeps trying to catch up in the naïve hope that by going beyond what makes economic sense, they will be deemed Socially Responsible. The more that business does, the more that environmentalists demand. Extortion is a one way ratchet.

The cold reality is that environmental zealots do not want accommodation, nothing short of surrended will be acceptable to them. Many in business are blind to this fact and focus on grievances instead of the larger ambitions. In short, environmentalists are engaged in a war of attrition and escalating demands. Since Kyoto, they have been slowly gaining ground in spite of the absence of a stronger scientific justification. This is ironic–it shows the skills of their PR–since there is very little new scientific knowledge to bolster their case.

Much of what is new, in my opinion, reinforces the view that the world is not facing a human induced apocalypse and that we have the time and the capacity to set the right policy course. That course does not appear bold and dramatic and hence does not reach the threshold for serious attention by the media. But, it is the course that will balance responsible action with promoting the aspirations of the less well off around the globe.

What we have been observing is environmentalists using science as an instrument for achieving political goals. Professor Richard Lindzen, of MIT, recently observed that science is no longer about theory and experimentation. It’s about models and programs to address an unending stream of problems. He noted that this reflects a new paradigm where everything is connected, everything is uncertain, and everything might cause anything. Under these conditions, something must always be done. In recent years, this has come to be called The “Precautionary Principle.”

Now let me turn to the Clinton-Gore Administration. Several things are becoming apparent. First, Vice President Gore will say enough about climate change to keep the environmental community sullen but not mutinous. But, he is not likely to make it a major campaign issue, absent some unpredictable external event. Most political commentators claim that the Vice President is becoming more pragmatic on the environment. I doubt it. In re-releasing Earth in the Balance, he reiterated his most extreme views and said that he “stands by every word.” If he was becoming more pragmatic, he could have used the re-release to simply take credit for making climate change a global priority. But he didn’t. I believe that his reaffirmation of extreme and indefensible views will come back to haunt him.

Although the Vice President is not making climate change a major campaign issue, President Clinton raises it repeatedly. And his Administration continues to use its regulatory authority to increase the stringency of emission requirements and, in the process, raise the cost of using fossil fuels. What they failed to achieve directly in 1993 with the BTU tax proposal, they’re achieving indirectly and gradually with regulation.

The president is working harder than any other president to get his vice president elected. And for reasons that have nothing to do with climate change, he is pandering to the far left, which includes environmental elites. That is why he is pushing climate change. If Vice President Gore wins, the Democrats could very well recapture the House and make enough gains in the Senate to change the legislative dynamics. While this does not alter my assessment about the Kyoto Protocol, it could have an impact on COP-6 in November and open more doors for the incremental implementation of Kyoto’s objectives. Remember, once a treaty is signed, a nation is obligated under international law to take “all reasonable actions to further [its] objectives.”

The main bulwark against wrong-headed policy remains the United States Senate and our Constitution. When the Senate passed Senate Resolution 98 – also known as the Byrd-Hagel resolution – 95 to 0, the near-term fate of Kyoto was sealed. In 1997, many of the international dealmakers did not appreciate the importance of the Senate’s constitutional role. They do now. And, when they call our constitutional process and the Senate’s prerogatives “irresponsible” and an “inconvenience,” you get a clear sense of how they regard core American values like sovereignty and liberty.

It is hard to conceive of any foreseeable circumstance that could lead to ratification, since it only takes 34 Senators to stop ratification. Europeans know this. It gives them license to posture, which they have been doing, while also being thankful that we are saving them from having to make a serious effort to achieve the unachievable.

So the Senate is our first line of defense. If we want and expect the Senate to remain firm, Senators need principled–and sustained–support from the business community and groups who understand the folly of Kyoto. They’re not getting it from business. And that represents a serious problem.

Prior to Kyoto, the business community was focused, united and forceful. Our support for S.R. 98 and our willingness to openly debate the climate issue and undertake a major advertising campaign was a significant achievement. Momentum was on our side. Unfortunately, we did not sustain it because many in the business community do not understand the imperative of perseverance. This is ironic. Business leaders who do so well in the marketplace for goods and services seen not to understand the marketplace of ideas and public policy. Because of this failure, the Administration and its environmental allies have regained the momentum. They have succeeded in fracturing our unity and in putting industry on the defensive.

There are many views as to why industry generally does poorly in the political marketplace. I want to mention a few of my own. I’ll admit up front that I’m speaking very generally and that there are exceptions. First, many in business haven’t taken the time to understand this marketplace and its relevance to our long term economic viability and progress. The most prominent example of a company underestimating the relevance of the political marketplace is Microsoft–and they are obviously paying dearly.

Second, industry has done a poor job tying advocacy to society’s core values, which is necessary to establish legitimacy with the public. Too often business apologizes for what it does. Take, for example, the recent statement by Ford’s chairman apologizing for making SUV’s. He should have been rejoicing the contribution to mobility, safety and advances in technology.

Third, gaining near-term competitive advantage from laws and regulations often overrides longer-term values. In other words, some endorse regulation to hobble competitors.

Fourth, industry lacks staying power on many public policy issues. There is a saying that no defeat is final until you admit it. The Administration and its allies view their defeat prior to Kyoto in this spirit. Many in business declared victory and went to the sidelines.

Finally, in the pursuit of being deemed socially responsible, business supports organizations that are its enemies, at the expense of those that promote the benefits of free markets smaller government.

People in the Clinton-Gore Administration and their allies have staying power. They are committed to their positions and they will persevere regardless of what happens in November. They are betting that they can achieve through perseverance what they wouldn’t be able to achieve on a grand scale. So far, their long-view approach is being validated. There are a number of major corporations that, in one form or another, have capitulated on principle. When companies assert that it’s time to stop debating the science or that this issue has moved beyond science, they are validating my point. The essence of science is about debate, observation and testing. And encouraging debate has nothing to do with taking responsible action. But, actions to cut off debate reflect a fear that the longer the issue remains open the weaker the advocates case appears.

Once the concession on science is made, the only remaining question is how much business is willing to spend. In the debate over costs, businesses rarely win and usually just keep on paying. No policy debate, including this one, should be beyond science, objective reality, and principle. Standing on principle is not a subterfuge for a denial or taking no action. Action should be taken and is being taken. But action should be consistent with our state of knowledge, should meet a reasonable standard of prudence and be mindful of the fact that actions do have consequences.

Industry has an important role in advancing our understanding of the climate system, in bringing forward new technology, and in promoting the economic aspirations of people around the globe without diminishing the well-being of generations that will follow us. Realizing these outcomes, however, will require a change in strategy and approach. This is a battle worth waging because, stripped of its rhetoric and use of pseudo-science, the climate change debate is about power–the concentration of power. It’s about the balance of power over business and industry and who will exercise it: consumers and investors or administrators pursuing the “vision of the anointed.” In the short run, it is a battle. In the long run, it’s about achieving a balance in decision making that reflects the values of the real stakeholders. I recently read an article by David Horwitz in the magazine The American Enterprise. His premise is that politics – or, my phrase, public policy – is war by other means.

Business historically sees policy issues in terms of debates that are won by rational arguments and clearly articulated principles. The other side sees them as conflicts where prevailing means greater control over business decisions and weakening the resolve to compete vigorously in the public policy process. One of the ways they do this is creating an image of industry as self-serving exploiters who put profit above social responsibility. They have been successful. The success in creating negative images of industry is one reason why business has such a hard time connecting with the public and demonstrating that it shares society’s values. These images provoke fear rather than hope and optimism.

The process of defining, or, more accurately, demonizing business, according to Horowitz, is analogous to the military concept of choosing the terrain of battle. It is well known that if you get your enemy to fight on your terms, you gain the advantage. All too often, business ignores this fact and relies on defense, which to me is a strategy for losing, although perhaps slowly. Offense wins and on the battlefield of ideas, offense involves defining the issues, defining your adversary’s agenda, relentlessly articulating the values and consequences at stake and demonstrating how you promote society’s values.

What this means for the climate policy debate is that business has to give both policy makers and society reasons to support its positions on sound, defensible climate policy. Business cannot prevail without building coalitions within industry and between industries and constituents who coalesce around shared values, a vision for a better, more prosperous tomorrow, and, yes, genuine and effective environmental stewardship rather than posturing about it. As Dick Lindzen pointed out, environmentalists have defined the governing paradigm. That’s an inside the beltway word for the rules of the game. We know they’re rigged, but business keeps playing because it’s the only game in town. We need to bring about a change in the rules.

The facts are on our side; principle is on our side. The means of providing for a better tomorrow for our children and for the aspirations of people in the developing world are in our nation’s institutions of knowledge and the private sector. What’s missing is a commitment to engage in the hard work of competing effectively in the political marketplace. We have time to do it right, but time is not infinite.

In the near term, the big question is what will happen at COP-6 .It is likely to be influenced by who wins the presidency. If Governor Bush wins, the EU may not want to start a relationship with a new Administration by making Kyoto worse or making the United States a scapegoat. On the other hand, forcing him to reject Kyoto frees them from the impossible task of living with it. If Vice President Gore wins, it depends on whether the zealot or pragmatist prevails. If he feels somehow vindicated, he may go to the Hague and once again give away the store. If the pragmatist prevails, he may support an agreement that pushes tough choices further off into the future so that climate change does not jeopardize his legislative agenda from day one.

If I had to speculate, I would come down on the side of pragmatism in The Hague. The EU nations know that they cannot achieve Kyoto targets without damaging their economies or cheating. If pragmatism prevails, business will have bought a little more time, time to decide if it wants to be seriously engaged in shaping the policies that get implemented in the years ahead. Make no mistake, policies will get implemented. If complacency continues to dominate, the shackles of government constraints will be greater, as will the threat to liberty and economic prosperity. There is no basis in history, economics, sociology, or any other field of human experience for assuming that this incredible engine of progress and prosperity, described as “the Shining City on the Hill”, has an infinite capacity to withstand assault.

Let me close with two points. The right choice, as I have defined it, is mostly tactical in the short run. That is necessary because right now political momentum is moving against us. Looking longer term and more strategically, continuous conflict over environmental issues, motives and the means of achieving society’s environmental goals won’t work for either side. If there is to be an eventual and productive rapprochement with the environmental community, business must be better aligned with the public’s values, its expectations and its perceptions. For too long, the elites and zealots whom I have criticized have been able to exploit the gap between the public’s expectations of business and its perceptions of our performance. Only business can close that gap.

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