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Monday, June 19, 2006

Henry Paulson on Cap and Trade

Following up my post about the Weekly Standard's green praise of Treasury Secretary-designate Henry Paulson, I'm recommending this Grist article about Paulson, which says "Paulson also worked with environmental groups including the World Resources Institute and the Natural Resources Defense Council to develop a comprehensive environmental policy framework for Goldman Sachs, unveiled last November..."

Click on the link Grist kindly provides and you read what Paulson, the World Resources Institute and the Natural Resources Defense Council came up with.

An excerpt, as relating to global warming:
Goldman Sachs acknowledges the scientific consensus, led by the Intergovernmental Panel on Climate Change, that climate change is a reality and that human activities are largely responsible for increasing concentrations of greenhouse gases in the earth's atmosphere. We believe that climate change is one of the most significant environmental challenges of the 21st century and is linked to other important issues such as economic growth and development, poverty alleviation, access to clean water, and adequate energy supplies. How governments and societies choose to address climate change will fundamentally affect the way present and future generations live their lives. Goldman Sachs is very concerned by the threat to our natural environment, to humans and to the economy presented by climate change and believes that it requires the urgent attention of and action by governments, business, consumers and civil society to curb greenhouse gas emissions.

...As an institution that brings providers and users of capital together, we believe that capital markets can and should play an important role in creating opportunities to address today's environmental challenges. Markets are particularly efficient at allocating capital and determining the appropriate prices for goods and services we purchase. The government can help the markets in this regard by establishing a strong policy framework that creates long-term value for greenhouse gas emissions reductions and consistently supports and incentivizes the development of new technologies that lead to a less carbon-intensive economy. Working with governments, the private sector can then take the lead in further developing these markets, establishing better price transparency, creating incentives for innovation, and finding cost-effective alternatives. [Emphasis added] To that extent, we believe the following principles should guide public policy development:

* Policies and actions should be based firmly on science and rational economics.

* Policy frameworks should be based on market-based mechanisms to set clear, transparent and consistent price signals.

* Voluntary action alone cannot solve the climate change problem.

* Policies should encourage conservation and efficient use of energy as an important part of a comprehensive solution.

* Solutions must be global in scope.

* Climate change should be viewed in conjunction with other major challenges, e.g. conservation of ecosystems, access to water, poverty alleviation and economic growth.

* Implementation requires an integrated approach to identify where there is the greatest leverage to help mitigate potential problems.
In addition to the call for cap and trade, which I placed in italics for emphasis, I direct attention to the claim that "voluntary action alone cannot solve the climate change problem" and the notion that "scientific consensus" can be "led by the Intergovernmental Panel on Climate Change."

It is a bit worrisome that a Bush cabinet official to-be believes scientific "consensus" comes from a U.N. agency. (For more on the merits of scientific consensus as a goal even when scientists are seeking it, go here.)

The Grist article, by the way, quotes an environmentalist vaguely implying that White House Chief of Staff Josh Bolten may have some environmental views similar to Paulson's. Bolten worked for Goldman Sachs from 1994-99. I have no idea, but I would not advise assuming that's true. For one thing, as this Washington Post article notes, Bolten has been known for his willingness to hear from dissenters; his proximity to someone holding a particular opinion should be be confused with his willingness to hold it himself.

Posted by Amy Ridenour at 12:16 AM

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