Bad Economy Threatens Obama's Climate Fix The president-elect promised to cut greenhouse gas emissions. But his plan to create a market that sells the right to pollute is ambitious even in good economic times. Keeping this promise in today's financial state will be a challenge.

Bad Economy Threatens Obama's Climate Fix

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For NPR News, this is All Things Considered. I'm Michele Norris.


And I'm Melissa Block. President-elect Obama has promised measures to deal with climate change, such as slashing greenhouse gases. Keeping that pledge would be challenging even in good financial times. In our latest Memo to the President, NPR's Elizabeth Shogren reports on the obstacles to changing environmental policy.

ELIZABETH SHOGREN: No one seems to doubt the President-elect's commitment to tackling climate change. But lots of environmental activists, scientists and business leaders worry that a recession and two wars will put global warming on the back burner.

WILLIAM REILLY: There will be so many reasons not to attend to climate change.

SHOGREN: William Reilly headed the Environmental Protection Agency under the first President Bush. He says delaying would be risky, both for the planet and for Mr. Obama.

REILLY: It would be a matter of huge disappointment if the new president did not give this the priority he has promised to give it. And even more, it would affect his standing in world opinion. The United States is quite properly seen to have dragged it feet on the most important environmental issue of the day.

SHOGREN: The president-elect favors an approach modeled after the program that has cut acid rain pollution 50 percent since 1990. It's called cap and trade. The government would set a cap on how much global warming pollution businesses can emit and then tighten that cap over time. The government also would create a new market. Instead of stocks, businesses would trade the right to pollute. Reilly helped create the acid rain program. He says it will be much trickier to craft a market for controlling the most abundant greenhouse gas.

REILLY: Carbon dioxide is a much more difficult pollutant to control. It's combustion. It's the basis for civilized life.

SHOGREN: That means, instead of just power plants, the bill would regulate the whole economy. Last summer the Senate tried and failed to pass a bipartisan version of this approach, and that was before the credit crisis hit. The financial collapse makes members of Congress much more skittish about passing on big costs to businesses.

DREW GREENBLATT: Right now we're in a recession. Right now people are very nervous. And the last thing we need to do is add on a whole new layer of costs to factories.

SHOGREN: Drew Greenblatt owns Marlin Steel Wire in Baltimore. His 27 employees and several robots are busy fulfilling orders from around the world for wire baskets. Greenblatt says he's an environmentalist. He uses only recycled steel. But he's dead set against Mr. Obama's climate policy.

GREENBLATT: Our energy costs will go up. A lot of our clients will have challenges because their energy costs will go up.

SHOGREN: Greenblatt says workers would suffer, companies would cut back on health care and maybe have layoffs. Economists predict that businesses would pass most of the costs on to customers.

DALLAS BURTRAW: We're looking at the creation of a program that has a value of hundreds of billions of dollars every year, and it's going to deeply affect households.

SHOGREN: Dallas Burtraw is an economist at the Washington, D.C. think tank Resources for the Future.

BURTRAW: Families can expect to pay more for electricity, more for gasoline at the pump, more for natural gas or oil to heat their homes.

SHOGREN: Burtraw says the government could help offset this pain by offering a big rebate. Still he thinks the recent financial market fiascos could make it difficult to gain public support for a massive new market that will trade something as ephemeral as greenhouse gases. Supporters of the market approach say they're concerned about this.

JIM ROGERS: What if we've lost faith in markets, what do we do?

SHOGREN: Jim Rogers is CEO of Duke Energy, a big electric company in the Carolinas. He says other options, such as taxing businesses or directly regulating greenhouse gases, just wouldn't work. He says a market would help businesses cut carbon dioxide, or CO2, in the cheapest possible way, just as they do in the acid rain program.

ROGERS: There's nothing in that experience that tells me that won't work for CO2.

SHOGREN: Rogers predicts that once companies have to pay to pollute, they'll find cleaner ways to do business.

ROGERS: Let's create the most energy-efficient economy in the world. And it would create jobs and stimulate our economy. That would be the smartest thing to do because we're not talking about rescue plan or bailout. We're talking about reinvesting in the future, in a future that's going to be a low-carbon world.

SHOGREN: In fact, if the government auctions off the right to pollute instead of giving it away, it could raise a hundred billion dollars a year, maybe more. That money could help companies build wind farms, design electric cars, and come up with cleaner ways to burn coal. Or it could be divvied up to households. That could help take away the sting of the new climate policy and the recession. Elizabeth Shogren, NPR News, Washington.

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