<div><div>Hi All,<br><br>Stratfor has been termed the "private CIA"<br><br>PUBLIC POLICY INTELLIGENCE REPORT</div><div>07.12.2007</div></div><div><h1>Climate Change: The Consequences of Waning Interest</h1><b>By Bart Mongoven
</b><br> <br>Live Earth, a global series of concerts
intended to raise awareness of climate change issues, has come and gone and
probably soon will be forgotten. Attendance at the venues was satisfactory
and television ratings were low, but not unexpectedly so. Live Earth had the
potential to serve an important role in the re-emergence of grassroots
concern in the United States with climate change, but it appears to have
failed in that task. That project remains undone, and those fighting for the
passage of significant climate change legislation in the United States in
2007 are beginning to face the consequences of waning public interest in the
climate issue. They are also facing the lack of a coherent grassroots
movement in support of action on climate change.<br><br>The move toward
legislation in the United States addressing climate change is nearing a
decisive moment. Though public concern remains far higher than it was a year
earlier, the emotion driving the issue has dissipated much more quickly than
it rose. Still, while climate change has emerged as a top-tier issue, the
public's focus is back to the issues that dominated in 2006: immigration,
health care and the war. <br><br>As a result of the momentum that had built
up, politicians in Washington nonetheless find themselves dealing with the
specifics of altering energy policy -- something that affects almost every
industrial sector and every aspect of life in the United States. The
impatient rhetoric that "we must do something now" has met the Gordian knot
that is America's energy system. Complexity has won, and decision-making has
slowed.<br><br>In the larger picture, the politics surrounding climate change
in the coming months and years will run on two parallel tracks. One set of
debates will focus in the near term on a political resolution of the current
climate change policy, and another set of debates will focus on how people
live their lives and conceive of their relationship to major environmental
issues. The second track, driven by advocacy of <a href="http://www.stratfor.com/products/premium/read_article.php?id=289194" target="_blank" onclick="return top.js.OpenExtLink(window,event,this)">sustainable
consumption</a>, is more important. It will determine the long-term future of
energy and global energy policy, but the first is important, too, as it will
set the ground rules for the policies that follow in the coming
decades.<br><br>Among the most important ground rules will be two issues that
arise out of the federal government's desire to soften the economic impact of
emissions cuts. The first will be the rules governing emissions trading,
beginning with a discussion of carbon credit auctions versus free
allocations. The second will be the issue of "safety valves" and "off-ramps"
in the emissions reduction targets. Both issues are terribly important to the
companies, activists and other interest groups intensely involved in the
climate issue. For the rest of the public, even a basic description of these
topics risks putting the reader to sleep (something that will be tested later
in this piece).<br><br>Because these technical issues lack the emotional
punch of drowning polar bears, and because public pressure is not at a
particularly high level, the coming debate over these issues will provide
important insights into the degree to which policymakers themselves have
embraced climate change as an issue. It also will show the degree to which
they see climate change as having become embedded in voters' minds as a key
issue. Finally, it will show the limitations facing climate change activists
if political support remains tepid in the absence of a strong grassroots
movement. Through these two issues we will soon have a valuable barometer of
how far the issue of climate change has come.<br><br><b>Flagging
Interest?</b><br><br>The U.S. public's interest in and concern about climate
change is dramatically higher than it was a year ago. According to polling
data, in July 2006, 13 percent of Americans were very concerned about climate
change and 51 thought that immediate action was necessary to change energy
policy. Public attention increased dramatically at the end of 2006 and
through the winter of 2007. By April, the peak of public concern, the issue
of climate change was on the cover of Time magazine and featured in almost
three times more news stories in the United States than a year earlier. Polls
showed that 29 percent viewed climate change as the nation's highest-priority
issue (by comparison, 34 percent thought health care was first), and 60
percent felt that immediate action was required. Congress saw these polls and
began to act. <br><br><div align="center"><img></div><br><br>Since
April, however, the issue has cooled, albeit at a higher plateau than a year
earlier. This is because, unlike the war or health care, climate change does
not lend itself to a continual thread of news stories that the public can see
and react to. Continuing carnage in Iraq fuels the anti-war movement. Every
week offers a horror story about the U.S. health care system, and people
interact with the health care system in their daily lives. Climate change is
remote, coming to the forefront only occasionally, such as in the aftermath
of hurricanes. Polls now show climate change is a top priority for less than
15 percent of the public and less than 55 percent think that immediate
attention is necessary. <br><br>To remain on the front burner, a static issue
needs clear leadership and a platform. Immigration, for instance, has the
same disadvantages as climate change, but particularly through the leadership
of CNN host Lou Dobbs, it remains at the forefront of the political debate.
Dobbs continually develops stories about immigration and provides a single
strategic focal point for immigration activists to track. While he is by no
means the only voice on immigration, it is difficult to imagine such a static
issue remaining a high public priority for so long without his
leadership.<br><br><b>The Politics</b><br><br>When the Democratic Party took
power in Congress in January, it made climate and energy a top priority.
House Speaker Nancy Pelosi promised to replace the glacial pace of operations
in the previous Congress with a new, active gait. Among other things, she
promised to pass a comprehensive climate policy by July 4. Within weeks, this
was replaced with the goal of taking action toward a comprehensive policy by
July 4. By May, the goal became passing a bill (pretty much any bill)
addressing climate by Independence Day, and by July 4 a modest (but
nonetheless very important) energy bill had passed the Senate but not the
House. <br><br>The lack of decisive action on Capitol Hill coincides with a
stall in the broader public's concern for and attention to the issue. In
effect, the balance of a year ago is beginning to flip. Whereas in 2006 the
public appeared ahead of federal policymakers, Congress is now shoulder-deep
in energy policy while the public's interest in what Congress is up to is
waning. This is not good news for Congress, especially the Democrats, as this
means that the cost of action (action that necessarily will harm large
interest groups) remains high, but the rewards -- in the form of public
approval -- appear to be getting smaller.<br><br>Congress' reflexive response
to this situation will be to strike a modest deal as soon as possible. If the
public's concern about the issue continues to wane, the majority in both
branches will likely see safety in voting for a minimal policy that addresses
the chief issues raised by climate change but that does little harm to
industry groups and other special interests. In voting for it,
representatives and senators can go to their home districts having voted to
solve the climate issue. For the congressional leadership, a swift vote has
many advantages: It takes a difficult issue off the table and allows Congress
to demonstrate leadership while putting U.S. President George W. Bush in a
difficult political position. <br><br><b>The Necessity of the Grass
Roots</b><br><br>All of this <a href="http://www.stratfor.com/products/premium/read_article.php?id=286865" target="_blank" onclick="return top.js.OpenExtLink(window,event,this)">was
predictable</a>. For those trying to win the most ambitious global emission
reduction plans, the current direction in Congress is a disaster. It was
obvious months ago that momentum would stall over the summer.<br><br>For
those pressing for emissions reductions, Live Earth was only a small part of
the strategy, and it was organized independent of most U.S.-based climate
change advocacy groups. Proponents of emissions reduction regulations have a
number of other events and campaigns planned for the coming weeks. For
instance, within a month, former Vice President Al Gore will re-emerge as the
public spokesman for emissions reductions, though it will take some time for
his influence to ramp up. August also will see the reappearance of Step It
Up, a grassroots campaign dedicated to creating a U.S.-wide student movement
on climate change. <br><br>Climate activists' push for an active grassroots
effort is driven by the fear that Congress thinks it can get by with minimal
action on climate. The activists specifically fear the public will see
Congress pass modest climate and energy legislation and conclude Washington
has resolved the issue. Environmentalists may howl in protest, but the public
(and media) fully expects environmentalists to complain regardless of what
passes. Environmentalist complaints -- valid or not -- will fall on deaf
ears. <br><br>To combat Congress' attempt to get by with minimal action on
the climate, an independent climate change movement not led by
environmentalists but by someone with stature who enjoys credibility with the
public is needed. While the public largely does not trust environmentalists,
it is likely at least to listen to a recognized public figure who appears
dedicated to finding pragmatic political solutions for the climate issue. In
effect, climate activists hope that if the leadership of the climate movement
-- distinct from the environmental movement -- says a bill does not go far
enough, the public will not consider the climate issue a closed case. The
suit is tailored to fit the former vice president -- and he is likely to put
it on, but not for some months yet. <br><br><b>Allocations and Circuit
Breakers</b><br><br>The debate over allocations of carbon credits and
"off-ramps," also known as "circuit breakers," will test this. In both cases,
Congress will face a terribly complex (mind-numbing to some) debate between
activists and certain industry groups. While neither issue will come for a
decisive vote in the coming months, both are central to bills that have been
recently introduced or that will be introduced soon, so these issues will be
at the center of climate discussions in the coming weeks and months.
<br><br>Both issues are connected to the emissions-trading system envisioned
in most climate bills. The core of emissions trading is that companies must
have a permit to emit a certain amount of a pollutant (in this case carbon
dioxide). These emission credits can be bought and sold in a market, which
means a credit holder can sell excess credits to a company emitting in excess
of its allocation. As long as the total amount of credits is capped, the
national emission level will be capped. <br><br>How facilities match up their
credits and their emissions is up to each company. A company can become more
efficient and sell extra credits, or keep the credits and increase
production. Another company can continue with business as usual and simply
buy credits on the open market. The effect of the cap-and-trade system in
climate change is to create a price for carbon. As the national cap is
lowered (to, say 1990 levels from today's levels) the theory holds that the
price of carbon will increase. More carbon polluting companies will find
themselves at a competitive disadvantage against competitors whose operations
are cleaner, because more polluting firms will have to buy credits on the
market, credits their competitors may be selling. <br><br>The allocation
debate focuses on whether the initial emissions credits should be sold at
auction or whether each company should be allocated credits based on their
emissions in a specific year. Most in business prefer the latter, an initial
free allocation. Companies that have significantly cut their emissions in
recent years would be given carbon credits they could sell immediately.
Companies that have not cut emissions would only have to begin buying
emissions once the system is in place. Not all in industry support a free
allocation -- especially those who have made dramatic progress over the past
10 to 15 years, because a free allocation probably would not give credit for
long-term cuts. These companies are joined in opposition to free allocation
by environmentalists, who see the system as giving an advantage to those
companies that have done the least in the past few years to cut emissions.
Environmentalists thus prefer that initial carbon allocations be
auctioned.<br><br>The other major debate coming soon will address the
question of whether the cap-and-trade system should include mechanisms that
would stop the cap from falling so fast that the economy suffers severe harm.
Supporters of off-ramps, aka circuit breakers, argue that if technology does
not come up with new efficiencies as quickly as lawmakers hope, carbon could
become so expensive that industrial activity could be shut down by climate
regulations. To stop this from happening, proposals such as the one offered
by Sen. Jeff Bingaman, D-N.M., offer to halt the cap's fall if the price of
carbon reaches a level that endangers the economy. Opponents of circuit
breakers argue they would create disincentives for companies to develop new
efficiencies and would also reduce the windfall for those who develop the
most important and lasting solutions to energy generation and efficiency
questions. <br><br>Both of these issues are highly technical, too arcane and
complicated for the general public to be expected to have strong feelings
about either way. For those in Congress, the easiest political position is
the one that would ease the burden of compliance. Thus, a bill that cuts
emissions and changes energy policy dramatically still will pass, but it will
not be as onerous for business. <br><br>The strength of the current
grassroots movement will be apparent in how many in Congress go against the
easy route, either because they firmly believe emissions cuts must be as pure
and unclouded as possible or (more likely) because they fear angering voters
concerned about climate change. While the effect of the grassroots campaigns
could kick in by the end of the year, they seem unlikely to have much impact
for the rest of 2007. <br><br>The intervening period presents a unique
opportunity to observe how much pull the climate movement now has, before it
is unified and organized around a clear leadership and goals. We expect it is
fairly small, and that the debates over circuit breakers and allocations will
not favor environmentalists in the coming weeks. If on the off chance
Congress is prepared to take the hard road in 2007, industry will have a
strong signal to fight quickly for whatever it can get -- because when the
movement starts back up, winning concessions will be next to impossible. <p><u>Contact Us</u><br>
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