Job Creation Takes On New Importance in Climate-Change Fight

By JEFFREY BALL
If the public has to choose between creating jobs and spending billions to scrub invisible heat-trapping gases from the sky, jobs will win. That's why the campaign to combat climate change is morphing, at least politically, into an economic-development drive with an environmental twist.
Many billions of dollars are being spent on clean energy, even amid the recession. One key to combating climate change will be increasing that investment so the economy keeps growing but coughs out less carbon. Most talk focuses on a "cap and trade" system, in which companies would buy and sell permits to emit dwindling amounts of greenhouse gases.

But nations gathered at last month's Copenhagen climate summit declined to create a global cap-and-trade scheme. They couldn't agree on which countries should reduce their emissions the most. In Washington, proposals to launch a U.S. cap-and-trade program are crashing into similar fights among regions and industries.
So what's the alternative? A grab bag of more granular steps, each sold as creating "green jobs." One example: $2.3 billion in federal clean-energy manufacturing tax credits, whose recipients President Barack Obama announced Friday.
Michael Morris, chief executive of American Electric Power Co., an Ohio-based utility and one of the country's biggest carbon-dioxide emitters, doubts the U.S. will soon adopt a cap-and-trade program. Unless big developing countries like China accept an emissions cap -- something unlikely -- a U.S. cap, which would saddle American industry with higher energy costs, would make it less competitive, he said.
"I think there is no potential for a global approach to this issue anytime soon, and because of that, it's almost illogical that there would be a U.S. approach anytime soon," Mr. Morris said. "Having said that, I don't think there's any reason we as a country can't do some constructive and positive things."
He suggested that instead of harnessing the market by putting a price on carbon, the U.S. government could require utilities to produce a certain percentage of their electricity from renewable sources -- a cost they would pass on to their consumers in the form of higher electricity bills. To succeed, he said, the government would have to exercise more authority to allow the construction of power lines to take that clean juice to market. "The transmission piece is, in fact, a jobs bill," Mr. Morris said, previewing a message that was likely to be heard more often given today's 10% unemployment rate in the U.S.
Fans of a cap-and-trade system tout it as the ultimate jobs program. By driving business toward ever-cheaper ways to curb emissions, they said, it would create more jobs than it kills. They said it was the only way to prod U.S. industry to develop low-carbon technologies to compete against China, which was boosting its renewable-energy and energy-efficiency industries to nurture new exports and curb its foreign-energy bill.
"A market guided by a cap is the most powerful tool we have to match the focus of China's industrial policy," said Fred Krupp, president of the Environmental Defense Fund, an advocacy group that often works with business. Polls show that voters are even less willing than they were before the recession to spend extra money to help the environment. Any cap-and-trade proposal, Mr. Krupp said, must contain "something that jump-starts a lot of jobs."
Markets aren't as popular as they once were. And one aspect of a cap-and-trade system is emerging as a political liability: the chance for Wall Street traders to profit from the buying and selling of greenhouse-gas emission permits.
Many advocates of a cap-and-trade system said it was necessary, but not sufficient on its own, to control climate change. Research suggests it would produce most of its emission from power producers, because they have more flexibility than most other industries to switch to lower-carbon fuels.
The world still would need big emission cuts elsewhere -- namely from more-efficient cars, appliances and buildings -- to slash emissions as deeply as many scientists are calling for. Achieving that, many studies conclude, would require tougher mandates for the energy efficiency of various products.
It isn't clear that any politically viable environmental policy would meaningfully curb greenhouse-gas emissions. In Copenhagen, the U.S., China and several other countries pledged to cut their emissions or slow their growth. Even if those countries kept their Copenhagen promises, the average global temperature would rise 3 degrees Celsius above pre-industrial levels by later this century, according to the International Energy Agency.
Many scientific panels have said that allowing temperatures to rise more than 2 degrees above pre-industrial levels could trigger dangerous consequences from climate change.
Some scientists said the computer models projecting those temperature increases and those consequences were flawed, and that any environmental effect from rising carbon emissions would be manageable.
"There's still a major gap between the current pledges and the desired outcome," said Fatih Birol, the IEA's chief economist.
Yet an environmental policy that fails to promote jobs isn't going to do anything for the atmosphere, either, because it isn't going to get off the ground.
Write to Jeffrey Ball at jeffrey.ball@wsj.com