From December 2009
An Interview with Daniel Esty
Conducted by Alexander Kayfetz-Gaum and Nick Rugoff
Daniel C. Esty is the Hillhouse Professor of Environmental Law and Policy at Yale University, as well as the Director of the Yale Center for Environmental Law and Policy, and the Center for Business & Environment at Yale. He is the author of the recent prizewinning Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage, as well as nine author books on environmental policy issues. He is also Chairman of Esty Environmental Partners, a corporate environmental strategy group based in New Haven, CT. He earned an A.B. in Economics with honors from Harvard College, a M.A. from Oxford University as a Rhodes Scholar, and a J.D. from Yale Law School.
NR: In light of the overwhelming federal budget deficit, how should Congress and the Obama administration pursue climate change initiatives such as cap-and-trade and investment in “green” jobs and technology?
I think there is a big opportunity to do things a little differently than they’re currently being done. In particular, I would like to see the potential revenue from either a cap-and-trade program, or alternatively, from a more straight-out “harm charge” on greenhouse gas emissions, be used to bring down a broader tax base. I would want to bring down payroll taxes. I would like to see a commitment, where, if every American did their bit to conserve energy in their own home, while harm charges or cap-and-trade could cause them to pay more for dirty energy, if they conserved they would save more in terms of efficiency gains and lower taxes than they would pay in higher energy prices. I want to see an economic stimulus supporting structure to our climate change package in the United States.
AKG: Overall, how would you rate the new administration thus far in tackling energy and climate change policy issues?
I think on the big picture, it’s important to remember that we’re actually taking these issues seriously today, in a way that we weren’t two or three years ago. That’s a huge positive. I wish the Obama administration was taking a larger leadership role in the path forward, rather than leaving it to the Congress. One of the ironies of our American system is that our legislature is not very good at legislating.
NR: Given the United States’ failure to pass substantial legislation on domestic climate change issues, how much international legitimacy do we have in pushing for global agreements on these issues?
There’s a very important inter-connection between the domestic political conversation and the international negotiations. The continuation of the international progress that we’ve seen recently depends very fundamentally on the US having a domestic climate change action plan in place. China, India, and other critical countries are not going to step up and make commitments without a similar and substantial commitment from the United States, which today, we’re not in a position to do. Additionally, the prospect of getting domestic legislation approved is very much dependent on Congress’ being confident that major US trade partners like China and India are going to undertake obligations in a mandatory fashion and not sit on the sidelines. So the domestic political dialogue and the international negotiations have to run not just in parallel, but actually in tandem. This is a tricky thing to negotiate, but that’s what is needed if we’re going to make progress. The absence of a real framework that looks likely to win Congressional approval makes it hard for the US to exert influence and leadership in the international dialogue.
AKG: Speaking recently from the Asian-Pacific Economic Cooperation summit, President Obama and other world leaders said they would delay major agreements on climate change until after the upcoming United Nations Climate Change Conference in Copenhagen. Why the repeated apprehension to enact meaningful policy change on this crucial international issue?
They didn’t quite say that they would delay major agreements. They said that they are going to do this in a two-stage process, where they get a political commitment in Copenhagen, and then build out the more detailed elements of that framework in subsequent negotiations. I think that is the best they can do with the current circumstances. It was probably a mistake, going back several years, to try and schedule these negotiations in Copenhagen for this time. The Obama administration hasn’t really had a chance to get all of its people in place and take over leadership on the issue with enough time to affect the outcome of the upcoming negotiations. It’s going to require a lot more time for the Obama team to really process this issue.
AKG: Given the situation, what do you hope to see accomplished at the Copenhagen conference?
I think that we’re already seeing the signs of what’s possible. Firstly, we see signals from important countries in the world that they are ready to step up and work together over the coming months to consolidate a global framework for emissions control. I hope this will be centered on reinvigorating the principle of “common but differentiated responsibility,” which has been the central principle of every past effort of international environmental cooperation. Common meaning, everybody signs up, no free riders, nobody sitting on the sidelines, no countries saying “we’re too poor, we can’t be asked to do anything,” and differentiated responsibility — meaning that richer nations such as the US, Japan, European countries, etc. will need to take on much bigger commitments in the coming years than developing countries. Even the developing countries, and certainly the significantly industrializing developing countries like China and India, will make very substantial and serious commitments to being part of the solution and not part of the problem.
NR: As your last answer revealed, you’ve been a strong advocate for “common but differentiated responsibility” for solutions to climate change issues. What specific factors and measurements should be used in determining these differing responsibilities?
That is a very important question to work out in the context of negotiations. I think the factors include a country’s history of emissions, which is going to put a special burden on the United States and other long-standing industrialized countries; a country’s current level of emissions, which will put a very substantial burden on present industrial powers like China; and fiscal capacity, meaning that wealthier countries will necessarily carry a bigger burden. Countries that might still consider themselves developing countries but which have accumulated a great deal of wealth in recent years, including China, India, Brazil, and South Africa, for example, are also going to have to take on substantial responsibility. The issue of combating climate change cannot be left to only a handful of countries; many countries need to be involved.
NR: How do you respond to complaints that these solutions punish current entities for the past behavior of others?
I think it is important to understand that this is not strictly a question of punishment. Countries which industrialized earlier accumulated a lot of wealth, and some of this wealth was a function of emissions that were not fully paid for at the time the industrial activities were undertaken. Some of that bill is now coming due, and the United States and European nations are going to have to pay for it. On the other hand, current emissions are also a key element of the problem and will only become even more important moving forward. This means that countries like China and India can no longer resist taking action. They are going to have to make mandatory commitments and live up to growing expectations.
NR: It seems like there is “tragedy of the commons” problem here. What is going to make the average American citizen come around and change his or her lifestyle?
I think the critical component in terms of behavioral change is a price signal; that is, activities that cause harm must be paid for. This means setting the clearest price signal on environmentally harmful activities undertaken by everyday Americans, including everything from transportation to heating, lighting, and air conditioning. I think that once a cost for harmful behavior exists, the public will begin to demand cleaner consumer products and an overall cleaner energy foundation for our society.
AKG: The American Clean Energy and Security Act of 2009 is a major climate change bill currently in Congress, having passed through the House of Representatives last June. When do you predict such major domestic climate change reform will be enacted?
I do not think the Senate will pass any major legislation this year, although there are people like Senators John Kerry and Lindsey Graham who are working very hard to build a broader base of support for the bill. However, the original legislative package looks to me to be too narrow to really achieve the requisite 60-vote margin in the Senate. I would argue that what we really need is something more than a partisan split vote since we cannot reestablish the energy foundation of our society based on party lines. Politicians from both the Democratic and Republican parties must work together over time and celebrate the success of progress together. I support a rethinking of the package and aim at building a much broader, bipartisan base of support, looking to get 70-80 votes in the Senate that represent a very broad commitment to change.
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THE POLITIC — December 2009.
