The latest Nobel Peace Prize to Al Gore and the IPCC has pitchforked climate change debate into the forefront of the global environmental agenda. An article in the Guardian by Tim Watkin, Manufacturing the Green Revolution, captures the issues. As the example of Prius shows, it is less of ethical dilemmas instead of hard nosed material and economic incentives that drives the changes in the behaviour of human beings. (A recent survey in California found that a mere 2% of Prius users purchased it for environmental reasons, and an overwhelming majority did so for accessing the car pool lane and for establishing their green credentials!)
Though there have been numerous high profile celebrity campaigns espousing climate change, they have had minimal impact in making any substantive changes in people's behaviour. Cosmetic window dressing apart, such piecemeal efforts have limited utility value and cannot address the core issues in any meaningful manner. This requires bringing the market into the centre stage of the debate on climate change. This in turn necessitates appropriate Government intervention and regulation.
Unfortunately, Governments across the world have hitherto evinced only a marginal commitment in embracing policies that address climate change challenges. There are many immediately implementable regulatory solutions towards mitigating climate change. For a start, Governments could regulate on energy saving technologies and standards. Taxation policies can be tailored to incentivize people and firms to adopt energy saving technologies and processes. Therefore big vehicles, power guzzling electronic gizmos, etc could be discouraged with high taxes.
There is a need for Government policies that acts in two dimensions simultaneously. It has to turn away both the producers and consumers from energy intensive technologies and encourage them to adopt energy efficient systems and practices. This requires appropriate structuring of incentives, that seek to internalize the negative externalities imposed by climate change causing systems, while at the same time promoting cleaner and environment friendly technologies. This incentive structure and the resulting Government policies and regulations should aim to bring in a market in energy saving technologies and systems. Only a market driven solution that harnesses the incentives and dis-incentives, supplemented by appropriate regulations, can make a substantial and sustainable dent in the campaign against climate change.
I have tried to list out a recipe for a few immediately implementable policy solutions
1. Energy consumption standards and ratings for all electronic goods. Higher taxes on lower rating goods.
2. Energy saving technologies for consumer electronics like refrigerators, air conditioners etc. A one time retrofitting campaign for all old devices.
3. Higher taxes on gas guzzling vehicles. A graded system of Motor Vehicle Tax on energy intensive private vehicles can encourage a trend towards more environment friendly vehicles. Preferential tax treatment of vehicles like Prius can help.
4. Extensive promotion of Compact Fluorescent (CFL) bulbs. Mandatory use of CFLs in all offices. Incandescent bulbs should be phased out, while lowering the price of CFLs.
5. Standardization of energy consumption for different categories of electro-mechanical devices and capping energy consumption thereof. Any consumption over and above this should be heavily taxed.
6. Carbon emission to be capped and permits to be issued for trading. (Though important voices like Lawrence Summers favors Carbon taxes to such permits, Practical Steps to Climate Control)
7. Promoting research in solar and other renewable energy sources, and in technologies like LEDs and energy efficient motors/engines and lighting. Aggressive energy saving technology sharing protocols between nations.
8. Mandatory energy audit of all institutions, including Government run facilities. For example the Water and Sewerage facilities and streetlights of Urban Local Bodies can be audited and very easily massive energy savings achieved.
9 Reexamine all the over $250 bn worth energy subsidies, and permit only those which cannot be avoided. For the remaining, explore options to achieve the objectives through other interventions.
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