In this month's American Prospect, Ted Nordhaus and Michael Shellenberger have yet another essay arguing that environmentalists should abandon all hope of trying to cap or tax carbon emissions, and instead focus solely on subsidizing clean-energy sources if they want to avert drastic global warming. It's a weird piece. One of the central arguments they're making is that carbon caps or taxes won't work if they're badly designed or loophole-ridden, so instead we should support a different, investment-based approach that we'll pretend is going to be perfectly well-designed and managed.
But of course a flawed carbon cap won't work very well. Most policy experts are quite aware that Europe's initial foray into cap-and-trade was rife with missteps, and, as a result, emissions didn't drop as rapidly as expected. But the EU has been working to try to fix the system rather than scrap it because they know you absolutely need a price on carbon, working in tandem with government investment and regulatory changes, if you want sharp cuts in greenhouse-gas emissions. Simply having the Energy Department dole out $50 billion per year to clean-energy producers (as Nordhaus and Shellenberger suggest) will pale beside the amount of private-sector money that will flow to alternative energy and efficiency improvements if carbon is priced properly. Check out this report from Resources for the Future for a more detailed argument on why carbon pricing has to be the foundation of any broad-based strategy to curb emissions, which should also include government R&D spending, regulatory fixes, subsidies.... the whole shebang. What Nordhaus and Shellenberger are proposing simply isn't adequate to the scale of the climate problem.
Meanwhile, I do think that Nordhaus and Shellenberger's view of the Kyoto Protocol as a miserable failure is somewhat tendentious. The treaty hasn't been perfect by any stretch, but, as Joe Romm recently argued, the EU has gotten on track to meet its targets and make the required emission cuts by 2012. (It's also worth noting that some of the countries struggling the most under Kyoto don't actually have mandatory carbon caps or taxes—Japan, one of the countries that's going to miss its targets, has only pursued "voluntary" agreements with its own industrial sectors to reduce emissions.)
Now, if Nordhaus and Shellenberger simply want to argue that carbon caps, while necessary and effective, are politically unrealistic, that's a fair debate, though I'm not swayed by their case in the TAP piece. The Lieberman-Warner bill that died in the Senate this summer was never going to pass into law, not least because Bush was dead set on vetoing any climate bill that crossed his desk, and, hence, few politicians took it very seriously. (The Finance Committee didn't even bother to mark the thing up.) That doesn't mean it'll be easy to pass a climate bill in 2009 or 2010, but you can only extrapolate so much from the Lieberman-Warner debate and a few blind quotes about Barbara Boxer lifted from Roll Call—we now have a new president who's promised to make global warming a top priority, which counts for a lot.