Monday, January 22, 2007

Encouraging News on Climate Change

This article was a rare piece of good news on climate change.

Apparently, a key group of prominent business leaders is launching an initiative to encourage Congressional action on global warming. The details of the plan being advocated are scarce, but CNN reports that it is a "cap and trade" scheme. Based on my study of economics, this is probably the best way to balance the trade offs between reducing greenhouse gases, protecting the economy, and building a politically feasible plan.

It is quite remarkable that CEOs are taking the initiative on this issue. But are they motivated to save the environment, or are they just trying to mitigate their financial risk by taking the lead on the issue with the hope of gaining greater influence on the outcome?

Definitely the latter, but probably both, I think. After two years at a leading business school, I have learned firsthand that business leaders, on average, are not the heartless profiteers that many outside of the private sector think they are...

We will find out their intentions when specific discussions occur around setting "the cap" (the total emissions allowable in the economy). The lower the cap, the better for the environment, the more costly for business, and the more difficult to sell politically.

We'll see how this plays out, but it is an encouraging and necessary step. It will be interesting to see if President Bush addresses climate change in the State of the Union tomorrow. He is rapidly becoming one of the only leaders in the country not to list this challenge as a top priority.

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