"We're the first generation to feel the impact of climate change, and we're the last generation that can do something about it," Barack Obama said on Monday. The President backed up his words with the Clean Power Plan, a White House initiative that will almost certainly end coal-fired electricity production in the United States in the next decade.
There are five lessons in the announcement for Canada, which recently signed on to the G7 commitment to "decarbonize" the global economy by the end of the century.
Lesson 1: Greenhouse-gas emissions are a legitimate public-health issue. Mr. Obama has done an end run around Congress and unilaterally set regulations to cut carbon-dioxide emissions from electricity production by 32 per cent (compared with levels in 2005) by the year 2030. He can do this under the Clean Air Act, which obliges the Environmental Protection Agency to regulate any pollutant that is a danger to public health. Last year, the U.S. Supreme Court ruled that large amounts of carbon dioxide qualify as a dangerous pollutant, since they lead to climate change.
The threat of climate change is not often put in terms of human health and well-being in Canada; it is usually portrayed as a battle between our energy sector and the health of the environment. While the threat to human health is implicit in that, the White House has made it explicit. And that's sobering.
Lesson 2: Fossil fuels have limited lifetimes, and not just because they eventually run out like any non-renewable resource. If their price or the price of their pollution is raised, they become more costly and less likely to be removed from the ground in the first place.
Critics call Mr. Obama's plan a "war on coal" – which, let's face it, is exactly what it is. Coal-fired power plants are the single biggest carbon-dioxide producers in the U.S. – they account for more than 30 per cent of total emissions. Something had to be done if the U.S. planned to meet its emission-reduction goals.
But Mr. Obama is really only delivering the coup de grâce – the U.S. coal industry was already on the wane. Coal is extremely dirty and can be expensive to mine, and much of it is burned in inefficient, outdated plants. The drop in price of natural gas and renewables has made it less competitive, and the President's new regulations – which mean that coal users must internalize the pollution costs that go along with burning the fuel, which until now have been free – will make coal even more expensive relative to other options. There's still lots of coal in the ground, but just because it's there and can be exploited, there is no longer any guarantee the world is going to want it. To some extent, the same is true of all fossil fuels, oil included.
Lesson 3: The fight against climate change will make life tough for economies that are over-reliant on the extraction of carbon-based fuels. Wyoming, Kentucky and other coal-producing states are planning court battles to overturn Mr. Obama's plan. But given the course the world is on, it is arguable that it would be better for those states to spend money not on lawyers' fees but on alternative and cleaner sources of energy. They could also invest in the development of carbon-capture and storage technologies, which have the potential to turn dirty coal into a low-carbon fuel. Economies that depend on fossil-fuel production for growth should start thinking now about what's next, instead of clinging to old ideas and hoping for a reprieve. Global warming and its consequences can't be wished away.
Lesson 4: Carbon pricing is the way to go. Put a price on pollution, and the market will figure out the cheapest and most efficient way of eliminating it. Under Mr. Obama's plan, the White House will tell the states how much carbon dioxide their power plants can emit, and the states will enforce the limits through cap-and-trade schemes. Market-based systems are the most efficient way to cut emissions, and also to promote innovation. Quebec, Alberta and British Columbia have got carbon-pricing plans working for them to various degrees of success, and Ontario plans to bring one online later this year.
But Canada's federal government has always blanched at the practice, accusing the provinces of inventing new taxes simply to line their coffers. Yes, we should always scrutinize how our governments spend our tax dollars, but that's true of every kind of tax and is not peculiar to carbon schemes. And yes, we should carefully consider how cap-and-trade systems are implemented; it is possible to design one so badly that it ends up delivering far more political benefits than environmental ones.
But making polluters bear the cost of pollution is, in fact, a very conservative idea, one that is being promoted in Canada by Preston Manning, the spiritual godfather of the country's modern conservative movement. That the world's greatest capitalist economy is counting on carbon-pricing to force coal-fired power plants to either drastically clean up or completely shut down should be a wake-up call for all reluctant carbon-pricers.
Fifth and final lesson: The world is moving quickly on climate change. In the past eight months, the U.S. and China have signed a historic deal to cut emissions and the G7 have committed themselves to significant carbon reductions, with a goal of decarbonization in 85 years. These commitments have yet to be made real, but the intention is clear. The wind is blowing in a particular direction.
And now comes Mr. Obama's Clean Power Plan. The world will meet in Paris in December at the United Nations Climate Change Conference to consider the march forward. Some countries will arrive as leaders and others as reluctant followers. It's the leaders who will matter.