Posted by Patti on Sunday, November 21, 2010.

Lord Stern gets stern, a.k.a. the carrot and the stick

Economist Nicholas Stern, chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics, and author of the 2006 Stern Review on the Economics of Climate Change commissioned by the British government, has issued a challenge to the U.S: cut emissions or face a ban on U.S. exports.

CO2 emissions per capita in the run twice that of the European Union and almost three times that of China. Thousands of companies and millions of people in the U.S. are making efforts to cut emissions. Some are guided by the carrot of being responsible stewards of the planet. Others by the carrot of reductions in energy costs. Still others by creating a draw for customers, employees, investors, partners. All good, but not enough.

Sticks can also motivate. Sticks such as investor pressure, government regulations, or peer pressure. Now add the stick of a potential ban on exports as the U.S. treads water on emissions actions at the same time as Europe and the Far East advance even further to control emissions and transition from dirty to clean energy. These countries that have taken climate action do not want American competitors to undermine their own industries.

How odd to have the U.S. at the other end of the bargaining table. I think of the economic sanctions the U.S. undertook in the 1980’s to pressure South Africa on apartheid, which many believe lead to a multi-racial political bloodless revolution. Or more recently, of our economic sanctions against Iran aimed at limiting their use of nuclear power, with mixed results to date.

Brought on by the failure of climate regulations in Washington, I wonder whether this threat of concrete economic consequences will spur action. Now, with a massive trade deficit undermining our long-term economic vitality, the specter of a ban on U.S. exports would hit American businesses where it hurts the most: the cash register.

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