Samuelson: The Make-Believe of Green Politics

My younger son calls the Toyota Prius a "hippie car," and he has a point. Not that Prius drivers are hippies. Toyota says that typical buyers are 54 and have incomes of $99,800; 81 percent are college graduates. But, like hippies, they're making a loud lifestyle statement: We're saving the planet; what are you doing?

This helps explain why the Prius so outsells the rival Honda Civic Hybrid. Both have similar base prices, about $22,000, and fuel economy (Prius, 60 miles per gallon city/51 highway; Civic, 49 mpg city/51 highway). But Prius sales in the first half of 2007 totaled 94,503, nearly equal to all of 2006. Civic sales were only 17,141, up 7.4 percent from 2006. The Prius's advantage is its distinct design, which announces its owners as environmentally virtuous. It's a fashion statement. Meanwhile, the Civic hybrid can't be distinguished by appearance from the polluting, gas-guzzling mob.

The Prius is, I think, a parable for the broader politics of global warming. Prius politics is mostly about showing off, not curbing greenhouse-gas emissions. Politicians pander to "green" constituents who want to feel good about themselves. Grandiose goals are declared. But measures to achieve them are deferred—or don't exist.

California Gov. Arnold Schwarzenegger is the champ of Prius politics, having declared that his state will cut greenhouse emissions to 1990 levels by 2020 (about 25 percent below today's levels) and is aiming for an 80 percent reduction below 1990 levels by 2050. However, the policies to reach these goals haven't yet been formulated; that task has been left to the California Air Resources Board. Many mandates wouldn't take effect until 2012, presumably after Schwarzenegger has left office. As for the 2050 goal, it's like his movies: make-believe. Barring big technological breakthroughs, the chances of reaching it are zero.

But it's respectable make-believe. Schwarzenegger made the covers of Time and NEWSWEEK. The press laps this up; "green" is the new "yellow journalism," says media critic Jack Shafer. Naturally, there's a bandwagon effect. At least 35 states have "climate action plans." None of this will reduce global greenhouse-gas emissions from present levels.

Even if California achieved its 2020 goal (dubious) and the United States followed (more dubious), population and economic growth elsewhere would overwhelm any emission cuts. In 2050, global population is expected to hit 9.4 billion, up about 40 percent from today. At modest growth rates, the world economy will triple by midcentury.

Just to hold greenhouse-gas emissions steady will require massive gains in efficiency or shifts to nonfossil fuels. The McKinsey Global Institute predicts that, under present trends, worldwide energy use will have risen 45 percent from 2003 to 2020. China will have accounted for a third of the increase, all developing countries for four fifths. Even after assuming huge improvements in energy efficiency (better light bulbs, etc.), McKinsey still projects an increase of 13 percent in global energy demand.

But we've got to start somewhere, right? OK, here's what Congress should do: (a) gradually increase fuel economy standards for new vehicles by at least 15 miles per gallon; (b) raise the gasoline tax over the same period by $1 to $2 a gallon to strengthen the demand for fuel-efficient vehicles and curb driving; (c) eliminate tax subsidies (mainly the mortgage interest-rate deduction) for housing, which push Americans toward ever-bigger homes. (Note: If you move to a home 25 percent larger and then increase energy efficiency 25 percent, you don't save energy.)

I support these measures, because we should implement them anyway. We should limit dependence on insecure foreign oil. Tax subsidies cause Americans to overinvest in oversized homes. But practical politicians won't enact these policies, except perhaps for higher fuel-economy standards. They'd be too unpopular.

Prius politics promises to conquer global warming without public displeasure. Gains will occur invisibly through business mandates, regulations and subsidies. That's why higher fuel-economy standards are acceptable. They seem painless. It sounds too good to be true—and it is. Costs are disguised. Mandates and subsidies will give rise to protected markets. Companies (utilities, auto companies, investment banks) will manipulate rules for competitive advantage. There will be more opportunity for private profit than public gain.

The government's support for ethanol is instructive. In 2006, 20 percent of the U.S. corn crop went for ethanol; the share is rising. Driven by demand for feed and fuel, corn prices have soared. With food costs increasing, inflation has worsened. The program is mostly an income transfer from consumers to producers and ethanol refiners. Americans' oil use and greenhouse gas output haven't declined.

Deep reductions in emissions of greenhouse gases might someday occur if both plug-in hybrid vehicles and underground storage of carbon dioxide from coal-fired power plants become commercially viable. Meanwhile, Prius politics is a delusional exercise in public relations that, while not helping the environment, might hurt the economy.