similar groups in other countries—was introduced. Overall, the convention emphasized that dealing with climate change would be a process that would extend over many years, even decades. And its execution demonstrated that the character of international negotiation was changing—that nongovernmental organizations were now sanctioned as part of the process, with their own more-or-less guaranteed seats at the table.
The U.S. administration’s own experts had calculated that the United States could manage to hold emissions by 2000 at 1990 levels through new energy-efficiency programs and new environmental technologies. “That was just wrong ,” Reilly later said. “We did not anticipate the fabulous economic growth that the United States would experience in the 1990s. Emissions actually rose 11 percent in the 1990s. On the other hand, if there had been targets, that would have enabled policies that would have led us to be more efficient.”28
As it was, the Framework Convention on Climate Change—the agreement that came out of Rio—was remarkable. Not because of its targets, for it had none save the “aim” to reduce emissions in 2000 to 1990 levels, but because it existed at all. Four years earlier, climate change had not even been on the political agenda in the United States, nor on that of many other countries. Yet in less than half a decade, what heretofore had been an obscure scientific preoccupation had been turned into something that the international community had gone on record promulgating as an urgent and fundamental challenge to humanity and to the planet’s well-being.
The road to Rio was actually quite long; it had begun more than two centuries earlier, in the Swiss Alps. But what had started as an obsession by a handful of researchers with the past, with glaciers and the mysteries of the Ice Age, was now set to become a dominating energy issue for the future.
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MAKING A MARKET
The idea was reprehensible—morally reprehensible. Create a market in pollution? Trade “allowances” that give companies the right to sell their pollution like a commodity? Put a market price on environmental degradation? Unbelievable!
That was the response of many environmental organizations, academics, and many others to a revolutionary idea: using the mechanisms of the marketplace—buying and selling—to solve environmental problems.
One prominent political theorist put the objections in philosophical terms: “Turning pollution into a commodity to be bought and sold,” he declared, does the grave disservice of removing “the moral stigma that is properly associated” with pollution. The head of a major environmental organization was more blunt. “Economics,” he said, “is an advanced form of brain disease.”1
That may have been the common reaction in the late 1980s and into the 1990s when the battle over using markets to curb pollution was at its fiercest. This particular form of “brain disease” arose from the world of ideas, from a debate among economists about how to subject pollution to the laws of economics. Then, intrigued by its possibilities, and at the same irate with the rigidities of conventional regulation and frustrated by inaction, a small group of “policy entrepreneurs”—economists, environmental activists, and officials—seized upon the idea of using the market to address climate change. Instead of an abomination, it came to be seen as the “better” way to take on the challenge of climate change—and, indeed, as the essential tool. They eventually called it cap and trade.
The ambitions held for it were breathtakingly large; it was intended to do nothing less than remake the world’s energy marketplace and the character of energy in every person’s life and thus many of the daily choices that we make. How did this come about? It goes back to what John Maynard Keynes called the “academic scribblers”—those who come to influence subsequent politicians and lawmakers and “practical men” in general—none of whom have any idea that they are channeling thinkers they had never heard of in the first place.
THE “SCRIBBLER IN CHIEF”
In this case, there was even a “scribbler in chief”—Ronald Coase. Yet Coase would have seemed a most unlikely candidate for this post. Born in 1910, he suffered as a child from “weakness” in his legs, thought to be polio, as a result of which he had initially been put into classes for physically and mentally handicapped children. He managed to learn to read only by studying the labels on bottles of medicine. But, at age 11, his father, a postal worker, took him to a phrenologist, who, seeking to bolster his confidence, said, “You may be inclined to underrate your abilities.” It was good advice. The next year, Coase managed to switch