Michael Grossman: Choke Point

Fifty Shades of Grey has a new meaning thanks to Beijing’s air pollution index recording 755 on a scale of 0 to 500, with 500 being the most unhealthful air imaginable.

For the first (and I suspect) not the last time, Beijing’s local council restricted construction and industrial activity, curbed vehicle use by government officials and ordered schools to limit outside activity. On the same day New Yorkers went about their normal business with an air pollution rating of 19, or about 40 times less air pollution that the Chinese capital.

If you could see through air the color of bouillabaisse, there is an undeniable truth that’s at the base of our nation’s distinct value proposition in the global economy and the need to adapt to a warming planet: we will never win a battle with the China (or India) when it comes to ‘cheap.’ We can, however, win in the global economy at ‘smart’ and ‘clean.’ (H/T Tom Friedman)

China has been driving a three-decade steamroller to economic powerhouse status, becoming the model in the process for India, Indonesia, Brazil and a host of other emerging nations who are paving their way to middle class prosperity. Painful as this may be to admit, we aren’t going to stop this drive at the expense of the environment through a top-down international treaty comprised of pie wedges and binding targets but by the same grassroots activism from the Chinese people that has spurred the Arab Spring and countless clarion calls from the American public to adapt to current realities.

We are sitting on a glut of fossil fuels right now while at the same time our canary in a coalmine–the Patent and Trademark Office—has issued a similar surfeit of patents in recent months in fuel cells, solar and wind technologies. Wouldn’t it seem to reason we should be selling China the commodities they need today, and as they come to grips with the inevitable arc of resource constraints that will eventually wean them from fossil fuels, invest in the technologies we can sell them tomorrow?

China is choking itself on coal, so counterintuitive as it might sound, now is exactly the right time to profit by sending domestic coal overseas. By creating a larger international market, we’ll drive up the domestic price and hasten our own utilities’ transition to efficiency, renewables and cheaper and cleaner natural gas (which is why you don’t want to ship that fuel overseas in addition to what we don’t know yet about fracking).

It’s going to take China ten-to-twenty years to wean itself from coal in the best case scenario, meaning American ports aren’t the choke point for coal; only the Chinese people (and Indians) will be the arbiter of that decision. If activists are successful at preventing coal terminals from being built in the Pacific Northwest to ship coal from Wyoming and Montana, other nations will be quick to replace the supply. Only when residents of Shanghai and Tianjin and the hundreds of millions that moved into cities have had enough of breathing toxic air and drinking fetid water, will there be a true force for change against China’s lenient policies on burning carbon. Remember, this is an autocratic government that fears civic unrest more than it will ever fear a finger-wagging UN delegate. If you want to democratize China, what better way than to galvanize the public around an issue that doesn’t directly challenge government authority, but absolutely makes them more conscious global players?

Wouldn’t it be great if they took some proactive steps around emissions, water remediation or carbon capture because average Chinese citizen demanded it? Wouldn’t it be even better if American companies could come to the rescue by selling China the engineering and technologies that we perfect over the coming decade to help them do just that?

Long term, China will get out of the coal business at the same pace other governments tip the balance towards changing–when the human costs become too high. We can use this interval to be ready to compete against a clean energy China by using a levy on overseas shipments of coal today to invest in land acquisition for our own high-speed rail system that’s been languishing as a pipe dream for decades, and connect rural and urban America while getting more people out of cars and reducing our need to spend billions building new highways while taking a bite out of our own carbon emissions.

To environmentalists, this means more delay as the PPM number grows closer and closer to the point of no return—and they’re right: it’s a high stakes gamble. Unfortunately, if we don’t stay engaged (read: sell them coal) we get stuck sitting at the table without holding any cards.

Source, Michael Grossman, Fifty+One, January 22, 2013.