Lomborg on Fox News...

Here's an interview with Bjorn Lomborg....

Gigot: It's been dubbed cap-and-trade, and as Democrats work to push a climate-change bill through the Senate, all eyes on this controversial approach to combating global warming. The system would require U.S. companies to purchase permits to emit greenhouse gases, and the total number of permits available would be capped. The companies would be able to trade or sell their permits depending on their emission needs. Europe has been employing cap-and-trade for years, but has it actually worked?

Bjorn Lomborg is director of the Copenhagen Consensus, a think tank in Denmark, and author of "Cool It: The Skeptical Environmentalist's Guide to Global Warming."

Bjorn Lomborg, welcome.

Lomborg: Thanks, Paul.

Gigot: All right. So Congress and the president are pushing cap-and-trade here in the United States. Good idea?

Lomborg: Pretty bad idea, in sense that both--it's not going to do very much to climate. It's not actually going to reduce temperatures very much. Estimates show 0.2 degrees Fahrenheit by the end of the century.

Gigot: And why is that? Because China and India wouldn't be part of it?

Lomborg: It's probably partly because of the way that it's actually constructed, that it actually turns out you can go out and buy a lot of permits elsewhere. So there is a huge barn door open for actually not reducing very much.

Gigot: So unless you really, really push that cap down, you're not going to really help.

Lomborg: Yes, and the second part, of course, is that the U.S. is only a fairly small player towards the end of the century. So the vast majority of emissions are going to come from China and India.

Gigot: All right, so why else is it a bad idea?

Lomborg: And the problem is that it costs a lot of money. That you end up both paying a lot, even if you did it smartly, but chances are that most of these kinds of legislations are going to be bungled, simply because there is huge amounts of political interest, a smorgasbord for political lobbyists.

Gigot: OK.

Lomborg: So essentially, you are going to have a very expensive bill doing very little good for the climate. That's a bad idea.

Gigot: All right. Interesting. Now Europe has had this for years, after the Kyoto protocol was endorsed by European nations. How well has it worked in Europe?

Lomborg: Well, it's almost not reduced emissions.

Gigot: Really? Not at all?

Lomborg: No. It has probably has a tiny bit, but if you look at the major impact of what has actually happened in Europe, it's because England went to gas because of Thatcher. And it's because East Germany was incorporated into West Germany. Those are the two main things that caused Europe to reduce--

Gigot: And gas reduced emissions--

Lomborg: Yes, gas reduced the emissions from coal.

Gigot: Fewer emissions as opposed to coal, from coal.

Lomborg: So basically, it had very little to do with Kyoto, what happened in Europe. And what you also saw was, the main people gaining from Kyoto--who was that? That was the energy companies in Europe, because they got all the permits for free, which is also what's going to look likely in the U.S. But they charged the consumer, so they made tens of billions of euros every year from Kyoto.

Gigot: So this is something that you call the climate-industrial complex, a play off of Dwight Eisenhower's famous military-industrial complex. What do you mean when you talk about this? This is a relationship between business and government on this kind of climate legislation. Give me an example.

Lomborg: The problem, of course, is that there's a lot of companies that are going to make a lot of money. Immelt from GE, obviously making a lot of windmills.

Gigot: The CEO of General Electric.

Lomborg: He would love for us to buy a lot more windmills. T. Boone Pickens--a lot of people are going to make a lot of money off of this. So of course they are telling us climate change is terrible. If you actually look at the latest--their latest summit in Copenhagen, because we're going to have the climate summit by the end of the year. They told us that we were going to see eight-story-high sea-level rises, which is beyond anything even Al Gore has been claiming. But of course it makes since to try to terrify people to say, "All right, well, then we want to buy into cap-and-trade."

Gigot: But you know, if you talk to some of these business CEOs, what they'll tell you is, Look, we have no choice to play ball with government, because if we're not at the table, we're on the menu. So we have to be there, and we have to make sure to protect our shareholders. And if they're going to tax us or limit what we can do, of course we have to fight and lobby to get some kinds of benefits that we can offset those costs. What is wrong with that?

Lomborg: You're absolutely right that many businesses just simply want security, and they don't know what's going to happen, and therefore they'd rather have something happen than not knowing where they're going. But the problem is that many are also playing for much, much higher taxes and much higher cap-and-trade, because they're going to make money.

But yes, we do need certainty. And I think we should be honest be honest and say, "Yes, climate is a problem." We should tax it at the relevant rate, that is how much damage does an extra ton of CO2 do. And the answer is about $7 per ton of CO2.

Gigot: And Congress is thinking of 20 or more dollars per ton.

Lomborg: Right, and if you look at Kyoto, that was probably 30 or even 40 dolars. The next Kyoto is probably going to be even more.

Gigot: So you're saying impose--if you really are serious about global warming and want to do something, impose just a tax across the board on carbon.

Lomborg: Yes.

Gigot: But of course, that's politically unpalatable, because that would raise gasoline prices. That would be something consumers could see directly, whereas cap-and-trade is hidden, and it's on businesses, so people don't see it. Is that part of the calculation?

Lomborg: Absolutely, and of course, you have to be honest. If you're going to reduce consumption of fossil fuels, it needs to be more expensive. But the crucial fact here is to remember, even if you put a $7 tax on carbon, it won't mean much. It'll mean 6 cents more per gallon of gasoline, so it's not going to be a terrible disaster. What you need--and this is the thing that's really missing in the whole discussion--is you need much more research and development. You need to get green energy to be much, much cheaper. Right now, solar panels are incredibly expensive, so a few--

Gigot: I understand that. But I have to tell you, we've been subsidizing solar panels in the United States for about 30 years. And they're still not competitive with regular carbon energy. Why are you going to throw more money after bad?

Lomborg: Because you've been doing it badly, and most of the world has been doing it badly.

Gigot: That's for sure.

Lomborg: You've been subsidizing people putting up solar panels, inefficient solar panels. That's not we want to do. We should invest in getting better technology of solar panels, because we want to have solar panels, or something else, eventually competitive with fossil fuels. Now that's much cheaper, and the benefit is that that's the only way you're going to get the Chinese and the Indians on board.

Gigot: And you subsidize wind and other things as well, other alternatives?

Lomborg: Don't subsidize them. Invest in research and development so that they become cheaper. Imagine if we could make solar panels cheaper than fossil fuels by, say, 2040 or 2050. We'd have solved global warming, because everybody would shift to these solar panels. Not because they are green, not because they are good people, but because we've made it cheaper.

Gigot: All right. Excellent discussion. Thanks, Bjorn.