Brothers Battle Climate Change on Two Fronts

Source: By CORAL DAVENPORT, New York Times • Posted: Monday, May 12, 2014

William Nordhaus an economist at Yale, came up with the idea of a carbon tax and developed a model for determining the price tag of climate change. CreditChristopher Capozziello for The New York Times
WASHINGTON — In the New Mexico of the 1950s, the two brothers grew up steeped in the beauty of the landscape, the economics of energy and the power of science. They skied, fly-fished, explored on the family’s 50,000-acre sheep ranch, watched oil towns go boom and bust, and talked of the nuclear weapons up the road at Los Alamos.

Today the work of Robert and William Nordhaus is profoundly shaping how the United States and other nations take on global warming.

Bill Nordhaus, 72, a Yale economist who is seen as a leading contender for a Nobel Prize, came up with the idea of a carbon tax and effectively invented the economics of climate change. Bob, 77, a prominent Washington energy lawyer, wrote an obscure provision in the Clean Air Act of 1970 that is now the legal basis for a landmark climate change regulation, to be unveiled by the White House next month, that could close hundreds of coal-fired power plants and define President Obama’s environmental legacy.

Called the Manning brothers of climate change, the mild-mannered, dry-witted Nordhauses are scions of a New Mexico family long rooted in the land, which powerfully shaped who the brothers became. But for the Nordhaus brothers, protecting the earth depends far more on dispassionate thinking and intellectual rigor than on showy protests outside the White House.

Robert Nordhaus wrote a provision of the Clean Air Act that is now the legal basis for a landmark climate change regulation. CreditGabriella Demczuk/The New York Times

They have neatly divided their world — Bill is the academic theorist, Bob the legal mind and political pragmatist — but their work is intertwined.

“I tend to have lots of crazy ideas, and I run them by Bob first,” Bill said by phone from the Acela train between Boston and New Haven, Conn. He described himself as “an academic economist” who has stayed out of policy debates, although his ideas have not.

Bob agreed. “Bill’s work is about what needs to be done and how soon, using the tools of economic analysis,” he said over a recent lunch in Washington. “My work is: How do you convert that into a legal and regulatory policy?”

The two have a friendly rivalry, but both believe that cutting carbon pollution is crucial to protecting the environment and the economy from the risks posed by climate change. They also agree on the best way to do it: A Bill-style carbon tax, they say, would be far more effective and efficient than a Bob-style regulation.

Their story starts in Albuquerque, where their father, the grandson of a wealthy Santa Fe merchant, started the ski resort at the top of Albuquerque’s Sandia Peak and with a partner built the city’s iconic tram up the granite cliffs to get there. A specialist in energy and Native American law, Robert Nordhaus Sr. won a Supreme Court case giving Apache tribes the authority to levy fees on the oil companies that drilled on their native land.

Like him, both brothers went east to Yale, where in 1963 Bob graduated from the law school and Bill from Yale College. From there Bob headed to Washington for a job as a staff lawyer in the House legislative counsel’s office.

He was still there in 1970, working on the bill that would become the Clean Air Act, when his bosses came to him with an unusual assignment: The legislation already included language to regulate known pollutants, such as mercury and smog, but could he write a provision giving the federal government the authority to regulate as-yet-unknown pollutants of the future?

Bob wrote the provision — it became Section 111(d) of the Clean Air Act — at a time when carbon dioxide, a greenhouse gas, was not considered harmful. It was not until 2009 that the Environmental Protection Agencydefined carbon dioxide as a harmful pollutant because of its contribution to global warming. Thus it falls into the category of an unknown “pollutant of the future.” Section 111(d), after languishing in obscurity for decades, is now the legal rationale for the Obama administration’s plan to regulate carbon emissions without a law passed by Congress.

While Bob began his career in Washington, Bill received a Ph.D. in economics from the Massachusetts Institute of Technology and began teaching at Yale. By the late 1970s, when an increasing number of scientists were raising the threat of global warming, Bill wrote a paper proposing a tax on industries and businesses based on the amount of carbon they emitted into the air. The idea was revolutionary at the time, but economists, scientists and many world leaders now say it will have a powerful market effect and is the best way to stave off the catastrophic impacts of a warming world. Already, more than 30 countries have passed carbon-pricing laws.

In the ensuing decades at Yale, Bill developed an economic model that put a price tag on the effects of climate change, like more droughts, flooding and crop failures and stronger hurricanes. He called it the Dynamic Integrated Climate-Economy model, or DICE.

“The name was both descriptive (representing a dynamic integrated model of climate and the economy) but also consciously aimed to suggest that we are gambling with the future of our planet,” Bill wrote in an email.

DICE profoundly changed climate policy. Although the chief political argument against curbing carbon emissions from cars and coal plants has long been that doing so would harm the economy, the DICE models show that, depending on various scenarios, one ton of carbon pollution can inflict $20 to $30 in economic damage — a major cost, given that the global economy emits about 36 billion tons of carbon a year.

Bill’s work “was seminal,” said Robert Stavins, director of the Harvard Environmental Economics Program.

But it is, for the time being, politically untenable in the United States. The conservative Heritage Foundation has called the DICE model “flawed beyond use for policy making” and warned that it should not be used to justify “trillions of dollars of government policies and burdensome regulations.”

Here the work of Bob comes in: Mr. Obama tried but failed to push a carbon-pricing bill through Congress in his first term, which is why he has turned to Bob’s section of the Clean Air Act as the legal underpinning for the regulation due out in June.

Bob, who was an energy adviser to President Jimmy Carter and general counsel at the Department of Energy under President Bill Clinton, now says that because he was not writing the provision with climate change in mind, the new regulation is an imperfect and perhaps legally vulnerable solution to regulating carbon pollution. Environmental lawyers note that it has almost never been used.

“I call it the 40-year-old virgin,” said David Doniger, a lawyer with theNatural Resources Defense Council, an advocacy group.

But one way the E.P.A. will justify the new regulation is with an analysis showing that the economic benefits of the climate change rule would outweigh the costs.

A core component of that analysis? The DICE model.

Back in New Mexico, Bob recalled, he and Bill — the oldest and youngest brothers among four siblings — could not help noticing the changing world of energy around them. In the 1950s, he said, as the Los Alamos weapons program expanded, the state changed “from a pastoral economy, split between ranching, irrigated farming and extractive industries, to defense-related work, which was a whole different world.”

They also paid close attention to the climate changes, and periodic droughts, that affected the family ski business and their lives outdoors.

“Growing up in New Mexico,” he said, “you’re aware of the very fragile ecosystem.”