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Water, beer and the White House

Here's a recent headline from Sydney: "Australian Drought Pushed up Price of Beer."

Here's one from Atlanta: "Georgia governor leads prayer for rain."

In the world's first climate change election, Australian voters last month ousted the incumbent, conservative prime minister, John Howard, who scorned the idea of global warming. They replaced him with Kevin Rudd, the liberal challenger from the Labor Party. Rudd ratified the Kyoto Protocol in the first formal act of his government, thereby ending Australia's isolation on climate change.

It could happen here.

So, at least, suggested Jonathan Lash, the president of the World Resources Institute, in his annual look at environmental issues for the year ahead. Lash has a good track record as a prognosticater-he predicted state legislation to regulate greenhouse gas emissions in 2006 (before California acted) and he opined that big U.S. companies would endorse federal climate legislation in 2007 (although he had insider information there, as a founding member of the U.S. Climate Action Partnership).

Lash has no special insight into the weather that awaits us during the 2008 U.S. election campaign and, in fact, he was careful to note that you can't attribute specific weather events-droughts, heat spells, hurricanes or cyclones-to climate change. "But," he added, "the public won't be troubled by the scientific niceties. It was the weather that drove the turnaround in Australian public opinion."

He's probably right that climate change and the environment, issues that up to now have been all but absent from the presidential campaign, could come into play in a big way if the weather in the year ahead gets drier, hotter or stormier. Already, he noted, conflicts are brewing in the southeast as Atlanta seeks to tap into the water from the Tennessee River valley. What if droughts drive up food prices? Or beer prices, as they did Down Under? Australians, Lash observed "are the largest per capita users of coal in the world." (They rank 4th in per capita beer consumption, in case you were wondering.) If the Australians got religion on climate change, so could the U.S. electorate. Particularly if the Republicans nominate anyone but John McClain, who has a good record on global warming, the issue could benefit Democrats.

Lash's other predictions were less fanciful, but well worth the trip from my home in Bethesda to the National Press Building in Washington, where he did his briefing. Congress, he predicted, will enact climate change legislation, either in 2008 or 2009. He described the Lieberman-Warner bill that cleared the Senate's environment committee as "a very strong bill" and said that big companies-which now face the prospect of differing regulatory schemes in the west, the midwest, the northeast and Europe-will press harder in the year ahead for federal action. "The key thing to watch is whether the House begins to move," Lash said. The big players on the House side are John Dingell (a car guy) and Rick Boucher (a coal guy). If they introduce a bill soon after New year's Day to offer a bill, Lash said, you will know they are serious about moving forward. And if Congress manages to enact a bill next year, and send it to President Bush, "my guess is...he will sign it," he said.

The WRI also expects good things out of the EPA next year. "If Congress doesn't act," Lash said, "EPA is going to." The agency is under pressure from the U.S. Supreme Court to regulate carbon emissions, and it is already working on a regulatory scheme. That's another reason why Congress does not want to be left on the sidelines.

Other issues to watch include the rise of biofuels, and the threat they post to deforestation. (As part of its collaboration with the Goldman Sachs Center for Environmental Markets. WRI just published an excellent new report on biofuels, called Plants at the Pump.) China, and the Beijing Olympics, will be another big environmental story in 2008. So will the growth of clean technology investments in such areas as solar thermal power plants and next-generation biofuels.

All topics, it turns out, that we will address this spring at Brainstorm: Green, FORTUNE's upcoming conference on business and the environment. WRI is among the groups helping us program the event. Maybe we should add a panel on the Australian election and bring in some weather forecasters, too.

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