After a long weekend of family and sun, centered around our annual rite of Americana, I've been thinking about what a modern declaration of independence would look like. What is the modern tyranny that controls our lives?

I looked back at the actual Declaration of Independence to spark my thinking. After laying out our "unalienable Rights" to life, liberty, and the pursuit of happiness, our founders declared...

"That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government..."

I can think of no greater form of control and "destructive" practice than our utter dependence as a country and species on fossil fuels for our energy. We rely on fuels which come, in large part, from parts of the world that fund actual tyranny (of women in particular) and religious fundamentalism that creates a true security threat (see this report from retired generals and admirals about how climate change and energy dependence threaten our security).

Substitute our dependence on these fuels for "government" in the Declaration. Reliance on fossil fuels dirties our air and threatens our health and life (and those of our soldiers forced to defend oil stocks around the world), it reduces our liberty, and let me ask this: how happy are we with this dependence?

Consider also this passage from the Declaration that appears during the litany of complaints against the King.

"He has plundered our seas, ravaged our coasts, burnt our towns, and destroyed the lives of our people."

What is the BP oil spill if not a "plundering" of seas and destruction of coasts and economies? If we were not dependent on these fuels, we would not need to dig in such hard-to-reach places with such high risk of failure.

Energy is not the enemy. Energy is the foundation of our lives. And just as the colonization and support of the British empire allowed the formation of a new nation, we have used fossil fuels to build our society and raise the standard of living for literally billions of people. And we should respect that.

But it's time for us to throw off our bonds and pursue new, cleaner forms of energy as fast as possible. The same companies that have helped create our modern energy-rich society can play a critical role...or not. It's their choice.

Imagine how it would feel for an individual, home, or business to get all the energy it needs from local, free sources -- the sun, wind, wave, and heat of the ground below us.

That's a form of freedom and prosperity we have not known...but we will.

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The day after the climate bill failed in the U.S. Senate, the New York Times' conservative columnist Ross Douthat gave his take on "The Right and Climate" in a piece that on the surface sounded reasonable. Maybe it was best that the bill didn't pass, he says. While he displays some bravery in calling out the climate change deniers, who remain almost entirely on the right, for "making a spectacle of their ignorance," he nevertheless himself betrays a much greater ignorance about what climate change means for us and our economy. Douthat espouses the dangerous idea that doing nothing to combat climate change is the best course for business and for the world.

In doing so he relies on a set of arguments against the pursuit of a clean economy that have little basis in fact and mainly defend the untenable status quo. The overall pitch has two main parts: (a) promoting a clean economy through the use of market mechanisms like cap-and-trade is a perversion of free markets, since the renewable energy industry shouldn't need tax subsidies if it's a real business; (b) going green will cost jobs and hurt the economy. Let's look at both ideas.

First, the notion that fossil fuels do not rely on subsidies is absurd. A new analysis from Bloomberg New Energy Finance compares the roughly $45 billion of global government subsidies for renewable energy (mostly tax breaks) to the $557 billion of subsidies for fossil fuels in 2008 alone. That 12-to-1 ratio of dirty-to-clean subsidies is surely understated. Let's just say that the International Energy Agency, which calculated that larger number, is not a liberal think tank, and it is measuring only the most literal subsidies. In reality, the market for energy is not currently "free" at all. So if putting a price on carbon helps us support new industries of the future, drive innovation and, say, preserve the ability of the planet to support our species, it seems like a good deal.

Second, this general notion that green will hurt the economy is simply the easiest defense of doing nothing. This concept — that that there's some tradeoff between economic development and what he calls a "growth-slowing regulatory regime" — is the heart of Douthat's argument. This idea is so very dangerous since it keeps us tied to the past, and abdicates leadership to other countries that are pursuing the real growth and prosperity agenda.

The most thorough studies — such as the well-regarded Stern Review on the Economics of Climate Change — tell us that the cost of ignoring climate change (including the possible devastation to our species) will be far higher than addressing it. Using less energy and material, or switching to electric vehicles and renewable energy, will help everyone from homeowners to businesses save money. As one CEO said to me, "I don't know about climate change, but it seems pretty clear that producing less carbon is better than producing more."

And the flashy side of this "kill the economy" argument remains the odd notion that a green agenda will kill jobs. Of course it will destroy some old-school jobs, but clearly the move to a clean economy will create jobs as well — millions of them. Installing insulation and solar panels, building wind turbines, and managing buildings for energy efficiency are just some of the obvious ones. Every industry that makes components for these new sectors will also have new markets and customers.

So what part of the economy is actually hurt by the race to clean economy? Which companies will lose jobs? In essence, only one sector, oil and gas, will truly get hit. If everyone uses less in general, and switches from fossil fuels overall, then of course those companies that only provide fossil fuels will shrink-unless they decide to play a role in the new energy economy).

But the big mistake is that protecting these particular jobs, and keeping us pinned to the status quo, does not represent a path to growth. Consider this: at the macro level, the world produces roughly 85 million barrels of oil per day. Nobody reputable seems to think that the number will rise much if at all; in fact, "peak oil" theories have gone quickly from fringe to mainstream (even Kuwaiti scientists recently predicted a global peak in the next five years).

My point is that even with optimistic numbers, fossil fuels are not a growth industry, and not a job creator. Relying on that sector is not a path to prosperity for the world or for the United States. Creating new technologies and products, building greener buildings and businesses, and just plain using less energy to do it all: those actions will make almost all companies more profitable — just not the ones providing only fossil fuels.

Our current path, and commitment to doing nothing, is in effect protecting one sector at the expense of all the others...and risking our planet and economy as well.

(This post first appeared at Harvard Business Online.)

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Creating a clean economy will not be easy. It will require sustained, consistent, and large-scale investment across many sectors, including transportation, building systems and appliances, energy generation, and of course the electric grid itself. We will need new, more intelligent software and hardware to manage the new demands on the grid.

We'll need a smarter grid, one that will both communicate in real time with customers' devices to help manage peak demand and manage the inflows of renewable energy and plugged-in electric cars. But this is not a single pursuit; it's the connective tissue in a network of new technologies and energy systems. These are multi-trillion-dollar markets, so the opportunities for the countries and companies that lead the charge will be vast. And some governments, especially in China and Germany, are taking this challenge much more seriously than others.

At the country level, I see two core indications of leadership and commitment to the clean energy economy:
(1) the amount of capital invested by both the private and public sectors and,
(2) the implementation of an aggressive policy framework that supports the economy-wide shift.
On both fronts, a few countries, but China in particular, are going for the gold.

According to a pithy report from Deutsche Bank titled "The Green Economy: The Race is On", in the years 2000 to 2009, the U.S. invested (public and private) about $67 billion in clean technology. Similarly China spent $72 billion and Germany $38 billion. However, as a percentage of GDP, China, Germany, and even Brazil are investing at a rate three times greater than the U.S. On the specific issue of smart grid investment, another report estimates that the U.S. and China far outpace the rest of the world with an estimated $7 billion each in spending in 2010 alone (PDF). Companies like IBM, Siemens, GE, Cisco, and HP have noticed this investment — and plan to get a piece of the business.

The U.S. economic stimulus package, technically the American Recovery and Reinvestment Act (ARRA), is really kicking in now. ARRA provides tens of billions of dollars for energy efficiency, R&D investment, and new transmission and smart grid investments. According to a recent report in Time Magazine, the Obama administration has turned the Department of Energy into "the world's largest venture capital fund."

This level of investment should not be taken lightly, but the stimulus is short-term. China is doing things differently, making longer-term, sustained commitments that are much larger. The country is already in the process of building 16,000 miles of high-speed rail (that's roughly, oh, 16,000 more than the U.S.). And China is bringing together 16 state-run companies to put one million electric cars on the road within a few years.

But it was the country's ten-year plan that made some jaws drop. Between now and 2020, the country will invest 5 trillion yuan in the clean economy. That works out to about $75 to $100 billion per year for 10 years running (smart grid investment alone is estimated at $60 to $100 billion over the next decade). Imagine the U.S. Congress passing the equivalent of the highly controversial stimulus package 10 times over (not likely).

Since the $100 billion in stimulus spending is significant, it's hard to argue that the U.S. is not investing in the future. It's the second aspect of green economic leadership — building a strong climate and carbon policy framework that supports the economy-wide shift — where the U.S. falls short.

Deutsche Bank's report suggests that countries need a policy regime that provides "transparency, longevity, and certainty" to increase investment and get private money off the sidelines. The report lists eight national policy elements that it deems critical, including having a concrete emissions target and a renewable electricity standard, among others. Only Germany and China have put all eight policies in place, while the U.S. has only implemented one in the form of some tax benefits. Unsurprisingly, Deutsche Bank concludes that, "the US is falling behind in the race to develop new technologies, industries, and jobs as the global economy moves towards a low carbon future."

Finally, as an indication of how serious China really is, the country has built the largest solar and wind production industries in the world in just a few years. The government is supporting its renewable energy industries so aggressively and lowering their cost of business so much, that it's likely the country is breaking World Trade Organization rules on fair play.

Even if that's true, you have to admit that China is in the clean economy race to win it. Is the U.S.?

(This post first appeared in a series on the smart grid at Harvard Business Online.)

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The New York Times reported today that the U.S. Military is aggressively pursuing "Less Dependence on Fossil Fuels." Why does the military care about going green? Because the cost in money, resources, and lives to bring fuel to Afghanistan and Iraq is just too great. A few of the mind-blowing statistics in this article:

• Fossil fuel is the number one thing the military imports into Afghanistan (30 to 80 percent of convoy loads)
• The military spends $1 per gallon of gas, but can then spend up to $400 more per gallon to get it to forward operating bases
• For every 24 fuel convoys, one soldier or civilian working on transport was killed

This last fact is truly tragic. The Times got this number from an amazing analysis by the Army Environmental Policy Institute. According to this chilling report, in 2007 alone, 170 people lost their lives on fuel caravans (and another 68 on water transport). The study then goes on to provide hope in the form of calculations on how many lives can be saved by investing in thin-film solar to complement generators in forward bases.

The military has realized over recent years that our reliance on fossil fuels is a direct threat to our military in operation, but is also a larger national security threat. The contrast with our political failings to tackle climate and energy holistically could not be more stark. As the Times put it,

Even as Congress has struggled unsuccessfully to pass an energy bill and many states have put renewable energy on hold because of the recession, the military this year has pushed rapidly forward. After a decade of waging wars in remote corners of the globe where fuel is not readily available, senior commanders have come to see overdependence on fossil fuel as a big liability, and renewable technologies — which have become more reliable and less expensive over the past few years — as providing a potential answer.

The military is seeing how much of a liability oil really is to our war efforts. It's not a big leap to say that reliance on fossil fuels is a liability to our health and economy as well. But you'd think the security argument would be enough.

Military leaders at think tanks like CNA and very well-respected security experts such former CIA head Jim Woolsey (see his recent WSJ op-ed) have been making the case for years that we need to get off of fossil fuels (in particular oil, which props up dictators and funds terror).

I wish I understood why the security argument has not united our politicians on both sides of the aisle to create comprehensive legislation which puts a price for carbon and provides incentives to promote new technologies and support entrepreneurs (the stimulus money is a very good start, but is not in place for the long term).

Luckily for our soldiers, the military is not waiting for us to get our act together on a political or industiral level and is just pushing forward to find new energy solutions. Bravo.

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On the heels of my recent column on China's investment in clean technology, two news items really caught my attention in the last couple of weeks. They tell an interesting story of who in the U.S. is really prepared to build a modern energy system.

First, the Governor of New Jersey decided to stop the construction of a new commuter train tunnel between New Jersey to Manhattan (and again today, after further review, he still killed it). This much-needed expansion of our infrastructure would double the number of trains entering New York City from the west. Up to $3 billion in federal funding had already been lined up to offset some of the cost. The project would also reduce congestion on the roads (and/or allow population and economic growth), reduce pollution, improve property values, and employ 6,000 workers. But even with all of these benefits, unless Christie changes his mind, the project is now dead.

Rising costs — which are always a part of big infrastructure projects — were the stated reason for the Governor's defection. But the small-government fever that's taking over the United States is largely to blame. This country did not seriously debate infrastructure investments in the past. Republican President Eisenhower is credited with signing the Federal-Aid Highway Act of 1956, which committed the U.S. to build an interstate highway system. But he wasn't going out on a limb — this was a bill that the House passed on a vote of 388 to 19, and the Senate by 89 to 1. This landmark infrastructure law raised the gas tax by 50% and allocated nearly $200 billion to the project (in today's dollars). Can you imagine our leaders making that kind of commitment today?

As many pundits have lamented, we seem to have completely lost our ability to consider, invest in, and complete big infrastructure projects. This does not bode well for our future.

But just when I was thoroughly discouraged, Google announced recently that it would invest heavily in a truly innovative energy infrastructure project. The tech giant and some other investors are proposing a $5 billion "transmission backbone" for offshore wind farms along the East Coast. This new 350-mile line would connect Virginia to, yes, New Jersey, and allow for much easier, cheaper development of offshore wind (it would also, as a side benefit, get some cheaper energy already produced in Virginia up to the northern states).

This is in no way the first time that Google has made noise about clean tech. A few years ago it announced its intention to invest a billion dollars to help make renewable energy cheaper than coal. The company has also put in place one of the largest corporate solar installations in the world.

But why would Google invest so much in these kinds of projects? It's easy to dismiss it as the socially-minded whim of a cash-rich company. But that's not giving the company much credit for being a smart operator. Given the resource-intensity of its giant data centers — there's a persistent, believable rumor that Google is the largest energy user in the State of California — trying to bring the cost of renewables down is a great hedge strategy. What growing enterprise wouldn't want to rely increasingly on energy with zero variable cost?

But the company must also believe that this wind transmission project is a good investment. Google is not even the first surprising organization to jump into renewables as an investment vehicle. I'm reminded of Goldman Sachs netting $900 million on the sale of a wind company back in 2007.

So while federal and state governments are somewhat incapacitated, some elements in the private sector are trying to move ahead with infrastructure and green projects anyway. Companies have gotten nowhere near the help they need. The stimulus bill does provide for some serious dollars, but we could've unleashed far more capital with price on carbon, the very thing comprehensive climate legislation would have provided.

But let's not kid ourselves. Infrastructure is way too large a project for the private sector to handle alone. Train tracks, roads, the Internet — all were built with massive and sustained commitment from the government.

But, still, it's a good sign that companies are plowing ahead anyway. Let's hope that the Governor of New Jersey, and other leaders, seize the opportunity and actually start helping these kinds of innovative companies.

(This post first appeared at Harvard Business Online.)

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Obviously some things have changed in Washington and around the country in the last 24 hours. But what will this shift in power mean for the green business movement and for the sustainability agenda in general? It may not change as much as you think, and I see a number of reasons to maintain hope.

Here are my three big takeaways from the elections in general, and the defeat of Proposition 23 in California specifically. (Quick reminder: Prop 23 was an oil-company-funded ballot measure that would’ve suspended the far-reaching environmental law AB32).

1. Federal legislative action on climate and energy is dead. But we knew that already -- the defeat of the climate bill this past summer, even when Dems held huge majorities in both houses, sealed that fate. But to be more nuanced about this point, this election does not mean that all government action is stymied. At the national level, the EPA will move forward with plans to regulate carbon, and it will continue its transparency initiatives, such as the mandate for the largest facilities in the country to measure and release data on greenhouse gas emissions. But let's not kid ourselves: the new majority in the House, with some Democratic support from coal states, will be attacking the EPA aggressively. So all federal action will be a tough slog right now.

But the regional and local players will continue to advance sustainability agendas that affect businesses and consumers alike. Yesterday, I gave the keynote address at the State EPA Innovation Symposium in Wisconsin. I sat in on some sessions and heard about some really innovative ways states are using stimulus funds (or continuing existing programs) to reduce emissions and save money in schools, businesses, and homes. The innovation will not stop. Cities are promoting green lifestyles and business aggressively. Cleveland recently announced a program to give sustainable businesses a leg up on getting city contracts, for example.

But the best indication that climate action in particular is not on hold comes from California. The state announced yesterday that it's moving ahead with a cap-and-trade program, and the defeat of Prop 23 ensures that the program will continue. Which brings me to...

2. A broad consensus on building a clean economy future is not dead. The defeat of Prop 23 shows that coalitions for clear economic and environmental winners can be surprising. As green job advocate Van Jones put it a few days ago, defenders of the landmark clean energy legislation AB32 put together “a beautiful coalition,” including clean tech business leaders, faith-based groups, Governor Schwarzenegger, President Obama, and people from "every political, ethnic, faith, and socio-economic spectrum."

But I believe that one of the main reasons the logic of AB32 won the day was that a range of business interests saw that tackling climate was good for the economy. The greening of industry and society makes perfect business sense. Thus...

3. Business can, and will, lead the sustainability movement. It will have to. With federal support on the ropes, business will continue its leadership. For some that statement may sound odd, but I believe that over the last five years, the private sector has shown more sustained, creative drive toward a lower-carbon, resource-efficient economy than the government has. Corporate giants such as Wal-Mart, HP, IBM, and P&G have set tough goals for suppliers that are often much more strict than federal standards. They have also reduced energy use aggressively in stores, data centers, and fleets saving billions of dollars.

Clearly not all companies have kept up the momentum during the recession. But most of the leaders have. And the green business movement continues for one fundamental reason: it's profitable. As GE's Jeff Immelt said a few years back, "green is green."

So on some level, when it comes to green business, the election doesn't matter at all. Economic logic always wins out and sustainable businesses will be more profitable. Of course, without government support, the pace of change may not be fast enough to fully beat back the challenges of climate change, water scarcity, or biodiversity loss. But business and some unusual coalitions will continue on the sustainable path nonetheless.

For those of us who are working for a more sustainable, healthy, and profitable future for companies, communities, and our country, we should channel Martin Luther King, Jr. who once said, "We must accept finite disappointment, but never lose infinite hope."

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On the heels of the big election, we're all wondering what it means for the issues that matter most to each of us. I'm of course watching closely for signs of what this means for sustainability and the green agenda (see my last post on this).

One of the first specific things I saw on Republican intentions (outside of their non-stop attack on cap and trade for many months) was this headline on HuffPo:
"John Mica: GOP Lawmaker Poised To Head House Transportation Committee Wants To Re-Examine Obama's $10 Billion High-Speed Train Grants."

My first thought was, uh-oh, here they go again, cutting investment in critical (green) infrastructure that will create jobs and build a 21st century infrastructure for our economy to grow on (an infrastructure that China is not shy about investing in while our government seems stymied) .

But I'll admit to being really surprised at what Rep. Mica is actually saying -- his views, as presented in this article at least, made sense to me. His point apparently is not that the $10 Billion in federal stimulus for high-speed rail is a bad investment (which puts him WAY left of many of his new compatriots who want all government action to cease). But, he says, the investment plans so far haven't been logical. As is the Washington way, the stimulus funds aimed at high-speed rail were sprinkled on multiple states, including money to California (to build a line between San Francisco and San Diego), Florida (Tampa to Orlando), Missouri and Illinois (Chicago to St. Louis), and even Wisconsin (Madison to Milwaukee).

The problem, as Mica sees it, is that some of these projects won't result in real high-speed rail, and the population density doesn't always warrant the investment today. Why not start with the Northeast corridor, where the rail system might actually make money?

I'm skeptical that any major infrastructure can make money since that's not what it's for; we built railroads, roads, airports, and even the Internet to facilitate economic and population growth -- they're public goods that rarely make money. But we still should start with the most dense areas and make one region really work before sprinkling it everywhere. Granted, San Fran and Chicago are not rural outposts, but Madison, WI? I was just there this week -- it's lovely, but probably doesn't need a high speed rail line yet.

And as it turns out, many of the newly minted Republican Governors don't want the money anyway. They want to spend on roads instead, which is insane, but these funds can't be used for roads anyway.

So let's hope that when Rep. Mica says, "I am a strong advocate of high-speed rail," he means it. Let's hope this isn't some twisted, cynical bait-and-switch to eliminate needed investment.

Call me naive, but I'm still holding out hope for rational discourse in Washington -- at least about investing in the country's future.

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I'll have a few posts on China over the coming week since I spent a few days in Beijing last week. I had a free afternoon on this trip, so I got the chance to visit the Great Wall.

It's hard to convey what it's like to see this amazing feat of engineering...and folly. When has a big wall ever worked? Maginot Line anyone? Here's me on the Wall -- the haze is pollution of course. (Thanks to colleague Dr. Rhoda Davidson from e3 Associates for taking this!).

I had some fun imagining that first meeting with an emperor in 220 BC when he said, "Hey I have this idea..." But what really struck me was that China seems to love big projects.

We can marvel at the speed of China's growth, especially in the green sphere where the country is building 16,000 miles of high-speed rail and became the largest solar panel maker in the world in just a few years.

But what I learned standing on the Great Wall is that China has done it all before.

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I visited Beijing a couple weeks ago to speak to a group of Chinese corporate executives. They were brought together by a major environmental NGO to discuss climate change. The meeting itself was fascinating, but I was really struck by a general impression in China that the country is taking green business very seriously.

I was interviewed by one of the major Chinese-language financial newspapers, which has a weekly section on clean technology. And each morning at my hotel I received the China Daily, the country's main English-language newspaper. Throughout the news and business coverage, the feeling that sustainability is crucial to the future of the country and its industries is palpable.

Out of 20 feature articles in the business section on November 15th, for example, five were all about the glories (and sometimes challenges) of green. Of course this is anecdotal evidence, but it demonstrates a level of conversation that the rest of the world should take note of.

Of these 5 articles, some were self-explanatory:

• "Nation spurs development of new, green technologies"
• "VW: Tooling up for sustainability"
• "Batteries still drag 'green vehicle' effort"

Two articles didn't scream sustainability until you read them:

• "Chemical company paints rosy picture for the future," which opens with the question, "How can a chemical company earn more money through eco-friendly products?" The article shows how the Dutch firm AkzoNobel is growing in China, particularly through products that help customers reduce environmental footprint in the shipping and building sectors.
• "China Hi-Tech Fair ready to highlight emerging industries," which describes China's largest tech show going on this week in Shanghai.

This last article is the one that really grabbed my attention. The theme of the big event was "Technology-led Transition and Innovation-driven Development," which sounds broad. But the focus was squarely on "energy saving, environmental protection, and the low-carbon economy" with other emerging areas -- infotech, biotech, and modern materials -- taking a distinctly secondary role.

Each major government ministry in China was pitching green products and services at the tradeshow. The Ministry of Commerce was showing how some companies "have made use of technology to...promote a low-carbon economy and environmental protection." The Ministry of Industry and Information Technology's pavilion will demonstrate "industrial energy savings and the comprehensive use of resources." And on and on.

Clearly, China is making green a central pursuit of business, not a side issue. Contrast this with the approach in the U.S., where the equivalent to China's Hi-Tech Fair might be something like the Consumer Electronics Show. It's hard to imagine the focus of that Vegas extravaganza shifting from new entertainment devices and other energy-using toys to energy-sipping technologies.

In the U.S. business community, green is still a separate pursuit -- frankly, it's usually ghettoized within companies and industry events alike. Most green-themed gatherings are still relatively small and feature a recurring cast of characters. The one major exception, which does not disprove the rule, is the mega-event GreenBuild which, coincidentally, was happening at the same time, but in Chicago. Tens of thousands of people gathered to explore green building materials, designs, and strategies.

But imagine if the even-larger annual event held by the National Association of Home Builders (NAHB) was focused mainly on environmental issues (I actually spoke at NAHB two years ago as a green keynoter, but to a few hundred people in a side room, not the thousands that attend the main-stage events). That's what China's Hi-Tech Fair is doing.

I wrote a couple of months ago about China's leadership in the clean tech race, but at the macro level. It's another thing to see the green focus up close. However, the company execs and NGO leaders in Beijing tell me that sustainability is still a new pursuit for Chinese companies. It's really the government that's pushing the agenda with massive investments in clean tech. At the corporate level, they're looking to the U.S. and the West for best practices. But don't count them out for long; if there's one thing Chinese companies are good at, it's implementing a "fast follower" strategy.

Still, before I got too carried away with conclusions about the difference in approaches -- and it's nearly impossible not to trip up trying to generalize about China -- I wanted to see if the November 15th issue of the China Daily was an anomaly. Then the November 16th issue arrived at my door and the cover story was about alternative energy.

(This post first appeared at Harvard Business Online.)

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Before the big job speech, President Obama made an important decision about the economy and public health. About 10 days ago he reversed himself and his own EPA to stop a regulation that would've reduced smog-causing pollution. The U.S. Chamber of Commerce and the Republican Congressional leadership quickly declared this a major victory for "job creators" and business in general.

It's anything but.

I'll give a major concession on this argument and put aside for the moment the danger of ignoring solid science and what it tells about public health (which is that, in the words of NRDC Director Frances Beinecke, "strong smog standards would have saved up to 4,300 lives and avoid as many as 2,200 heart attacks every year...[and] made breathing easier for the 24 million Americans living with ashthma...").

Ok, let's imagine those health benefits don't matter. Even from a business perspective these laws make sense and it's ridiculous to keep them weaker than they should be.

Choosing weaker environmental regulations actually makes our country less competitive and shows amazingly little faith in our business community to innovate.

Just because something may be difficult doesn't mean it will be expensive as well. For decades now, every major environmental regulation has met significant resistance from the industries most affected. That should be expected, but let's deal in reality, not hyperbole.

This time, industry opponents say it will cost enormous sums of money to comply with a regulation that moves the standard from 75 parts per billion to 60 to 70 ppb. We've heard this argument before. The claims of economic destruction, outrageous costs, and lost jobs are almost always seriously overblown.

Every now and then, a business leader admits the falseness of these Chicken Little cries. Former BP CEO John Browne once told Fortune, "Every time there's a new piece of regulation, we say it's the end of our industry...[we have] an appalling track record in this regard."

The most famous example, though, is the battle over the Clean Air Act Amendments of 1990, ultimately signed into law by the first President Bush. This law established the first major "cap and trade" system; it didn't restrict carbon dioxide as current iterations propose, but mandated reductions in acid-rain-causing sulfur dioxide. At the time, industry claimed compliance would cost up to $1,500 per ton of SO2 reduced. For the next decade, the industry never spent more than $200 per ton, and usually far less, as Dan Esty and I discussed in Green to Gold (see p. 75). So business was off on cost estimates by a factor of 10.

But it gets better every time. Friday's laughable assertion from Representative Eric Cantor that changing the smog standard would cost the economy $1 trillion and millions of jobs makes the acid rain cost claims seem quaint.

Granted, the fiscal logic for stricter pollution standards doesn't seem as clear as the cost-saving potential of energy efficiency standards such as those for light bulbs and cars. (Of course politicos are fighting those as well, even though the fact that they truly drive innovation and save everyone money has already been demonstrated repeatedly). But this seeming lack of economic logic applies if you only consider one side of the ledger, the cost to companies most affected. But on the other side we have public health savings, which are estimated at $37 billion per year, and the benefits to other industries.

What about the companies and entrepreneurs that create cleaner ways of operating or provide the pollution-reducing technologies? Those are real jobs too, aren't they? And our companies will be more competitive globally as every country struggles with pollution. Or just consider the productivity benefits to all companies of having their asthmatic employees breathe easier.

But here's what really galls me: saying that stricter pollution standards will cost enormous sums of money shows a staggering disregard for our capacity to innovate.

If American business is the engine of growth that our politicians make it out to be, why can't we find new ways to do things that save money, cut pollution, and make our companies more competitive. When given constraints, the tough and smart get going and innovate (and, by the way, the new standard wouldn't go into effect until 2013, giving us some time).

I have faith in our businesses.

Why don't our industry and political leaders?

(This post first appeared at Harvard Business Online.)

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