Speaking to key decision makers from the Department of Energy and the Department of State, Morse analyzed how to address the fact that coal is now both the leading fuel of choice in the developing world (passing oil in 2006) and the leading cause of climate change. 

Morse offered two strategic frameworks for US policy to reduce emissions from coal-fired power: substitution and decoupling. 

Under the substitution strategy, Morse compared the relative costs and carbon mitigation potential of a portfolio of alternative baseload power generation technologies that could be deployed in the developing world, taking into account political and resource constraints in key countries such as China and India. 

Under the decoupling strategy, Morse analyzed the options for carbon capture and storage compared to the mitigation potential of increasing the combustion efficiency of the existing coal fleet.  Drawing on PESD analysis of coal, power, and gas markets in the developing world, PESD put forward pragmatic strategies to US Government officials that could reduce carbon emissions at scale, without waiting on the emergence of a global carbon market.

Any mention of climate policy was noticeably missing from President Obama's recent state of the union address. This is unfortunate because every day of inaction on climate policy by the United States government is another day that American consumers must pay substantially higher prices for products derived from crude oil, such as gasoline and diesel fuel. Moreover, a substantial fraction of the revenues from these higher prices goes to governments of countries that the US would prefer not to support.

So, what is the cost of a single day of delay? US crude oil consumption is approximately 20m barrels per day and roughly 12m barrels per day are imported. An oil price that, because of climate policy uncertainty, is $20 a barrel higher than it would otherwise have been implies that US consumers pay $400m per day more, of which $240m per day is paid to foreign oil producers. Dividing these figures by the United States population implies that every US citizen is paying about $1 per day more for oil - and more than half of that may be going to an unfriendly foreign government.

Why does this climate policy price premium exist? It is not due to a dearth of readily available technologies for producing substitutes for conventional oil. A number currently exist that are economic at oil prices significantly below current world prices of $80-90 per barrel. Several even have the potential to scale up to replace a large fraction of US oil consumption.

Tar sands and heavy oils, gas-to-liquids and coal-to-liquids are all available to produce substantial amounts of conventional oil substitutes at average costs at or below $60 per barrel. If these technologies were currently in place throughout the US, the world price of oil would not exceed that price, because any attempt by conventional oil suppliers to raise prices beyond that level would immediately be met by additional supply from producers of oil substitutes.

But if these technologies are financially viable at current world oil prices, then why don't they exist in the US? That's because they require massive up-front expenditures to construct the necessary production facilities. These fixed costs, plus the variable costs of production, must be recovered from sales over the lifetime of the project - and future climate policy can substantially increase the variable costs of these technologies.

Climate policy uncertainty impacts of the economic viability of these technologies because of the increased carbon intensity of the gasoline and diesel fuel substitutes they produce. Almost double the greenhouse gas emissions result per unit of useful energy produced and consumed relative to conventional oil. Therefore, if the US decided to set a significant price for carbon dioxide (CO2) emissions at some future date, either through a cap-and-trade mechanism or carbon fee, investors in these technologies would immediately realise a massive loss - because they would have to pay the price fixed for all of the CO2 emissions that result from producing and consuming these oil substitutes.

To understand this point, suppose that a technology exists to convert coal to an oil substitute that is financially viable at an oil price of $60 per barrel and that this technology produces double the CO2 per unit of useful energy relative to oil. At a $90 per barrel oil price, this technology could be unprofitable for a modest price of carbon dioxide (CO2) emissions because of its substantially higher carbon intensity. For instance, at a $100 per ton price of CO2 emissions - which is roughly twice the highest price observed in the European Union's emissions permit trading scheme - the total cost per barrel of oil equivalent, including the cost of the additional emissions, could easily exceed $90 per barrel.

A solution to this investment impasse is a stable, predictable price of carbon into the distant future. Although there is currently a regional cap and trade mechanism for CO2 emissions in the Northeast US, permit prices in the Regional Greenhouse Gas Initiative (RGGI) have been extremely modest - less than $5 per ton of CO2. California also plans to implement a cap-and-trade mechanism in 2012. No significant coal-mining activity takes place in the participating RGGI states or in California. But such regional cap-and-trade programmes are unlikely to set prices for CO2 emissions for a long enough time and with sufficient certainty to encourage investment in facilities to produce conventional oil substitutes. In other words, despite regional experiments with cap-and-trade, it is the national climate policy uncertainty that remains the major factor in preventing these investments.

If prospective investors in the major fossil fuel-producing regions of the US knew the cost of the CO2 emissions associated with these alternative technologies over the lifetime of each alternative fuel project, they would be able to decide which projects are likely to be financially viable at that carbon price. Particularly for coal-to-liquids, much of this investment would take place in the US because of the massive amount of available domestic coal reserves. This investment would also provide much-needed new domestic high-wage jobs.

New sources of supply of conventional oil substitutes would reduce oil prices, create new jobs in the United States and reduce the amount of money sent to governments, whose interests are counter to the US. Finally, this price of carbon would raise much-needed revenues for the US government and stimulate investment in lower carbon energy sources, such as wind, solar and biofuels. A modest, yet stable long-term price of carbon might even stimulate so much investment in conventional oil substitutes and low-carbon energy sources that the long-term net effect of this carbon price could be lower average energy prices across all sources.

The investments in these technologies need not result in higher aggregate CO2 emissions. For example, coal-to-liquids produces a concentrated CO2 emissions stream that is ideally suited to the deployment of carbon capture and sequestration (CCS) technology. Consequently, a carbon price high enough to make CCS financially viable, yet reasonable enough to make this technology competitive with conventional oil, would address both concerns.

If there are concerns that committing to a modest carbon price may be insufficient to address climate concerns, this commitment could be stipulated only for investment projects initiated within a certain time window. The US government could reserve the right to increase this CO2 emissions price for projects initiated after that period. This logic has not escaped the Chinese government, where General Electric and Shenhua, a major Chinese coal producer, recently announced a joint coal gasification project, which is financially viable because the Chinese government can provide the necessary climate policy certainty.

The choice is stark: either we can continue to wait to implement the perfect climate policy, and in the meantime pay higher prices for oil, and watch countries like China that are able to provide climate policy certainty to investors move forward with this new industrial development; or we could commit to a modest climate policy and so unleash the new technologies and new jobs made possible by this more favourable investment environment.

WASHINGTON - Hours before the judge in the latest Mikhail Khodorkovsky trial announced yet another guilty verdict last week, Russia's most prominent political prisoner was already being attacked in cyberspace.

No, Khodorkovsky's Web site, the main source of news about the trial for many Russians, was not being censored. Rather, it had been targeted by so-called denial-of-service attacks, with most of the site's visitors receiving a "page cannot be found" message in their browsers.

Such attacks are an increasingly popular tool for punishing one's opponents, as evidenced by the recent online campaign against American corporations like Amazon and PayPal for mistreating WikiLeaks. It's nearly impossible to trace the perpetrators; many denial-of-service attacks go underreported, as it's often hard to distinguish them from cases where a Web site has been overwhelmed by a huge number of hits. Although most of the sites eventually get back online, denial-of-service attacks rarely generate as much outrage as formal government attempts to filter information on the Internet.

In the past, repressive regimes have relied on Internet firewalls to block dissidents from spreading forbidden ideas; China has been particularly creative, while countries like Tunisia and Saudi Arabia are never far behind. But the pro-Kremlin cyberattackers who hit Kodorkovsky's Web site may reveal more about the future of Internet control than Beijing's practice of adapting traditional censorship to new technology.

Under the Russian model - what I refer to as "social control" - no formal, direct censorship is necessary. Armies of pro-government netizens - which often include freelancing amateurs and computer-savvy members of pro-Kremlin youth movements - take matters into their own hands and attack Web sites they don't like, making them inaccessible even to users in countries that practice no Internet censorship at all.

Cyberattacks are just one of the growing number of ways in which the Kremlin harnesses its supporters to influence Web content. Most of the country's prime Internet resources are owned by Kremlin-friendly oligarchs and government-controlled companies. These sites rarely hesitate to suspend users or delete blog posts if they cross the line set by the government.

The Kremlin is also aggressively exploiting the Internet to spread propaganda and bolster government popularity, sometimes with comical zeal. Just last summer Vladimir Putin ordered the installation of Web cameras - broadcasting over the Internet in real-time - to monitor progress on new housing projects for victims of the devastating forest fires. This made for great PR - but few journalists inquired whether the victims had computers to witness this noble exercise in transparency (they didn't). Russia's security services and police also profit from digital surveillance, using social networking sites to gather intelligence and gauge the popular mood.

The Kremlin in fact practices very little formal Internet censorship, preferring social control to technological constraints. There is a certain logic to this. Outright censorship hurts its image abroad: Cyberattacks are too ambiguous to make it into most foreign journalists' reports about Russia's worsening media climate. By allowing Kremlin-friendly companies and vigilantes to police the digital commons, the government doesn't have to fret over every critical blog post.

One reason so many foreign observers overlook the Kremlin's harnessing of denial-of-service attacks is that they are used to more blatant measures of Internet control. China's draconian efforts to filter the Internet - characterized by Wired magazine in a 1997 article as the "Great Firewall of China" - harken back to the strict censorship of the airways by Communist governments during the Cold War. Back then it was possible to keep out or at least cut down on the influence of foreign ideas by jamming Western broadcasts. The Internet, however, has proven to be far too amorphous to dominate. So its better to co-opt it as much as possible by enabling private companies and pro-government bloggers to engage in "comment warfare" with the Politburo's foes.

Meanwhile, China itself is quietly adopting many measures practiced in Russia. The Web site of the Norwegian Nobel Committee came under repeated cyberattacks after it gave the 2010 award to the jailed Chinese dissident Liu Xiaobo. Many Chinese government officials are now asked to attend media training sessions and use their skills to help shape online public opinion rather than censor it.

In assessing the U.S. government's Internet freedom policy - announced a year ago by Hillary Clinton - one sees few signs that U.S. diplomats are aware of growing efforts by authoritarian governments to harness social forces to control the Internet. So far, most of Washington's efforts have been aimed at limiting the damage caused by technological control. But even here Washington has a spotty record: Just a few weeks ago the State Department gave an innovation award to Cisco, a company that played a key role in helping China build its firewall.

The eventual disappearance of Internet filtering in much of the world would count as a rather ambiguous achievement if it's replaced by an outburst of cyberattacks, an increase in the state's surveillance power, and an outpouring of insidious government propaganda. Policymakers need to stop viewing Internet control as just an outgrowth of the Cold War-era radio jamming and start paying attention to non-technological threats to online freedom.

Addressing the social dimension of Internet control would require political rather than technological solutions, but this is no good reason to cling to the outdated metaphor of the "Great Firewall."

Evgeny Morozov is a visiting scholar at Stanford University and the author of "The Net Delusion: The Dark Side of Internet Freedom."

The first decade of the 21st century has seen a dramatic reversal of fortune in the relative prestige of different political and economic models. Ten years ago, on the eve of the puncturing of the dotcom bubble, the US held the high ground. Its democracy was widely emulated, if not always loved; its technology was sweeping the world; and lightly regulated "Anglo-Saxon" capitalism was seen as the wave of the future. The United States managed to fritter away that moral capital in remarkably short order: the Iraq war and the close association it created between military invasion and democracy promotion tarnished the latter, while the Wall Street financial crisis laid waste to the idea that markets could be trusted to regulate themselves.

China, by contrast, is on a roll. President Hu Jintao's rare state visit to Washington this week comes at a time when many Chinese see their weathering of the financial crisis as a vindication of their own system, and the beginning of an era in which US-style liberal ideas will no longer be dominant. State-owned enterprises are back in vogue, and were the chosen mechanism through which Beijing administered its massive stimulus. The automatic admiration for all things American that many Chinese once felt has given way to a much more nuanced and critical view of US weaknesses - verging, for some, on contempt. It is thus not surprising that polls suggest far more Chinese think their country is going in the right direction than their American counterparts.

But what is the Chinese model? Many observers casually put it in an "authoritarian capitalist" box, along with Russia, Iran and Singapore. But China's model is sui generis; its ­specific mode of governance is difficult to describe, much less emulate, which is why it is not up for export.

The most important strength of the Chinese political system is its ability to make large, complex decisions quickly, and to make them relatively well, at least in economic policy. This is most evident in the area of infrastructure, where China has put into place airports, dams, high-speed rail, water and electricity systems to feed its growing industrial base. Contrast this with India, where every new investment is subject to blockage by trade unions, lobby groups, peasant associations and courts. India is a law-governed democracy, in which ordinary people can object to government plans; China's rulers can move more than a million people out of the Three Gorges Dam flood plain with little recourse on their part.

Nonetheless, the quality of Chinese government is higher than in Russia, Iran, or the other authoritarian regimes with which it is often lumped - precisely because Chinese rulers feel some degree of accountability towards their population. That accountability is not, of course, procedural; the authority of the Chinese Communist party is limited neither by a rule of law nor by democratic elections. But while its leaders limit public criticism, they do try to stay on top of popular discontents, and shift policy in response. They are most attentive to the urban middle class and powerful business interests that generate employment, but they respond to outrage over egregious cases of corruption or incompetence among lower-level party cadres too.

Indeed, the Chinese government often overreacts to what it believes to be public opinion precisely because, as one diplomat resident in Beijing remarked, there are no institutionalised ways of gauging it, such as elections or free media. Instead of calibrating a sensible working relationship with Japan, for example, China escalated a conflict over the detention of a fishing boat captain last year - seemingly in anticipation of popular anti-Japanese sentiment.

Americans have long hoped China might undergo a democratic transition as it got wealthier, and before it became powerful enough to become a strategic and political threat. This seems unlikely, however. The government knows how to cater to the interests of Chinese elites and the emerging middle classes, and builds on their fear of populism. This is why there is little support for genuine multi-party democracy. The elites worry about the example of democracy in Thailand - where the election of a populist premier led to violent conflict between his supporters and the establishment - as a warning of what could happen to them.

Ironically for a country that still claims to be communist, China has grown far more unequal of late. Many peasants and workers share little in the country's growth, while others are ruthlessly exploited. Corruption is pervasive, which exacerbates existing inequalities. At a local level there are countless instances in which government colludes with developers to take land away from hapless peasants. This has contributed to a pent-up anger that explodes in many thousands of acts of social protest, often violent, each year.

The Communist party seems to think it can deal with the problem of inequality through improved responsiveness on the part of its own hier­archy to popular pressures. China's great historical achievement during the past two millennia has been to create high-quality centralised government, which it does much better than most of its authoritarian peers. Today, it is shifting social spending to the neglected interior, to boost consumption and to stave off a social explosion. I doubt whether its approach will work: any top-down system of accountability faces unsolvable problems of monitoring and responding to what is happening on the ground. Effective accountability can only come about through a bottom-up process, or what we know as democracy. This is not, in my view, likely to emerge soon. However, down the road, in the face of a major economic downturn, or leaders who are less competent or more corrupt, the system's fragile legitimacy could be openly challenged. Democracy's strengths are often most evident in times of adversity.

However, if the democratic, market-oriented model is to prevail, Americans need to own up to their own mistakes and misconceptions. Washington's foreign policy during the past decade was too militarised and unilateral, succeeding only in generating a self-defeating anti-Americanism. In economic policy, Reaganism long outlived its initial successes, producing only budget deficits, thoughtless tax-cutting and inadequate financial regulation.

These problems are to some extent being acknowledged and addressed. But there is a deeper problem with the American model that is nowhere close to being solved. China adapts quickly, making difficult decisions and implementing them effectively. Americans pride themselves on constitutional checks and balances, based on a political culture that distrusts centralised government. This system has ensured individual liberty and a vibrant private sector, but it has now become polarised and ideologically rigid. At present it shows little appetite for dealing with the long-term fiscal challenges the US faces. Democracy in America may have an inherent legitimacy that the Chinese system lacks, but it will not be much of a model to anyone if the government is divided against itself and cannot govern. During the 1989 Tiananmen protests, student demonstrators erected a model of the Statue of Liberty to symbolise their aspirations. Whether anyone in China would do the same at some future date will depend on how Americans address their problems in the present.

The writer is a fellow at the Freeman Spogli Institute for International Studies at Stanford University. His latest book, The Origins of Political Order, will be published in the spring.