In his second inaugural address on Monday, President Obama laudably promised to "respond to the threat of climate change." Unfortunately, when the president described the urgent nature of the threat—the "devastating impact of raging fires, and crippling drought, and more powerful storms"—the scary examples suggested that he is contemplating poor policies that don't point to any real, let alone smart, solutions. Global warming is a problem that needs fixing, but exaggeration doesn't help, and it often distracts us from simple, cheaper and smarter solutions.

For starters, let's address the three horsemen of the climate apocalypse that Mr. Obama mentioned.

Historical analysis of wildfires around the world shows that since 1950 their numbers have decreased globally by 15%. Estimates published in the Proceedings of the National Academy of Sciences show that even with global warming proceeding uninterrupted, the level of wildfires will continue to decline until around midcentury and won't resume on the level of 1950—the worst for fire—before the end of the century.

Claiming that droughts are a consequence of global warming is also wrong. The world has not seen a general increase in drought. A study published in Nature in November shows globally that "there has been little change in drought over the past 60 years." The U.N. Climate Panel in 2012 concluded: "Some regions of the world have experienced more intense and longer droughts, in particular in southern Europe and West Africa, but in some regions droughts have become less frequent, less intense, or shorter, for example, in central North America and northwestern Australia."

As for one of the favorites of alarmism, hurricanes in recent years don't indicate that storms are getting worse. Measured by total energy (Accumulated Cyclone Energy), hurricane activity is at a low not encountered since the 1970s. The U.S. is currently experiencing the longest absence of severe landfall hurricanes in over a century—the last Category 3 or stronger storm was Wilma, more than seven years ago.

While it is likely that we will see somewhat stronger (but fewer) storms as climate change continues, a March 2012 Nature study shows that the global damage cost from hurricanes will go to 0.02% of gross domestic product annually in 2100 from 0.04% today—a drop of 50%, despite global warming.

This does not mean that climate change isn't an issue. It means that exaggerating the threat concentrates resources in the wrong areas. Consider hurricanes (though similar points hold for wildfire and drought). If the aim is to reduce storm damage, then first focus on resilience—better building codes and better enforcement of those codes. Ending subsidies for hurricane insurance to discourage building in vulnerable zones would also help, as would investing in better infrastructure (from stronger levees to higher-capacity sewers).

These solutions are quick and comparatively cheap. Most important, they would diminish future hurricane damage, whether climate-induced or not. Had New York and New Jersey focused resources on building sea walls and adding storm doors to the subway system and making simple fixes like porous pavements, Hurricane Sandy would have caused much less damage.

In the long run, the world needs to cut carbon dioxide because it causes global warming. But if the main effort to cut emissions is through subsidies for chic renewables like wind and solar power, virtually no good will be achieved—at very high cost. The cost of climate policies just for the European Union—intended to reduce emissions by 2020 to 20% below 1990 levels—are estimated at about $250 billion annually. And the benefits, when estimated using a standard climate model, will reduce temperature only by an immeasurable one-tenth of a degree Fahrenheit by the end of the century.

Even in 2035, with the most optimistic scenario, the International Energy Agency estimates that just 2.4% of the world's energy will come from wind and only 1% from solar. As is the case today, almost 80% will still come from fossil fuels. As long as green energy is more expensive than fossil fuels, growing consumer markets like those in China and India will continue to use them, despite what well-meaning but broke Westerners try to do.

Instead of pouring money into subsidies and direct production support of existing, inefficient green energy, President Obama should focus on dramatically ramping up investments into the research and development of green energy. Put another way, it is the difference between supporting an inexpensive researcher who will discover more efficient, future solar panels—and supporting a Solyndra at great expense to produce lots of inefficient, present-technology solar panels.

When innovation eventually makes green energy cheaper, everyone will implement it, including the Chinese. Such a policy would likely do 500 times more good per dollar invested than current subsidy schemes. But first let's drop the fear-mongering exaggeration—and then focus on innovation.

President Obama's new climate policies outlined Tuesday include both brilliant and useless ideas. The confusion stems from Obama's unwillingness to confront three climate fantasies:

Renewables are a major part of the solution today. No, they are almost trivial. Today, the world gets 81% of its energy from fossil fuels – by 2035, in the most green scenario, we will still get 79% from fossil fuels. Wind and solar will increase from 0.8% to 3.2% -- impressive, but not what is going to matter.

Biofuels should play a major part of the solution. No. For now, biofuels simply diverts food into cars, driving up food prices and starvation, while clearing forests for new fields emit more CO2 than biofuels save.

Efficiency can cut emissions. No. While efficiency is good, studies show it has little climate impact, because its savings gets eaten up by more use. As your car gets more efficient, you drive it further, and the money you still save get used for other carbon-emitting activities.
But carefully implemented, Obama's plan also shows the way to the three climate truths.

Fracking is this decade's green solution. Obama recognizes gas as a "bridge fuel." Replacing dirtier coal, cheaper gas from fracking has cut up to 500 MT of the U.S. CO2 emissions. This is 10 times more than what renewables do, and while renewables cost the U.S. tens of billions of dollars, fracking has saved the U.S. consumer $125 billion annually in cheaper energy prices. Fracking has local environmental issues, but these can all be addressed with good regulation. Moving the U.S. fracking miracle to the rest of the world will be the biggest source of CO2 reductions this decade, and simultaneously increase global welfare by allowing energy access to billions yet unserved.

Adaptation is smart, and Obama is right to stress it. Wet-lands, tidal barriers and subway caps could dramatically have reduced hurricane Sandy's impact, irrespective of how little global warming impacted the hurricane. There are many more, smart and cheap solutions here to real world problems.

Finally, we need innovation in long-term green energy, which the president suggests to fund with $7.9 billion for fiscal 2014. As long as green energy is much more expensive than fossil fuels, it will always remain a niche, subsidized by rich countries to feel good. But if innovation makes future green energy sources cheaper than fossil fuels everyone will switch. Just like the 30-year Energy Department research into fracking made cleaner gas cheaper than coal and produced a historic US CO2 reduction, twice that of the European Union/Kyoto reduction.

The final climate fantasy the president needs to confront is the idea that international negotiations can somehow bring about meaningful cuts. We've tried this for more than 20 years and failed and we will fail again in 2015 in Paris. More than 180 countries won't meaningfully reduce CO2 emissions from the fossil fuels that power their economic growth.

The president should instead ask the rest of the world to follow the U.S. lead on green innovation. Economic models show that this is by far the best, long-term climate policy. If we all invested far more to innovate down the cost of future green energy, we could outcompete fossil fuels faster and truly solve global warming.

Have you ever been to Germany? I mean since the war. Germany has thriving German manufacturing because they place tariffs on the imported goods to keep the prices in line with the same goods manufactured in Germany. You can go to a store to buy say a Patio umbrella. At the store you'll see an assortment of patio umbrellas...some made in Germany, some made in China, some made in Turkey. I was there, this was my experience. They are priced about the same...maybe a two or three Euro difference in the prices. No big deal right? Well, it is because Germany put its workers and companies fiscal health first. Here in America, you have to look very hard to find domestically produced items period. All those jobs went away. Instead of raising wages so workers could afford to buy American made goods, the job creators found cheaper goods then they realized they didn't need any workers and here we are in an economy where corporate profits are higher than they have ever been. The American worker was robbed of the American Dream, the American Family, was robbed of its future all in the name of quick and easy profits. You say wages were to high...wrong they weren't high enough to buy the goods...Henry Ford knew that 100 years ago he had to pay his workers enough to afford his cars. That goes across the board...people need to earn enough to buy the things produced here. We were sold a bill of cheap goods that cost jobs and futures.

It is late on this side of the country and I really don't have the energy to go into the downside of tariffs, but they are not necessarily the holy grail, but at the same time we should have never exported our manufacturing to the extent that we have, but it is not all about China, there is opportunity to revive our manufacturing, but government has to make that its goal and set policies that are conducive to achieving them if it is ever to happen. If government wants to war against business in this country then it will never come back, but for those of you who think it can't I would ask, why are Hondas, Toyotas, BMWs Volkswagon, Kia, Nissan..... all manufacturing here?

I am certainly no expert about tariffs. In fact I no little about them and their effects. But it seemed very logical to me at the time that if you make it possible for products from other countries that are manufactured much more inexpensively than we can do it (partly because of labor costs), people would buy the foreign imports. not the domestically-produced goods.

I knew someone who worked in a management position for GM for about 23 years, and he insisted that most of the management folks for our domestic car companies were so isolated they had no clue what the American people really wanted. He said he knew that when he was working for them. It is also true that many of the foreign-produced cars were simply made better and of much higher quality than hat our companies were turning out. That quality of the Japanese cars made it almost impossible for American manufacturers to compete.

At least that what it has seemed like to me.

Have you ever been to Germany? I mean since the war. Germany has thriving German manufacturing because they place tariffs on the imported goods to keep the prices in line with the same goods manufactured in Germany. You can go to a store to buy say a Patio umbrella. At the store you'll see an assortment of patio umbrellas...some made in Germany, some made in China, some made in Turkey. I was there, this was my experience. They are priced about the same...maybe a two or three Euro difference in the prices. No big deal right? Well, it is because Germany put its workers and companies fiscal health first. Here in America, you have to look very hard to find domestically produced items period. All those jobs went away. Instead of raising wages so workers could afford to buy American made goods, the job creators found cheaper goods then they realized they didn't need any workers and here we are in an economy where corporate profits are higher than they have ever been. The American worker was robbed of the American Dream, the American Family, was robbed of its future all in the name of quick and easy profits. You say wages were to high...wrong they weren't high enough to buy the goods...Henry Ford knew that 100 years ago he had to pay his workers enough to afford his cars. That goes across the board...people need to earn enough to buy the things produced here. We were sold a bill of cheap goods that cost jobs and futures.