The death of Michael Crichton deprives us of a hugely entertaining and elegant writer, who infuriated people who should have loved him by becoming a prominent nay-sayer of global warming. Crichton's 2004 bestselling novel, State of Fear, portrayed climate change as a hoax. His eco-terrorist villains blew up Antarctica to convince the public that the glaciers were melting; then claimed that global warming could be averted only by writing fat cheques - to them. It is a testament to the power of his plot - and his copious footnotes - that many people read this as science, not science fiction.

The book became notorious when George W. Bush invited Crichton to the White House and when the author appeared before a Senate committee to argue that global warming science was mixed at best. He also believed that second-hand cigarette smoke was not a health hazard and that DDT should not have been banned. He railed eloquently against environmentalism as a religion of choice for urban atheists, who cleansed their “energy sins” in organic communion with “pesticide-free wafers”. He was essentially a libertarian, a position to which I am always sympathetic and which proved popular with those who feared - not wholly without reason - that the Kyoto Protocol was cooked up by European socialists bent on bringing down capitalism.

What his passing makes me realise is what an extraordinary intellectual shift there has been since 2004. We feel that financial markets have moved at warp speed. But so has thinking on the climate. Partly owing to new scientific discoveries, and partly because of the emergence of more market-based solutions, almost no one now denies the problem. We are still doing nothing, but with a new justification: recession.

So we are still living in a State of Fear, though a different one, and it is still fiction. There is a huge financial upside to shifting away from fossil fuels, just as there was from abandoning the horse and carriage. If Barack Obama gets his way we could see the unleashing of a green revolution which will lift the economy.

Mr Obama and his team are strong supporters of a cap-and-trade scheme, similar to that operating in Europe, to cut greenhouse gas emissions. The Obama version would auction permits to pollute, among companies which burn fossil fuels. Over time the number of permits would fall, ratcheting down the “cap” on total pollution. It's a simple idea, invented in the US in the 1980s, to combat acid rain. The acid rain system demonstrated conclusively that you can reduce pollution without hurting GDP. The electricity industry adapted faster than anyone had expected, and slashed its sulphur dioxide emissions even though the price of permits stayed low. Why? Because business is much smarter, and more adaptable, than it claims to be. Once it sees the writing on the wall it will innovate to survive.

Old economy pundits fear that a cap-and-trade scheme will hit the economy when it is down, by raising electricity prices and slashing energy company profits. Mr Obama doesn't seem to buy that line. Asked by Time magazine a few weeks ago whether he wouldn't need to go slow on introducing cap-and-trade, he said that part of the revenue raised by auctioning permits should go straight back to the consumer, maybe through a rebate on payroll tax. John Podesta, the head of Mr Obama's transition team, has suggested that the revenues could be used to build new clean-energy transmission lines, and to insulate homes, thus giving a short-term stimulus.

A cap-and-trade scheme could raise around $150 billion a year. The American pipe-fitters union supports carbon caps because they are likely to mean non-exportable jobs in laying a new energy infrastructure. “Weatherisation” (insulating homes) could be the centrepiece of a green new deal that creates “green collar” jobs and simultaneously saves people money on their energy bills. This is FDR in triplicate: creating jobs, cutting energy bills, and boosting hundreds of small companies which are already manufacturing everything from solar components to LED lighting to high-tech coatings for wind turbines (some of which are incidentally, being made from old car parts). Far from being a one-way drain on the economy, green regulation could boost the economy in straitened times.

Just as America gets the wind in its sails, Europe seems becalmed. The EU pioneered the carbon market. But its cap-and-trade “emissions trading scheme” is foundering this week because the carbon price has virtually collapsed. It now costs almost nothing to pollute. This is because the “market” is rigged: EU governments allocate pollution permits to their companies, and they have been too generous. The number of permits needs to fall, urgently, and permits need to be auctioned - but the Italians are leading the charge to be “kind” to industry. The lessons for Europe, and for Mr Obama, are clear: that what seems like kindness leaves industry in limbo, unable to plan or invest. And that any trading scheme needs a floor as well as a cap, so that pollution keeps getting more expensive.

Europe is retrenching. But this is the wrong time to hunker down in the old economy. The longer we continue our addiction to oil, the more we will enrich the real villains of the piece - Russia and Middle Eastern oil regimes. And the greater is the risk that other nations - including China - will get an edge in designing the low-carbon economy.

The message from Tuesday night is that audacity wins. In the sheer giddiness of the moment, that much is clear. Audacity will win again, if America can start a green revolution which bolsters the economy and drains power from the oil regimes. It now looks quite possible that America will leapfrog Europe to pole position in the new economy. That's where the jobs will be. And that's fact, not fiction.

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