On one end of the spectrum we have people who think that climate change can be fought without the use of either carbon caps or taxes. Some of them think that direct action can get the job done, others that investing in green technology provides a near-painless path to global nonwarming. There are a few on the other side, though, who think that a carbon tax or something like it would be sufficient policy. Maybe it’s not exactly a crowd, but we should still tak a moment to see why taxes and permits alone will not be enough.
First I have to admit, however, that in a technical sense a high enough tax or strict enough permit regime would be a complete mitigation strategy. If by using a tool like this we could keep most of the carbon now in the ground securely in the ground for decades to come, we’d have the greenhouse gas problem under control.
The difficulty is that we are not interested in minimizing climate change because we have some general aversion to change, but because we want to safeguard the well-being of present and future generations. Simply keeping carbon in the ground and not dealing with any of the other consequences will result in immense social and economic costs, to the point where the political feasibility of the carbon price becomes inconceivable.
The main reason is that, without ancillary investments in renewables, energy conservation, alternative ways of meeting human needs that are less carbon-intensive, and research in all these areas, we will be forced to forego more and more goods and services year after year until even a climate disaster might look like the better alternative.
Take one obvious example, transportation. The United States is primarily car- and truck-dependent for commuting, shipping and other transportation needs. In nearly every case the fuel is petroleum. Switching all of them over to electric power would cause a surge in electricity demand which would be impossible to meet under current technology in the absence of fossil fuels. Now in theory you could just say “tough luck” and leave it at that, but the disruption would be so great that stranded car-owners would rise up and demand their old gas stations back. Realistically, without large investments in mass transit, fuel efficiency, and denser living arrangements, it’s not a viable scenario. A few research breakthroughs in renewable fuels wouldn’t hurt either.
This observation does not contradict my earlier point that investment in renewable energy and other green technologies is not the same as fossil fuel reduction. That remains true. The measure of reduced fossil fuel extraction is reduced fossil fuel extraction and nothing else. Nevertheless, the policies we need to keep these fuels in the ground won’t be adopted unless the costs are relatively bearable. It’s in this sense that I suggested that green investments should be thought of as a form of adaptation, not to climate change but to climate change policy.
The bad news is that there has been little success in the US in getting the public to make an early commitment to the kinds of investments that will reduce the cost of controlling carbon. Even Obama’s high speed train initiative, meager as it was, was largely rejected. The good news is that once we start putting a price on carbon, it is likely that the politics of green investment will change in a hurry. A new rail line looks more inviting if you’re shelling out $10 a gallon at the pump. With luck the investment side of the policy can get up a head of steam before fossil fuel restriction becomes draconian.
There’s a second kind of policy adjustment that will be needed when carbon gets priced: counteracting the negative incentives this may generate in other parts of our economy. Here’s an example. When fossil fuels start to get really expensive, there will be an even greater demand for biofuels. Farmers will be able to make more money by ripping out their food crops and planting fuel crops instead. Up to a point this may even be warranted. But we live in a horribly unequal world where many people live in luxury while millions of others starve for lack of income. Shifting large parts of the world’s food production to biofuel crops so that the relatively affluent strata are not inconvenienced would be unconscionable. Thus either regulations, taxes or subsidies need to be used to keep food production up and food prices at an affordable level.
Climate policy needs to be multifaceted and multi-instrumental. It’s true, however, that one big piece has to be direct restriction, through taxes or permits, on the extraction and burning of fossil fuels.