Might the US move from being a laggard to a leader in tackling global climate change? Two recent announcements — the “economists’ statement on carbon dividends” and the Green New Deal — suggest that it might. Intellectually, these proposals are from different planets. But they could be a basis for something reasonable. More important, influential people at least agree that for the US to stand pat is unconscionable.

The economists’ statement has been signed by 3,333 US economists, including four former chairs of the Federal Reserve, 27 Nobel laureates and two former Treasury secretaries. It has four elements: a gradually increasing carbon fee, beginning at $40 a ton; a dividend paid “to the American people on an equal and quarterly basis”; border adjustments for the carbon content of imports and exports; and removal of unnecessary regulations. This plan is also to be proposed to “other leading greenhouse gas emitting countries”.

The Green New Deal comes from a group of House Democrats, led by Alexandria Ocasio-Cortez. It is a proposal to transform the US economy. Notable climate-related goals include “meeting 100 per cent of the power demand in the United States through clean, renewable, and zero-emission energy sources”, “building or upgrading to energy-efficient, distributed, and ‘smart’ power grids”, and “upgrading all existing buildings in the US and building new buildings to achieve maximum energy efficiency”.

The US is a pivotal actor in global climate change discussions for four reasons: it is the world’s second-largest emitter of greenhouse gases, accounting for 14 per cent of the total; its emissions per head are very high; it has exceptional technological resources; and it has been highly recalcitrant. In brief, US participation is a necessary, though not a sufficient, condition for addressing the climate threat.

Alas, that threat has become imminent, as the Green New Deal notes. The rise in average temperatures above pre-industrial levels is already 1C. It will take dramatic changes to keep it below 2C, let alone 1.5C. The higher it gets, the more unpredictable and dangerous these irreversible changes will become. Above all, the trend to higher emissions must reverse very soon if the rise in atmospheric concentrations is to halt.

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This is one reason why reliance on the calibrated price incentives beloved by economists is inadequate. The challenges here are irreversible changes in climate with uncertain effects, on the one hand, and the imperfectly predictable consequences of carbon pricing on emissions, on the other hand. Quantitative objectives are inescapable. Moreover, the needed changes in the way the economy works will demand changes in spatial planning, in building regulations, in regulation of nuclear power, in spending on research and development, and in spreading new technologies across the world. The price mechanism is powerful. But, as a report from the Energy Transitions Commission makes clear, it will not be enough. The economists’ plan might have been adequate if implemented worldwide three decades ago. Now, it is almost certainly not.

The Green New Deal recognises the need for regulatory intervention and infrastructure investment. Unfortunately, it places no weight on incentives at all. A letter from activists in support of the Green New Deal states that “we will vigorously oppose any legislation that . . . [includes] market-based mechanisms and technology options such as carbon and emissions trading and offsets, carbon capture and storage, nuclear power, waste-to-energy and biomass energy”.

This looks like a dialogue of the deaf. But the economists just might recognise that the urgency of the Green New Deal and its focus on regulation and investment have some important things to offer. Activist proponents of the Green New Deal might realise that incentives matter and that the proceeds of a carbon tax might help buy public support. Above all, they might recognise that seeing every social ill through the lens of climate change guarantees that they will fail to achieve anything useful. As the British socialist Aneurin Bevan said, “the language of priorities is the religion of socialism”.

Only a broad coalition can tackle the climate challenge. So plans that have a chance of being politically workable will be compromises. A good plan must be a blend of price incentives with command and control, and investment in research and development. The fact that people with different policy approaches agree that climate is an urgent threat is a step forward. More Republicans might accept that the threat is not a hoax and join in.

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The US cannot solve a global threat on its own. But it could combine the best of the economists’ plan and the Green New Deal. It would then need to make it global. This could be done by a combination of carrots — exporting technology freely and helping poor countries — with sticks — carbon border taxes. This could also be an area where the US, the EU and China might co-operate. Of course, nothing so forward-looking can be expected from the Trump administration. But at least people can plan for the day when he is gone.

Pessimism about humanity’s ability to address climate change is understandable. Time is limited, talk plentiful and action negligible. But we can only start from agreement that there is indeed a threat worth addressing. That may now be emerging, even in the US. Turning such a consensus into a workable, globally replicable and politically acceptable plan is going to be very hard. But despair is not an option. We can see some movement. Let us push hard for more.

martin.wolf@ft.com



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