I readily recognize that there is, as yet, no international mechanism that adjudicate warming-based disputes, and I am quite sympathetic to those who believe any international entity capable of adjudicating such disputes would do more harm than good, but this does not negate the principle that global warming is, as best we can tell, likely to cause harms that should be addressed. The question is how to do it.
Accepting that global warming is a serious problem does not require the embrace of federal regulation of greenhouse gases under the Clean Air Act, as currently undertaken by the EPA. I have been quite critical of these efforts, which I believe are based on a misinterpretation of the Act by the Supreme Court. CAA regulation will be extremely costly but will not produce emission reductions sufficient to stabilize atmospheric concentrations of greenhouse gases. The pork-laden cap-and-trade legislation passed by the House of Representatives would not be much better. What then should we do?
If the effects of global warming are to be mitigated, it is necessary to stabilize atmospheric concentrations of greenhouse gases at a reasonable level. The emission reductions necessary for this to be achieved are enormous, and far beyond the capability of existing technologies. Just to reach a reasonable intermediate target the U.S. would have to reduce its emissions to levels not seen in 100 years, and reduce per capita emissions to levels not seen since Reconstruction. And even this would not be enough, for if equivalent emission reductions are not made elsewhere, it would all be for naught. As I explain in the first part of this paper, dramatic technological innovation is necessary to address the threat of climate change.
As Roger Pielke Jr. persuasively argues in his book The Climate Fix, nations will not decarbonize their economies until it is relatively cheap and easy to do so. Therefore, those who are concerned about climate change, as I am, should be pursuing policies that will make it cheaper and easier to adopt low-carbon technologies. What should these policies be? I've suggested several.
First, the federal government should support technology inducement prizes to encourage the development of commercially viable low-carbon technologies. For reasons I explain in this paper, such prizes are likely to yield better results at lower cost than traditional government R&D funding or regulatory mandates that seek to spur innovation.
Second, the federal government should seek to identify and reduce barriers to the development and deployment of alternative technologies. Whatever the economic merits of the Cape Wind project, it is ridiculous that it could take over a decade for a project such as this to go through the state and federal permitting processes. This sort of regulatory environment discourages private investment in these technologies.
Third, I believe the United States should adopt a revenue-neutral carbon tax, much like that suggested by NASA's James Hansen. Specifically, the federal government should impose a price on carbon that is fully rebated to taxpayers on a per capita basis. This would, in effect, shift the incidence of federal taxes away from income and labor and onto energy consumption and offset some of the potential regressivity of a carbon tax. For conservatives who have long supported shifting from an income tax to a sales or consumption tax, and oppose increasing the federal tax burden, this should be a no brainer. If fully rebated, there is no need to worry about whether the government will put the resulting revenues to good use, but the tax would provide a significant incentive to reduce carbon energy use. Further, a carbon tax would be more transparent and less vulnerable to rent-seeking and special interest mischief than equivalent cap-and-trade schemes and would also be easier to account for within the global trading system. All this means a revenue-neutral carbon tax could be easier to enact than cap-and-trade. And as for a broader theoretical justification, if the global atmosphere is a global commons owned by us all, why should not those who use this commons to dispose of their carbon emissions pay a user fee to compensate those who are affected.
Fourth and finally, it is important to recognize that some degree of warming is already hard-wired into the system. This means that some degree of adaptation will be necessary. Yet as above, recognizing the reality of global warming need not justify increased federal control over the private economy. There are many market-oriented steps that can, and should, be taken to increase the country's ability to adapt to climate change including, as I've argued here and here, increased reliance upon water markets, particularly in the western United States where the effects of climate change on water supplies are likely to be most severe.
I recognize that a relatively brief post like this is unlikely to convince many people who have set positions on climate change. I can already anticipate a comment thread filled with charges and counter-charges over the science. But I hope this post has helped illustrate that the embrace of limited government principles need not entail the denial of environmental claims and that a concern for environmental protection need not lead to an ever increasing mound of prescriptive regulation. And for those who wish to explore these arguments in further detail, there's lots more in the links I've provided throughout this post.