With the world buzzing about the Copenhagen climate meeting, stateside chatter is turning to our own climate change bill: The cap-and-trade behemoth that passed the House earlier this year. Among most eco-economists calling for a carbon price, cap-and-trade runs second to a simple carbon tax, but most ecos generally support the broad concept of capping emissions and allowing firms to trade emission permits between themselves. But big wig climate researcher James Hansen thinks the House bill is a sham and he slams it in the NYT.
OK so nothing to see here right? The progressive opinion world's raison d'etre is to carp and make hay to pull public policy to the left. So why are Ezra Klein, Matt Yglesias and Paul Krugman all jumping down this guy's throat like he just published a paper concluding that universal health care would melt Greenland?
Most of the criticism pivots off Krugman, so I'll excerpt him. Krugman says that a carbon tax will never happen (that's probably right) and it's counterproductive to bash cap-and-trade for not being perfect.
For here's the way it is: we have a real chance of getting a serious cap and trade program in place within a year or two. We have no chance of getting a carbon tax for the foreseeable future. It's just destructive to denounce the program we can actually get -- a program that won't be perfect, won't be enough, but can be made increasingly effective over time -- in favor of something that can't possibly happen in time to avoid disaster.
OK, sure we have no chance of getting a carbon tax.
But do we have a chance of getting a public works project to fight unemployment? I don't think so, but Krugman still advocates for it. Did we have a chance to nationalize the banks in March? I didn't think so, but Krugman still harped on it. Did we have a chance to pass a viable public option? It never appeared so, but Krugman still argued its merits. I never thought he was doing a disservice to these policies. On the contrary, I thought his poison pen was medicine for liberal causes. The universe of political commentary doesn't have to fit inside the nutshell of political feasibility. On the contrary, its job is to grow the nutshell.
And I think Hansen's piece does grow the nutshell in important ways. One of my biggest peeves with the House's cap and trade bill is its generous offset policy, which allows polluting firms to pay for "green" projects overseas to raise their carbon caps...
even if such offsets are imaginary or unverifiable. Stopping deforestation in one area does not reduce demand for lumber or food-growing land, so deforestation simply moves elsewhere.
The offset concern is about something bigger than what cap-and-trade will cost. It's about whether cap and trade will work. There is reasonable worry that US companies will flood the developing world with demands for offset projects, creating a huge market for fraudulent programs. You see, it's good for US companies if they find offsets. And it's good for foreign companies if they receive offset cash from US companies. But it's not good for the environment if US and foreign companies collude on projects with little environmental value. And the generous offset program in the House squashes the carbon price by encouraging this kind of behavior.
Hansen's piece doesn't bound itself in the nutshell like Ezra, Matt and Krugman hope, but it still offers useful commentary on one of the most important public policy issues of our generation. I'm sorry to see that its useful criticism was thrown out because of a utopian solution.