The “yellow vest” protesters in France hate it. Four Canadian provinces, including the biggest one, Ontario, have refused to implement a national law requiring them to impose it. The state of Washington voted it down. Even “Green New Dealers” are shying away from it.
“It” is a carbon tax: the preferred solution to climate change of wonks worldwide. “[R]aising the price of carbon is a necessary and sufficient step for tackling global warming,” wrote the dean of climate change wonks, 2018 economics Nobelist William Nordhaus. “The rest is largely fluff.”
Uh oh. Raising the cost of dirty energy is the only way to avoid a climate catastrophe. Raising the price of dirty energy is politically impossible. If both of these statements are true, humanity is in serious trouble.
Fortunately, even Nobel Prize winners are sometimes wrong. There is an alternative solution: better energy technologies that radically reduce greenhouse gas emissions at a cost that is competitive with coal, oil, and natural gas. Some of them are already here: solar power that is 70 percent cheaper than in 2010 and wind power that is 50 percent cheaper. Others will be here within a decade: electric vehicles that are cheaper and better than gas-powered cars.
One big problem: These technologies aren’t being adopted quickly enough. Another: there are big gaps in the portfolio. Renewables supply less than 10 percent of the world’s electricity, and there is no way to bring that to 100 percent without breakthroughs in electricity storage and “smart-grid” technology, as well as continued improvements in wind turbines and solar panels. Other options for zero-carbon electricity, such as advanced nuclear power and biofuels, are stuck in neutral.
Rather than pour political capital down the rathole of taxes on dirty energy, climate advocates ought to double down on policies that would dramatically accelerate clean energy innovation. Execute a public research, development, and demonstration (RD&D) investment surge. Enact pollution control regulations that reward technological creativity. Revise the tax code so early adopters of new clean energy technologies get a break. Reform energy markets to bring the grid into the 21st century.
Betting on clean energy innovation does not mean standing pat and waiting for a miracle. Governments need to be strong to carry out this agenda. They need financial strength to boost their investments in clean energy RD&D. They need political strength to fend off powerful incumbent industries in regulatory proceedings and legislative battles.
Governments gain strength when they give people what they want. And what people want is energy that is both cheap and clean. If they can’t have that, most prefer cheap, dirty energy. The innovation-centered approach promises lower energy costs along with solutions to the world’s most pressing environmental challenge.
By contrast, jamming unwanted changes down the throats of unwilling publics is a great way for governments to lose strength, as President Macron has discovered. A carbon tax high enough to make a real difference for the climate with the technologies currently in hand leads to backlash — in Canada, Washington state, and Washington, D.C., as well as in France. Real climate leadership demands brains as well as brawn.
A climate policy focused on clean energy innovation may not be perfect. Dirt-cheap dirty energy will remain a tempting option, particularly for nations and regions that have a lot of it buried in their backyards. But accelerating innovation will in some cases eliminate dirty energy’s price advantage, and in other cases dramatically reduce it.
That will make any tax required to close the residual gap far more palatable, especially if citizens experience real improvements from the clean energy transition at the same time. The gain from electric vehicles that cost less and perform better than gas-powered vehicles, for example, will balance the pain from a carbon tax that squeezes out any remaining fossil-fuel-powered electricity generation, especially if the tax is revenue-neutral.
The climate and energy debate has been dominated by magical thinking for far too long. To be sure, the worst form of magical thinking is the fantasy that climate change is not a serious threat to human well-being. But the delusion that a carbon tax is the best or even the only way to avert the threat is almost as bad. Leaders who succumb to it waste valuable time that the world needs to develop and scale up solutions, and the backlash to it discredits climate advocacy in all its forms. It’s time to get real, and that means focusing on energy innovation.
David M. Hart (@ProfDavidHart) is a senior fellow at the Information Technology and Innovation Foundation (ITIF) and professor of public policy and director of the Center for Science, Technology, and Innovation Policy at George Mason University’s Schar School of Policy and Government.
