New Essay in Foreign Affairs: "Why Carbon Pricing Isn't Working"
In a new essay now out in the July/August issue of Foreign Affairs, “Why Carbon Pricing Isn’t Working,” I argue that carbon pricing, which most experts have agreed is the most effective policy to fight climate change, is sensible in theory but proving largely ineffective in practice. Around the world, evidence is mounting that carbon pricing isn’t meaningfully curbing carbon emissions. More jurisdictions than ever are imposing carbon prices, yet global emissions are hitting new heights. The essay, now online and hitting newsstands, explores why carbon pricing is faltering and what a more-effective approach might look like. From the essay:
If governments proved willing to impose carbon prices that were sufficiently high and affected a broad enough swath of the economy, those prices could make a real environmental difference. But political concerns have kept governments from doing so, resulting in carbon prices that are too low and too narrowly applied to meaningfully curb emissions. The existing carbon-pricing schemes tend to squeeze only certain sectors of the economy, leaving others essentially free to pollute. And even in those sectors in which carbon pricing might have a significant effect, policymakers have lacked the spine to impose a high-enough price. The result is that a policy prescription widely billed as a panacea is acting as a narcotic. It’s giving politicians and the public the warm feeling that they’re fighting climate change even as the problem continues to grow.
This link to the essay circumvents Foreign Affairs' pay wall and will remain active for the next month: https://fam.ag/2JKEtXL. Please feel free to share the essay if you find it interesting.
Project Director & Founder — Global Carbon Reward
6 年Hello Jeffrey, I read your article, and thanks for taking the time to do the review. If you are interested in a new theory on carbon pricing that offers a paradigm shift. Please consider reading our papers on a Global Carbon Reward. We claim that there is a cognitive bias and missing theory, that prevents economists and citizens from seeing how central banks can provide the required climate finance—to manage systemic risks— and also synergy with all other conventional policies. Our new policy and theory appears to address the conundrum of unsustainable economic growth, and it has support from social science research that a mixture of carrots and stick incentives actually maximises human cooperation. If you would like more information, please contact me, or look at our website. There are few key papers being published this year, but so far no journalist or economist has commented on the Risk Cost of Carbon (RCC) and a Global Carbon Reward that is fully financed by monetary policy.? www.global4c.org
Sustainability & Climate Policy Professional
6 年Great article as are the comments that follow!
Former Communications Director to Senior Advisor John Podesta and Speechwriter to Secretary Granholm in Biden-Harris Administration
6 年Jeff - a great read and I agree with some of your points. However, I disagree with the overall notion that carbon pricing has "failed" just because it is not leading to large enough emissions reductions yet. As you pointed out, establishing a carbon pricing scheme is a big political lift - but the heaviest political lift is that first step. Once a system is in place, it is much easier politically to make adjustments that make the system more effective. As long as the initial system has an ambitious enough emissions target and flexible mechanisms for setting a price floor, adjusting permitting structures, etc. it can be changed over time to be better at what it is supposed to do. This is not just an idea - we are seeing it in practice in the EU, where lawmakers just agreed on an updated set of rules that are already raising the price of their emissions trading system. In late 2015, the EU's carbon price was only 5 euros per ton, and since the 2017 reforms, it is now at 15 euros per ton. Overall, a low carbon price does not constitute a failure in and of itself - rather, it indicates that the system can afford to be even more stringent while keeping the costs to polluters reasonable, because prices can be raised while still achieving emissions goals. I agree that for carbon pricing to be an effective tool, governments must take the lead. But the private sector is already showing enormous leadership on this, with over 1300 companies having instituted an internal carbon price. And while a "government push" certainly makes a large difference in getting companies to take action to reduce carbon emissions, it is certainly not the only incentive. Many forward-looking businesses recognize that the rise of clean energy is fundamentally changing the market, and it will be smarter and more cost-effective for them to make changes now instead of waiting for government signals. Lastly, I agree that carbon pricing is not a silver bullet solution to climate change and never will be, even though it is often treated as such. Climate change is such a large, multi-faceted problem that it requires many solutions, including CCS, smarter land management, and clean energy. Carbon pricing is simply one piece of the puzzle and is a fairly new concept that is still taking root - and as you pointed out, it is being implemented by more governments every year. Thank you for writing this article and making some great points, but I think it is still too early to label carbon pricing policies as a "failure."