You know this already, but let’s review:
Nearly all of this was known back in 2006, when California passed the Global Warming Solutions Act, though the massive growth in China’s coal consumption was just getting momentum. Back then, the argument for California emissions targets was “leadership” and that is still the word one hears most often from defenders of the state’s current package of GHG markets and mandates.
I’ve heard many different meanings of leadership in the context of California emissions targets:
There is something to each of these arguments (well, maybe not #3. Most economists think addressing climate change will be a small drag on the economy—if you don’t count the worldwide economic value of averting climate change).
But it’s 2014 now. The U.S. is further from adopting a price on GHG emissions than it was in 2006. Fewer members of Congress than 8 years ago even believe climate change is a problem. The three largest market mechanisms for reducing GHGs (California’s cap-and-trade, the EU-ETS, and the eastern U.S. RGGI program for utility emissions) all have very low prices that are doing little to change the course of emissions.
For these reasons, I think it’s time to have a frank review of California’s climate policy. We need to refocus on how California can realistically contribute to solving the problem of global climate change. Reaching emissions targets for California may be part of that strategy, but that should not be the singular or even the primary goal.
The primary goal of California climate policy should be to invent and develop the technologies that can replace fossil fuels, allowing the poorer nations of the world – where most of the world’s population lives – to achieve low-carbon economic growth. If we can do that, we can avert the fundamental risk of climate change. If we don’t do that, reducing California’s carbon footprint won’t matter.
Focusing on solving global climate change would mean that a major test of any policy proposal would be whether it is exportable to the developing world. It’s always hard to predict what will work, but “working” in California isn’t particularly valuable if the approach doesn’t work where most of the planet’s emissions will be coming from in the 21st century. GHG-reduction strategies that are very expensive – but bearable for a rich country – only make sense if they have a plausible path for getting to near cost competitiveness in poor countries.
That means less emphasis on numerical measures of California emissions and more emphasis on learning. What more are we likely to know at the end of a program and will that knowledge be applicable in other parts of the world?
Implications of a learning-driven strategy to tackle global climate change include:
This does not mean California should abandon pricing GHG emissions. Putting a price on emissions helps boost green technologies across the board. In addition, substituting cap-and-trade revenues (or GHG taxes) for income or sales taxes is a clear move towards improving economic efficiency and welfare.
California’s current strategy may eventually allow us to say “we’ve done our share; now the rest of you need to step up.” But that isn’t leadership when more than 80% of the “rest of you” are living at less than one-quarter of our standard of living. It’s time to make our Global Warming Solutions Act about global solutions.
Cross-posted from Energy Economics Exchange (tag line: Research that Informs Business and Public Policy), a blog of the Energy Institute at Haas.