Why climate policy is hard. By Matthew Yglesias

www.slowboring.com

13 - 16 minutes

26 Sept 2023

∙ Paid. 

In the midst of another round of pointless internet fighting about the Sunrise Movement, I thought I should step back and try to more clearly articulate how I see the broader climate problem. Because I think the essential fact about climate change is that it is, in fact, a very difficult problem. It’s difficult on a technical level, in the sense that a net-zero economy would require technologies that do not yet exist at any kind of reasonable scale. But it’s also extraordinarily difficult on a political level.

Climate activists and their funders have had (and I should probably have a better attitude about this) a lot more success than I would have predicted 20 or 25 years ago based on the basic structure of the situation. And while you can make yourself crazy starting with something like a global 1.5 degree target and only measuring policy in terms of the shortfall, any progress at all is borderline miraculous, and the fact is we have made a lot.

But this progress — the result of successful efforts to persuade lots of global political parties, including the Democrats in the United States, to undertake some very politically risky moves — has had some political costs and, at a minimum, has forced the deprioritization of other issues.

Not just because of misinformation or climate deniers or the clout of fossil fuel companies, but because the actual structure of any kind of emissions reduction, even reductions that are technologically feasible, is unfavorable to action.

The chart below is from a recent paper by Marshall Burke, Mustafa Zahid, Noah Diffenbaugh, and Solomon M. Hsiang called “Quantifying Climate Change Loss and Damage Consistent with a Social Cost of Greenhouse Gases.”

The point they’re getting at is that while greenhouse gas emissions have impacts all over the world, the impact is not felt equally by each country. India, in particular, incurs the most damage both because India is relatively warm to start and also because there are just so many people in India. At the other end of the spectrum, they calculate that colder Canada has actually benefitted from historical emissions (Canada also just doesn’t have that many people).

The largest emitters, the U.S. and China, are also large recipients of damage, but we are not the largest recipients of damage. Number three on the emissions list is the EU, but the EU is only suffering minor climate harms, according to their math.

Here I want to pause and say that all this climate/economic modeling is controversial, and I actually do not want to vouch for or build my case on the specific calculations presented in this paper. What’s important is just to note how confusing the lines are. Emissions lines start in the United States and then flow to every other country. China’s lines also flow to every other country, and so do the EU’s. Conversely, while China receives plenty of inbound climate harms, those harms arrive from every emitting country. This aspect of the chart doesn’t rely on any controversial economic modeling; it falls straight out of the basic science of climate change. When I drive my Prius, the tailpipe emissions primarily cause local harms. But the greenhouse gas emissions cause global harms. And since only a relatively small share of the world’s population lives in the United States, only a very small share of the harm caused by me burning gasoline accrues to Americans.

The upshot is that when you ask the American government to do something — regardless of what that something is — to discourage me from burning gasoline, you are asking the American government to do something that mostly benefits people outside of America. That is an admirable sentiment. We give 10% of our revenue to GiveWell’s Top Charities Fund precisely because we believe it is important to help people who don’t happen to have been born in the United States, but also because I am deeply pessimistic that democratic politics can be mobilized around the needs of non-voters. It needs to be a philanthropic project.

If I wrote a post complaining that I don’t see why Joe Biden has invested all this money in cleaning up lead water pipes in the United States when the lead poisoning problem in poor countries is much worse, you’d probably think I was being pretty silly. The reason Biden has prioritized lead remediation in the United States is that he is the president of the United States. He was able to persuade a bipartisan majority in Congress to spend money on this because it’s a popular cause that people see as benefitting themselves. The Biden administration is full of smart people who are aware of the global dimension of the problem and doing small things to help, but the American political system naturally focuses on the problems of Americans.

By the same token, if Biden proposed a 5% cut in Social Security benefits in order to boost foreign aid, he’d get crushed by Donald Trump in 2024.

Now you could make a perfectly good utilitarian case for this. But you could make an even better utilitarian case that running on an obvious dud of a platform and losing the election would be a terrible idea. Whenever a specific controversy arises as to whether one should compromise for the sake of political pragmatism, there’s always a chorus of people out there demanding a principled stand. But almost nobody favors a consistent ethic of “stand up for what’s right no matter the consequences” — if they did, you’d see a lot more demands for policies like this.

The fact is that nobody, even people with very cosmopolitan values, thinks it’s a good idea for politicians to adopt a hard-core cosmopolitan approach to politics. People who can’t deal with that reality just become relatively disengaged or apolitical.

Now to be clear, climate action isn’t just charity because climate change really does have negative impacts on the United States. The problem is that unilateral emissions reductions in the United States are ineffective at reducing those harms. And the same goes for China and India — they both suffer from climate harms, but that doesn’t change the fact that unilateral emissions reductions are a bad deal for them. That’s why the Holy Grail for climate policy since at least the Kyoto Protocol has been some kind of binding global treaty on emissions. But crafting binding global treaties is really hard, and even though there have been a lot of international climate agreements, they aren’t exactly rock solid.

Another idea, one that I associate with William Nordhaus, is that you could have a “climate club.” How does that work? Well, first the United States imposes a unilateral carbon tax. The tax is not super high because most of the emissions benefits accrue to foreigners, but it is higher than the purely domestic social cost of carbon because the revenue is useful. Now here’s the trick: not only do we impose the tax domestically, we also charge a carbon border fee on imports. And the border fee is set to the (higher) global social cost of carbon. But we offer foreign countries a deal. Canada can get out of the carbon tariff if they join a pricing club with the United States. As more countries join the club, the internal-to-the-club share of climate harms goes up and so does the Club Price. But since the Club Price is still lower than the global price, you eventually have everyone in the club. That’s a clever technocratic idea, I liked it when I first heard of it, and I’m glad Nordhaus won a Nobel Prize, but obviously this hasn’t gone anywhere.

Last week, Politico had a story about U.K. Labour Party leader Keir Starmer seeking counsel from Justin Trudeau, Anthony Albanese, Barack Obama, and Tony Blair.

Among other things, it discussed an international center-left conference where attendees “were presented with polling suggesting that voters in 10 countries, including the U.K., Australia, France, Germany and the U.S., supported climate policies by a wide margin when they were presented through the prism of energy security and high-quality jobs in industries such as electric cars, batteries, wind and solar power.”

I do not on any level disagree with that token of conventional wisdom among global progressives.

But I do wish the consumers of that polling would take more seriously what it does and does not say. Public opinion research indicates that there are a lot of policies with climate benefits that people support because they also have non-climate benefits. The Obama administration, for example, did a lot to reduce CO2 emissions through Clean Air Act rules that passed cost-benefit muster because of their local health impacts. That’s great. Particulate air pollution is a serious problem and “impose rules that are good for most Americans even though greedy corporate executives don’t like them” is classic center-left politics. The fact that you can make progress on climate by doing things that have non-climate rationales helps explain why so much good news has occurred despite the objective difficulty of the problem.

That said, the message of this polling is that you need to proceed with caution.

One reason I’m so hung up on the old Keystone XL Pipeline fight is that blocking construction of that project was a great example of an idea that you can’t rationalize through the prism of energy security and high quality jobs. That’s one reason Obama didn’t want to block it. But climate activists didn’t like that answer, and not only did they push to block it, but they made willingness to agree with them about this their litmus test for political support. This succeeded in getting Hillary Clinton to endorse their cause and then a few months later Obama blocked it. I don’t think that particular action had earth-shattering political consequences, but it’s an important sign of the post-2012 leftward drift — and overall lack of political caution — of the Democratic Party. If the plan is to advance a climate agenda by talking about energy security and good jobs, then you can’t block a union-friendly construction project that’s about getting energy from Canada.

As I’ve said before, I think the Biden administration has pursued a wiser and more moderate course on energy than they get credit for. But one reason for that is they don’t seem to seek credit for moderation on energy — their outward-facing message seems more geared toward convincing climate activists to clap louder for them than toward convincing working-class voters that they’ve taken a balanced approach.

I got a question in last week’s mailbag about the cost-effectiveness of different IRA decarbonization provisions, and it’s an important issue. I noted that if the Rhodium Group’s estimates are even close to correct, the clean electricity title of the bill generates a lot more decarbonization-per-dollar than the electric cars provisions, and you could boost the cost-effectiveness of the EV provisions by redesigning how they work.

But what are arguably the most important parts of the bill are unfortunately not really amenable to that kind of analysis. IRA has various provisions designed to boost technologies that right now are speculative and expensive. That includes small modular nuclear reactors, advanced geothermal, at-source carbon capture, atmospheric carbon capture, and hydrogen electrolysis. It’s entirely possible that all the money spent on these things will amount to nothing, that nobody will be able to make it work at scale, and the money will ex post have been totally wasted. All R&D essentially has this problem, and it’s unfortunate because it means a narrow cost-benefit lens can make the bill look worse than it is. Because at the end of the day, if one or two of those bets pay off, the benefits will be very large.

That’s because the global nature of the problem flips. If an American company like Fervo does succeed in mastering the drilling techniques required to place geothermal plants in arbitrary locations, that will not only promote decarbonization in the United States, it will shift the objective choice function for every country around the world. And the same is true of a nuclear breakthrough or an electrolysis breakthrough or a carbon capture breakthrough. And since American firms will be at the leading edge of these speculative revolutions, the United States will receive ancillary economic benefits of foreign adoption of technologies we pioneered.

Will IRA actually do those things?

I don’t know, in part because it’s inherently hard to know and in part because the regulatory implementation of IRA isn’t finished yet. We need to rejigger the regulatory environment to maximize the odds of success. But the technology-focused side of IRA is the side that takes the objective difficulty of the problem seriously, and it’s also the side that most aligns with the idea that “voters … supported climate policies by a wide margin when they were presented through the prism of energy security and high-quality jobs.”

The problem is that neither this idea nor the idea of focusing on policies that have large co-benefits fully exhausts activist aspirations. They want countries to embrace unilateral emissions reductions over and above what can be justified by co-benefits, and while that’s a somewhat admirable aspiration, it’s not something we regard as politically plausible in almost any other context — certainly not at large scale — and I don’t think we should expect climate to be any different.