Climate change policy is not stable – something has to break

Pretty much everything has a breaking point.  The only questions are where, when and how.  Might it be coming soon with climate change policy?

This week there was disarray in the Australian Liberal and National party coalition over the costs of climate change policy.  This was one of the issues which helped sink Malcolm Turnbull’s premiership.  It’s significant because political parties have a big incentive to hide the washing of their dirty linen, certainly until they have agreed an electorally marketable compromise.

And in the UK, Boris Johnson’s Conservatives have been hinting that they might bring forward to 2032 the proposed date to ban the sale of petrol and diesel-powered vehicles.

Both of these are examples of politicians struggling with currently irreconcilable forces.  The costs of zero carbon look electorally intolerable.  The simple choices are gone. Politicians on all sides are twisting this way and that in the search for policies with little impact or, more likely, which they hope can be presented as regrettably unavoidable.

They risk falling into the trap laid by the late great historian, A. J. P. Taylor, of supposing that politics is a conflict of arguments, not understanding that in reality it is a conflict of forces.

And now that policies which can really impact on how people live their lives are being actively contemplated, the risk is that folk start looking for their yellow vests.

So far politicians have been lucky that improvements in technology – such as the remarkable achievements in reducing the cost of wind and solar generation and in battery design – have carried them through.  But it would assume the most extraordinary surge in invention to take our societies painlessly through to zero carbon.  And it seems ludicrous to hope for this brain rush by, say, 2032.

So on current trends, a choice looms between pain allocation or a major policy break.

Oddly enough, in all the event-driven trivia, there is some good quality analysis.  Some people are even thinking about the sort of stable and bipartisan policy that might take this argument off the table, and free up political space for minor problems like paying for healthcare, building houses and infrastructure and dealing with gang-led crime.

Headlined by two former US Secretaries of State, George Schultz and Jim Baker, the one a policy heavyweight, the other with some renown as an operator, the Bipartisan Climate Roadmap is not rocket science.

It goes as follows:

  1. A broad-based US carbon tax, starting at $40/ton.
  2. A border tax to stop untaxed carbon leaking into US emissions.
  3. Rebating all of the carbon tax revenue to the public. This makes sure climate policy is not a tool to grow big government.
  4. And rebating on a per-capita basis. So two-thirds of the population get back more than they pay.

The planners reckon that this mechanism would cut US carbon emissions by 50% from the 2005 baseline, or more than the Paris 2015 target level.

At the same time, the non-distorting nature of the tax and the accompanying removal of current wasteful interest group-driven climate change policies, means it would be much more compatible with continued economic growth than other proposals.

It’s so logical that one has to assume it is unworkable in the current political environment.  But if there is a break in policy … something like this might appear as a relief from the chaos.  It would almost certainly have a better chance of meeting its objectives than most of what is currently being talked about.




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