Biden’s Climate Plan Has United Coalitions By Being Broad

Source: By Gernot Wagner, Bloomberg • Posted: Sunday, October 25, 2020

Instead of narrowly addressing carbon pricing, as economists have traditionally favored, the proposal has many aims

The climate policy choice in the U.S. Presidential election could not be clearer. One trusts science, the other dismisses and undermines it. One has a plan, the other does not.

In fact, Democratic candidate Joe Biden’s plan is the most ambitious climate plan ever proposed by a major U.S. presidential candidate. The headline goal of 100% carbon-free electricity by 2035, for example, is more ambitious even than Bernie Sanders’s from 2016. The $2 trillion investment over four years on clean energy, weatherizing homes, and mass transit approaches pandemic proportions.

Equally important are the many other plans for everything from environmental justice to foreign policy and government reform, including potentially a new White House office to coordinate climate activities across the government.

That important big climate push, aided by considerable momentum around climate as a top issue of concern for voters, also creates a particular bind for those long focused on climate issues, often in isolation: many economists, in short, don’t quite know what to do with such a transformational policy push.

Economists, as a species, are trained to think at the margins, analyzing oft-narrow – “marginal” – carbon pricing proposals aimed at charging emitters for each ton of CO₂ released. The ten(!) carbon pricing bills introduced this Congress are a good example. They are well-defined, narrow proposals to price CO₂ at levels between $15 and $50 per ton, some rising rapidly over time.

In fact, any such proposal follows a dearly held school of thought among economists: each policy ought to be narrowly targeted to address a distinct policy goal. The climate problem often gets split into two distinct problems: one is the external costs of carbon pollution, the other is how to jumpstart clean-energy innovation. The first, the argument goes, calls for a price on carbon, the second for subsidizing research, development, and deployment of clean technologies. Both are important. The pandemic necessitates adding a third: job creation, putting justice issues front and center.

The split has also led to complex politics. Political scientist Matto Mildenberger, in an important recent book titled Carbon Captured, details how business lobbies and labor unions have teamed up to successfully scuttle ambitious climate policies. “Narrow” policies aimed at pricing carbon have, in the past, found particularly vicious opposition from both.

Biden’s ambitious plan seems to have succeeded in uniting climate and labor union support behind his climate push. The recipe? Ignoring the dictum of separating climate policies into narrow buckets, isolating the objective of pricing the negative carbon externality. In fact, Biden’s plans do not explicitly mention carbon pricing at all.

While that worries some economists, it follows the advice laid out in another essential new book: Making Climate Policy Work, by energy economist and lawyer Danny Cullenward and political scientist David Victor. Steeped in the successes and failures of climate policy past and present, Cullenward and Victor are far from opposed to pricing carbon. In fact, they aim to find ways toward ambitious climate policies that might incorporate carbon pricing as one pillar, while recognizing that most successful real-world policies focus on other, more direct interventions. While California, for example, has established a comprehensive cap-and-trade program to price carbon, its many other more direct climate policies are responsible for most of its emissions reductions.

Biden’s plan is far from a guarantee for climate policy success. A lot depends on the outcome of the election, especially in the U.S. senate. But there are hopeful signs all around, including U.S. Senator Lisa Murkowski, a Republican from Alaska, joining Senator Sheldon Whitehouse, a climate champion and Democrat from Rhode Island, at a forum with two Stanford economists, saying how carbon pricing “is worth putting on the table” if – when – the next Congress considers climate policy. Carbon pricing entering an ambitious climate policy push would clearly be desirable, assuming it does not trade away more ambitious climate policies. That is a step environmentalists, economists, and hopefully the next Congress and White House can get behind.

Gernot Wagner writes the Risky Climate column for Bloomberg Green. He teaches at New York University and is a co-author of Climate Shock. Follow him on Twitter: @GernotWagner. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.