Missing in Popularity: How Carbon Pricing Has Failed To Cut Through
Two decades on from the surfacing of carbon pricing, it’s failed to cut through almost entirely as command and control policies have won the day.
At the turn of the century, there was massive expectation about new climate policies from governments to make fossil fuels more expensive. This drive would have, in turn, made renewables much cheaper through the channelling of investment. They would have become not only cheaper but more reliable and productive, driving the economy forwards not in spite of climate change, but as a result of it.
Even libertarians came round to the idea of government carbon pricing in some form, with the arguments about internalising emissions within the market being too persuasive for the most hardcore proponents of markets.
The policy, whether in the form of a direct price, tax, or cap and trade mechanism, was and is popular. Taking out the “don’t knows”, 60% of Americans favour a tax. Among economists, the idea is extremely popular. And when the promise of better funding for public services or restoration of the environment is attached to a tax, the public want it even more — about 67%.
In a few countries, there is already a pricing system. In France, for example, emitters must pay around $50 per ton of CO2 produced, and this will rise substantially in the next few years.
This would be great, except for one other thing we know about France: the French love riots, and they just happened to have started one of the most prolonged periods of rioting in the world over eco-pricing systems. That’s despite support for the tax standing at 65% in France in 2017.
The lesson, from two referenda in hyper-blue Washington state, to the riots in France and Mexico, is this: a carbon tax is popular, but people don’t want it. And that’s a weird conclusion to have to take, but the disparity between polls and votes, or between polls and action, is huge.
That means that a significant number of countries don’t have any form of carbon pricing system. The UK and the US are the particularly notable omissions from the list — and Germany is only just coming to implementing a pricing system now.
The reason why carbon pricing has gone missing in its popularity is an anti-market, socialist foe: command and control. Governments all around the world have opted for something akin to the socialist central plan, setting carbon targets and, in typically Soviet fashion, not meeting them.
But why are these policies winning out? They are, after all, usually counteractive to a good economy and growth, and often entirely ineffectual.
The reason is actually quite simple: the language of “tax”, “pricing”, or “cap” is threatening and politically difficult; the language of “target”, “reduction”, and “plan” much more conducive to eliciting a positive response from the electorate.
When voters have the idea explained to them, which is often the methodology of pollsters when it comes to policy initiatives, they see it as a brilliant way to force industry to reduce emissions and prevent the exporting of emissions. But when it comes to election time, politicians mostly avoid the idea of a carbon tax, preferring the more politically helpful command and control policies.
And for voters in Washington state, the block was a simple sense of unfairness, from those who felt that their bottom line would be affected but not that of their fellow Americans in the other 49 states.
The system is almost universally endorsed by economists as the most significant tool government has at its disposal to combat climate change, driving rather than curtailing economic growth. But there has been no big push, no big implementation across the world.
For two decades now, we have been stalling on the biggest issue of our time. With even the CEOs of big oil companies supporting carbon pricing, it’s time to take action.