Simply put, critics build up a “carbon pricing strawman” and then tear it down. Here’s how it works, in three easy steps: (1) put forth an argument supposedly (but rarely) made by carbon-pricing supporters; (2) explain why the argument is false; and (3) pretend this is a death blow to carbon pricing itself.
Let’s consider a few examples from both ends of the political spectrum:
In theory, the “right” price of carbon would balance the costs of reducing emissions and the benefits of avoiding damages from climate change. But quantifying benefits means deciding how to value human lives, ecosystems, and the well-being of future generations versus the present. Such questions do not have “right” answers in a precise sense, but that doesn’t mean we must throw up our hands in despair. What’s important for policy makers to understand is the current trajectory of greenhouse gas emissions causes unacceptable climate risks. Climate policy must be sufficiently stringent to significantly change that trend.
By itself, no single U.S. policy can significantly reduce climate change, and carbon-pricing supporters understand global action is needed to reduce global temperatures. But global action is inconceivable without a strong U.S. contribution. Any estimate of the effects of U.S. policy on global temperatures should account for how the policy encourages action (or inaction) from other countries.
Economists have long debated whether carbon pricing can improve the economy by taxing things we want less of (like pollution) instead of things we want more of (like income)—they call it a “double dividend.” While the possibility of a double dividend makes for compelling (if nerdy) academic debates, it’s irrelevant for practical purposes. The economy benefits from carbon pricing the way individuals benefit from paying insurance premiums—reducing climate risks makes for a stronger and more stable economy in the long-run, precisely why economists overwhelmingly support a carbon price.
The vast majority of carbon-pricing supporters understand a carbon price is a necessary but insufficient tool to address climate change. In situations where people are unresponsive to price signals, additional policies are sorely needed—to promote clean energy innovation or energy efficiency, for example.
Computer models predicting little to no technological change show carbon prices would need to be extremely high to meet emissions targets. Fortunately, clean energy technologies are progressing rapidly in the real world, and carbon pricing will accelerate these innovations. New technologies and complementary polices both reduce the carbon price needed to achieve a given emissions target.
Finally, no evidence has been put forward to suggest support for carbon pricing stands in the way of other policies. Many supporters believe the risks of climate change are so severe they will vigorously support alternative climate policies while also promoting a carbon price. Others support a carbon price because the resulting revenues provide an opportunity to accomplish non-climate goals, like reforming the tax code or assisting struggling communities, while simultaneously taking out an insurance policy on climate risks.
How to Fact Check the Critics
Research by WRI and many others shows carbon pricing is a cost-effective approach to reducing greenhouse gas emissions. As it continues to gain popularity, expect critics to get even louder. When you see critiques, be sure to ask whether they discredit these two basic points:
Reducing the risks of climate change requires additional U.S. government action; and
A national carbon price can achieve emissions reductions at a low cost compared to alternative policies, making it an important step toward addressing climate change.
If not, rest assured that the arguments for carbon pricing are as strong as ever. Critics should confront carbon pricing head on, and quit tearing down strawmen.