The first step of the plan is a carbon auction. To briefly outline, this is where the government auctions off permits for emitting a certain volume of CO2 — and this could be extended to methane.,
The reason this has to be the first step is that it informs the government of the true cost of decarbonising the economy. Whereas we currently can only go off the guesses of businesses and environmental charities, a carbon auction gives a clear indication: are there cheap alternatives to carbon emissions, or not? Do we actually need all of the activities which emit carbon?
This works because of the economic ‘world of truth’ which free markets create, and you can read about this in more detail here. In the US, a sulphur dioxide auction of the same type massively reduced emissions.
If the auction reveals a low price for emissions, then decarbonising is cheap and will occur rapidly as investment in alternative technologies is ramped up in the private sector and carbon speculators buy up and hoard permits.
If the auction reveals a high price, the decarbonising is costly. This will allow the government to set out a plan to centrally decarbonise the economy, with government investment and gradual prohibition of polluting technologies.
Here is a proposal, in brief, for that plan — although I suspect that little intervention would be required because decarbonising probably isn’t as expensive as business and industry would have you believe.
In the event that decarbonising proves to be difficult, the government mustn’t give up on economic solutions and turn immediately to investment and legislation.
One solution of this ilk would be congestion charging — typically done to reduce air pollution, but is apt for reducing emissions overall from the production of electricity for electric vehicles and emissions from diesel and petrol engines.
Congestion charging, like the carbon auction, is designed to reveal the true benefit of taking the car as opposed to walking, public transport, or not going somewhere at all. Like the emissions auction, it’s very effective at its job.
Carbon taxes on certain goods — albeit only those to which there are universally viable alternatives — would help to direct people towards more sustainable alternatives. However, government should assess goods on an individual basis, not have a tax per emissions unit, as the exact carbon footprint of products is difficult to trace.
The model of attempting to avert polluting behaviour through charges which make other options cheaper and more attractive is an effective one, and can be widely applied. They all show us, at the very least, the true cost of changing our behaviour, enabling governments to act. They are the only way to deal with externalities, and climate change is fuelled by externalities. Socialism and central planning aren’t up to the task.
Government must, though, have a back-up plan, for if the cost of change turns out to be high. Renewable energy, particularly the least-polluting sources, are a good first step for government to take, through investment in technologies and subsidies for using them. And, although many admonish it, nuclear energy is unavoidable if we are to transition to a sustainable energy mix in a cost-effective way. It is, ultimately, the lesser of two evils.
The renewable argument is an easy one to win — they bring huge economic and geopolitical benefits, and help to reduce climate change.
However, negative emissions technology, both futuristic and simple afforestation, is vital. Trying to get a carbon deficit (emitting less carbon than we take out of the atmosphere) is the aim of most governments around the world, and this will require negative emissions technology in one form or another. We won’t be able to eliminate all emissions.
On an individual level, we have to make changes, and whilst the government certainly shouldn’t ban foods or polluting items, the aforementioned carbon tax and making use of Richard Thaler’s ‘nudge’ theory is vital. Government must push us, without introducing taxes which unfairly target the poor and banning things in a draconian manner, towards a more sustainable lifestyle.
All manner of technological solutions are available, and the debate between different forms of renewable energy sources — biofuels, solar, wind, waves, tides, geothermal, etc. — is one worth having, but I can’t help but feel that extensive discussion of that is jumping the gun a little. We don’t have a good plan in most countries, and we need one if we are to deal with every aspect of the climate emergency.
