Not Just for Future Generations
How climate policy can benefit most people in the here and now.
This article is from Dollars & Sense: Real World Economics, available at http://www.dollarsandsense.org
This article is from the
March/April 2016 issue.
at a 30% discount.
As the United Nations Climate Conference began in Paris on November 30, economist James K. Boyce joined D&S co-editor Alejandro Reuss for an interview on the future of climate policy. Boyce, professor of economics at UMass-Amherst and director of the Program on Development, Peacebuilding, and the Environment at the Political Economy Research Institute (PERI), has written extensively on a wide variety of environmental issues. (See, for example, “Mapping Environmental Injustice,” co-authored by Klara Zwickl, Michael Ash, and Boyce, Dollars & Sense, November/December 2015.) In this interview, he emphasized how the dominant narrative about climate policy—the current generation’s pain for future generations’ gain—is both incorrect and politically damaging. —Eds.
Alejandro Reuss: With the Paris Climate Change Conference now underway, climate policy is undoubtedly at the forefront of many people’s minds. We often hear climate policy debates framed by the question of whether the current generation will be willing to sacrifice our standards of living, by reducing energy use and achieving emissions reductions, for the benefit of future generations. You’ve criticized that sort of framing of climate issues.
James K. Boyce: That’s right. I mean that framing is almost ubiquitous. One of the reasons why these international negotiations have proven so difficult is that if everybody believes that this is going to be a painful thing to cut our carbon emissions, then they all want somebody else to go first. It’s like a global free-rider problem—no one wants to be the one who cuts emissions more than someone else because they’ll bear the pain and everybody else shares in the gain. I think that framing of the problem has been a huge obstacle to progress, and it’s not true. In fact, it is, on the contrary, true that we can design climate policies that benefit the majority of people here and now, in the present generation. So instead of always wanting somebody else to go first, if we designed the policies right, everyone will want to go first and I think that’s a critical piece of the conversation that needs to be lifted up.
AR: One of those benefits that you’ve talked about and written about is called “air quality co-benefits of climate policy.” So what are air quality co- benefits, and why are those important?
JB: When we burn coal, oil, and natural gas—the fossil fuels—we not only release carbon dioxide into the atmosphere, which is the most important of the greenhouse gases propelling climate change, but we also release a lot of other really nasty stuff: particulate matter, sulfur dioxide, nitrogen oxide, a host of air toxics—things that are hazardous to people here and now when we breathe them. By cutting down on our use of fossil fuels, we will not only help to protect the climate for future generations by reducing CO2 emissions, but we’ll also help to improve air quality for the present generation. Those improvements can be really substantial. In fact, people who’ve tried to calculate how much, in terms of dollars, the public-health benefits of cutting carbon emissions would be find magnitudes of benefits that are as big, or even in some cases bigger, than the dollar values that have been put on reducing greenhouse gas emissions. So we’re talking about big benefits here, even in a country like the United States which has relatively good air-quality regulation. My grad student Brandon Taylor and I, for example, recently did some calculations on the clean-air benefits, the public-health benefits that would come from implementing one of the climate bills that’s been introduced in the current session of Congress, the Healthy Climate and Family Security Act, introduced by Congressman Chris Van Hollen from Maryland. Van Hollen’s bill would put a cap on carbon emissions, auction off the permits, give the money back to the people, and reduce the use of fossil fuels by 80% by the year 2050. We estimated that over that period, implementation of that bill would save about 700,000 lives in the United States. That is to say it would avert 700,000 premature deaths; that’s about—what?—250 times the number of people who died in 9/11? We’re talking about a lot of preventable mortality that could be averted by moving forward in the clean-energy transition.
When you then look at countries like China or India, where the air-quality problems are even worse, the public health co-benefits of a clean-energy transition are that much greater. So I think this is something that really needs to be part of the conversation. When we’re talking about cutting back on the use of fossil fuels, we’re really talking about making cleaner air for everybody on the planet today, and improving public health, preventing premature deaths, preventing respiratory diseases, cancers, heart problems, asthma, and a host of other illnesses that are related to air pollution from fossil-fuel combustion.
AR: Just to follow up on that point, probably a lot of our readers will have thought about the so-called “export of pollution”—the relocation of high-polluting industries from high-income countries like the United States to elsewhere in the world, and the insulation of people in high-income countries, especially affluent people, from the effects of that pollution. And yet, the argument that you make really says, well that may be true, but still there’s a lot of benefit to be gained in countries like the United States from an air- quality and public-health standpoint.
JB: Yes, that’s absolutely right. I mean, you can’t export burning gasoline in your automobile. You can’t export emissions from burning coal, oil, and natural gas to generate electricity. Those things are going to be in your own country, and we’ve still got a lot of that here in the United States. Despite having relatively strong air-quality legislation under the Clean Air Act, we’ve still got thousands of premature deaths every year that are attributable to burning fuels. So, the only way to really drive down those public-health costs is to transition away from, what really, when you think about it, is an awfully primitive technology. It’s digging up poisonous stuff that’s been buried under the ground for millions of years and burning it to generate heat and power. Really, I think people are going to look back on that in a hundred years and say, “Boy, people were sure primitive back in the 19th and 20th, and early 21st century if that’s the way they were generating their power,” where we now know that in fact it’s possible to generate energy very cleanly, at very low cost, by tapping the sun, the wind, geo-thermal sources of power, and so on. So I think we’re not only talking here about trying to improve the environment for people yet to be born, we’re talking about improving the environment for ourselves.
AR: You’ve also written a lot about climate policies like a carbon tax, or auctioned carbon permit system, and argued that those could be designed in a way that would yield net income benefits to most people. Now, again, in the current discourse, the idea is that a carbon tax or some other price on carbon would hurt most people in the pocketbook, in particular lower-income people who tend to spend larger percentages of their incomes on fuel and the like. So how is it that most people would end up benefitting from such policies, properly designed?
JB: Well, this is another really important part of the conversation. The fact that a carbon price is one of the most important instruments to achieve reductions in emissions by making fossil fuels more expensive, is again part of the reason why people think, “Oh, it’s going to be painful for us to reduce our use of fossil fuels because we’re going to have to pay more for these things.” It’s true we are going to have to pay more, but the important thing to realize is that money doesn’t disappear from our economy. When consumers pay more for oil, coal, natural gas, and everything that’s produced and distributed using them, for electricity, for gasoline for their cars, etc.—that money doesn’t get shipped to Saudi Arabia, it doesn’t get buried in a tin can in your backyard, it doesn’t get shot to the moon. It gets distributed somewhere, and the question is: Who gets the money?
In effect, by putting a limit on the amount of carbon we’re burning, we’re converting the atmosphere from something that was free, that you didn’t have to pay to use, into something that’s limited and that we have to pay to use—to park carbon in that limited atmospheric space. The question then is: Well if we’re going to pay, who should get the money? Who does that space belong to? Who owns the parking lot, so to speak, the atmospheric parking lot for carbon emissions? I would submit that it’s not owned by the corporations, it’s not owned by the government, it’s owned by all of us in common and equal measure. And consistent with that principle, then, the money that’s collected by auctioning permits, or by charging a carbon tax, ought to go back to the people as the rightful owners of the resource we’re paying to use.
If you did that, people who have smaller carbon footprints, who don’t burn as much fossil fuel, will receive more in dividends than they pay in higher fuel bills. This includes mostt low-income people because they can’t afford to burn as much fossil fuel—a lot of low income people in this country can’t even afford to drive a car, they certainly don’t have 4,000 or 8,000 foot houses that they’re heating, they certainly don’t fly off in airplanes to take vacations in sunny places in the middle of the winter, right? They don’t burn as much carbon, and so their carbon footprints are relatively small compared to the more affluent people who have bigger houses, bigger cars, fly around in airplanes, etc. By putting a price on carbon, everybody pays in proportion to their use of the scarce resource—that limited ability of the atmosphere to absorb emissions—and by recycling that money to the people as equal per person dividends, everybody gets paid back the same amount regardless of the size of their carbon footprint. So what that means is that people who have smaller carbon footprints come out ahead, and people who have bigger ones come out behind.
When you do the math, what you learn is that the majority of the American people would actually benefit through a recycling of the money: Low-income households would come out ahead, middle-income households would be kept whole—so their real incomes wouldn’t suffer by virtue of the rising prices of fossil fuels—and the wealthier households would end up paying more than they get back. But—you know what?—they can afford it.
AR: I think that, when they hear a description of that policy, most people have a favorable reaction to the clarity and the simplicity of it: You pay in proportion to the carbon emissions that are embedded in what you consume, and then you get back an equal share of what everyone pays into that pool. Some people, however, may live in an area where the electrical utilities are all using coal-fired plants, and this is a kind of emissions that’s very difficult for them to avoid individually. Is there an argument in favor of, say, adjusting the policy so that, if you’re stuck in that kind of area paying for high-carbon-intensity electricity, you’re not penalized for that?
JB: Well you’re raising an important point, Alejandro, which is that there are some regional and interstate differences in carbon footprints based, above all, on the composition of the electricity supply. In states like Oregon or Vermont, that don’t use much fossil fuel for electricity, people have lower carbon footprints at a given level of income than people in, say, Indiana or a number of other midwestern states that use more coal for their electricity supply. So that’s an important issue. Now, on the other hand, there’s a lot to be said for keeping the policy simple, and even in a state like Indiana, which has the most carbon-intensive electricity mix, when you calculate how carbon pricing would affect the households, the majority of households would come out ahead if the money’s recycled as a dividend. But it would be a slimmer majority in Indiana than it would be in, say, Oregon.
For that reason, I think, it’s desirable to think about other elements of the policy that could specifically try to channel resources to states like Indiana, to the most coal-intensive states—partly to assist those states in driving forward the clean energy transition and to cushion the impact on consumers in those states, and partly because in some of the coal-heavy states you’ve actually got jobs which are linked to the present energy infrastructure. We need to make sure that, as we transition to a clean-energy economy, we don’t penalize the people who have been working in the old energy economy, but instead we make sure that they’re able to take advantage of the expanded employment opportunities that come with the building-out of our clean-energy infrastructure.
One way to do that would be to channel 75%, let’s say, of the carbon revenue back to the public as dividends, and to have 25% of it held as money for public investment—because overall in our economy, about 25% of the investment is by federal, state, and local governments. This is what Senators Maria Cantwell, Democrat of Washington state, and Susan Collins, Republican of Maine, actually proposed in an act they introduced back in 2009 called the CLEAR Act. If you do this—they proposed to channel 75% back to the public as dividends, 25% for public investment in clean and renewable energy—what you can do then is allocate that public investment in ways that takes these regional differences into account. And I think that’s not a bad idea.
AR: To bring this back around full circle to where you started: You talked at the beginning of this interview about this narrative of present-day sacrifice as something that has politically hamstrung serious action on climate change. What do you see as the potential for a real, significant impact of reframing the way that people think about this, away from present sacrifice and toward the potential for present benefits?
JB: I think we already see rising awareness around the world and within this country—really, across the nation and across the political spectrum—of the fact that climate change is real, that burning fossil fuels is a major contributor to the problem, and that we need to do something about it. So, the political will to do something about it has been building. What I think has been holding it in check has been in no small measure the idea that, “Ah gee, but even though we ought to do something, it’s really going to hurt and should we really do it? Should we do it if the Chinese aren’t doing it? Should we do it if we don’t know for sure how much the planet’s really going to warm up, etc.?” All these reservations about doing something have held progress back. I think bringing out the ways in which we can design climate policy to achieve clean-air benefits—which means not just having carbon reductions happen regardless of where they’re emitted, but also to target the reductions to the places, the industrial sectors, the most heavily impacted communities, to make sure that we get significant reductions in emissions in those places where the air quality and public health co-benefits are likely to be greatest—that’s one way to try to break through that resistance. The other way is to design the policy so that the revenue generated by pricing carbon actually comes back to the people, so people end up, in most cases, financially better off in pocketbook terms than they would have been without the policy.
Once the public grasps that not only is this a good thing to do for future generations—for our children and grandchildren and those that will come after them—but it’s actually a good thing for us too, I think at that point we have a foundation for really moving forward on a policy, and a policy that can command bipartisan support. Because it’s not really a matter of red states vs. blue states or Republicans vs. Democrats. It’s not a matter of bigger government vs. smaller government. It’s a matter of getting the price on carbon to reflect the fact that burning this stuff comes at an environmental cost to the present and future generations, and making sure that that policy is implemented in a way that, far from hurting the public today, is going to benefit us.