Putting a price on carbon is a fine idea. It's not the end-all be-all: What is the most important policy tool for fighting climate change? Ask just about any economist and the answer will be the same: a price on carbon emissions.
Not only is there a robust consensus among economists, but they have been remarkably successful in spreading the gospel to the wider world as well. Climate activists, wonks, funders, politicians, progressives, and even conservatives (the few who take climate seriously) all sing from the same hymnal. It has become conventional wisdom that a price on carbon is the sine qua non of serious climate policy.
But it is worth keeping carbon pricing in perspective. It has become invested with such symbolic significance that it is inspiring some unhelpful purism on policy and magical thinking on politics.
Slowing climate change will require a suite of policies, regulatory reforms, and investments. Carbon pricing will be an important part of that portfolio. But only a part. It is not the only legitimate climate policy, the one true sign of seriousness on global warming, or a substitute for the difficult and painstaking political work that will be required to transition to a sustainable energy system.
I have no interest in a carbon-pricing backlash. But maybe a sidelash — a reality check.
This post will be a two-parter. Tomorrow I'm going to get into politics, how it shapes carbon taxes, and what's to be done with the revenue.
But first, I want to take a step back. In this post, I'll have a quick look at why carbon pricing has become so central to climate economics and raise some questions about its primacy in policy and political circles. ...