Climate Policy: Separating Fact from Fantasy

Abstract

There is widespread agreement that climate change is a serious problem. If nations fail to regulate greenhouse gases that contribute to global warming, or use alternative strategies for addressing the problem, the damages could be significant, and perhaps catastrophic. In this essay, I argue that the range of effective options to address this problem is likely to be quite limited for the foreseeable future. The reason is that national leaders appear to lack the political will to achieve global emission reductions in a timely manner.

This observation does not mean that we should do nothing. It does mean that we should focus on what is likely to be sensible and doable. I argue that it makes little sense to try to bring all countries into a binding international agreement to reduce emissions at this time, because such agreements are not likely to be workable. It makes sense, instead, for interested countries to take some action now to limit greenhouse gas emissions, including putting a price on emissions. It also makes sense to focus on research and development - including how best to adapt to climate change, improve our understanding of geoengineering, and improve the cost effectiveness of carbon capture and storage for coal burning power plants. In addition, countries should continue to experiment with institutions that will be needed to manage a portfolio of solutions for addressing climate change over the longer term. I also note the absence of key political leadership in this area and suggest what is needed.

Keywords: Benefit-Cost Analysis, Regulation, Environmental Economics, Energy Policy, International Conflicts, Negotiations, Sanctions