Paul Krugman: The climate change domino

Published: Friday, Jun. 6, 2014 - 10:08 am

Maybe it’s me, but the predictable right-wing cries of outrage over the Environmental Protection Agency’s proposed rules on carbon seem oddly muted and unfocused. I mean, these are the people who managed to create national outrage over nonexistent death panels. Now the Obama administration is doing something that really will impose at least some pain on some people. Where are the eye-catching fake horror stories?

For what it’s worth, however, the attacks on the new rules mainly involve the three C’s: conspiracy, cost and China. That is, right-wingers claim that there isn’t any global warming, that it’s all a hoax promulgated by thousands of scientists around the world; that taking action to limit greenhouse gas emissions would devastate the economy; and that, anyway, U.S. policy can’t accomplish anything because China will just go on spewing stuff into the atmosphere.

I don’t want to say much about the conspiracy theorizing, except to point out that any attempt to make sense of current American politics must take into account this particular indicator of the Republican Party’s descent into madness. There is, however, a lot to say about both the cost and China issues.

On cost: It’s reasonable to argue that new rules aimed at limiting emissions would have some negative effect on GDP and family incomes. Even that isn’t necessarily true, especially in a depressed economy, where regulations that require new investment could end up creating jobs. Still, the odds are that the EPA’s action, if it goes into effect, will hurt at least a little.

Claims that the effects will be devastating are, however, not just wrong but inconsistent with what conservatives claim to believe. Ask right-wingers how the U.S. economy will cope with limited supplies of raw materials, land and other resources, and they respond with great optimism: the magic of the marketplace will lead us to solutions. But they abruptly lose their faith in market magic when someone proposes limits on pollution - limits that would largely be imposed in market-friendly ways like cap-and-trade systems. Suddenly, they insist that businesses will be unable to adjust, that there are no alternatives to doing everything energy-related exactly the way we do it now.

That’s not realistic, and it’s not what careful analysis says. It’s not even what studies paid for by opponents of climate action say. As I explained last week, the U.S. Chamber of Commerce recently commissioned a report that was intended to show the terrible costs of the forthcoming EPA policy – a report that made the least favorable assumptions possible in an attempt to make the costs look bigger. Even so, however, the numbers came out embarrassingly small. No, cracking down on coal won’t cripple the U.S. economy.

But what about the international aspect? At this point, the United States accounts for only 17 percent of the world’s carbon dioxide emissions, while China accounts for 27 percent – and China’s share is rising fast. So it’s true that America, acting alone, can’t save the planet. We need international cooperation.

That, however, is precisely why we need the new policy. America can’t expect other countries to take strong action against emissions while refusing to do anything itself, so the new rules are needed to get the game going. And it’s fairly certain that action in the U.S. would lead to corresponding action in Europe and Japan.

That leaves China, and there have been many cynical declarations over the past few days to the effect that China will just go ahead and burn any coal that we don’t. And we certainly don’t want to count on Chinese altruism.

But we don’t have to. China is enormously dependent on access to advanced-country markets - a lot of the coal it burns can be attributed, directly or indirectly, to its export business – and it knows that it would put this access at risk if it refused to play any role in protecting the planet.

More specifically, if and when wealthy countries take serious action to limit greenhouse gas emissions, they’re very likely to start imposing “carbon tariffs” on goods imported from countries that aren’t taking similar action. Such tariffs should be legal under existing trade rules – the World Trade Organization would probably declare that carbon limits are effectively a tax on consumers, which can be levied on imports as well as domestic production. Furthermore, trade rules give special consideration to environmental protection. So China would find itself with strong incentives to start limiting emissions.

The new carbon policy, then, is supposed to be the beginning, not the end, a domino that, once pushed over, should start a chain reaction that leads, finally, to global steps to limit climate change. Do we know that it will work? Of course not. But it’s vital that we try.

Read more articles by Paul Krugman



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