Esty’s Reflections on “A Conservative Case for Climate Action”

February 15, 2017

By: Professor Dan Esty

Harvard economists Marty Feldstein and Greg Mankiw along with policy entrepreneur Ted Halstead published an op-ed in the New York Times on February 8 that could signal an important shift in the debate over action on climate change.  Their commentary, “A Conservative Case for Climate Action” makes the case for shifting the focus of climate change policy away from the “grab bag of regulations” put forward by President Obama to a “gradually increasing tax on carbon dioxide emissions.” They note that such a tax would offer a “powerful signal” to businesses and consumers alike about the need to conserve energy and to support the transition to a clean energy future. And they seek (quite smartly, I believe) to build political support for the tax by rebating all of its proceeds to the American people.  At their $40/ton starting level for the tax, these rebates would amount to about $2,000 for a family of four.

I agree with their conclusions, and I like their proposal. In fact, Harvard Business School professor Mike Porter and I offered a very similar policy recommendation in a New York Times op-ed piece in April 2011 “Pain at the Pump? Try a Charge on Carbon Emissions”.  We suggested a carbon charge starting at $5 per ton — and rising $5 per ton per year until it reached $100/ton in 2030. Our argument centered on the value of this price signal as a spur to innovation.
What is particularly notable about the opinion piece by Feldstein, Mankiw and Halstead is that it is corroborated by a report recently released by Halstead’s Climate Leadership Council, which outlines the details of their plan, and more importantly has been endorsed by a long list of notable Republicans including James Baker, Hank Paulson, George Shultz, and former Walmart chairman Rob Walton. 
I have argued for some time that Republican skepticism about climate change policy is derived less from doubts about climate science and more from a dislike of the policy prescriptions put forward by Democrats. If the only response to the accumulation of greenhouse gas emissions in the atmosphere was Big Government mandates and heavy-handed “command and control” regulations, their opposition could not be shaken. But a simple and clear market-based policy mechanism might shift the political dynamic. 
The “Conservative Case” authors argue that now is the “perfect time to enact a sensible policy to address the dangerous threat of climate change.” I concur. Let’s see if their call to action gets traction — and let’s hope so.