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The middle ground on climate policy

August 13, 2012

Climate change makes people angry.  The left refers to skeptics as denialists, corrupt, heartless, and stupid. The right refers to activists as traitors, fools, frauds, and socialists. Discussions about global warming and climate policy hardly live up to the word “debate” and are more likely to descend quickly into name-calling and dramatic assertions of doom.

When I wrote a monograph back in 2007 looking at some details of a carbon tax, I very intentionally side-stepped the heated debate about the science and just looked at the economics. This earned me hate mail from both sides of the isle.

Compromise seems unlikely, but it is worth at least considering our options.

The key part of the policy puzzle – that often gets ignored in the climate shouting matches – is that effective mitigation can only be achieved with a strong global binding deal. Without such a deal, everything else is smoke and mirrors.

The current Australian policy will give us the most comprehensive carbon pricing scheme in the world, but even this policy will only impact temperatures by a fraction of a degree unless it is combined with global action. Some rough estimates suggest our policy will only reduce global temperatures by about 0.004 degrees, which is too small to measure. In his much-quoted report, Garnaut rightly says: “There would be no point in Australia alone introducing mitigation policies. The entire purpose of Australian mitigation is to support the emergence of an effective global effort” (Chapter 14).

Despite this warning, Garnaut and others argue that Australia should be part of a global solution and that we can have some influence on the world. Fair enough. But then the main question – indeed, the only question that matters – is how can Australia act to increase the chance of a global binding deal, while avoiding carrying the burden if there is no global binding deal?

One potential answer is “conditional legislation”. Our government could legislate now in such a way that we would have no carbon price while there was no significant global action, but that a carbon price would automatically kick in as global action became more serious.

The first benefit of this approach is that it would increase the incentives for other countries to sign up to a global binding deal, thereby improving the chances that the world will achieve mitigation. Our current approach tells the world “do what you like, it won’t change our behaviour”… which is not the best way to encourage global action. With conditional legislation we would be telling the world “if you do your part, then we will do our part”, which improves the incentives for creating a global binding deal. If we concentrate on the real problem – getting a binding global deal – then climate activists should prefer the idea of conditional legislation rather than unilateral action.

The second benefit from conditional legislation is that Australia will play its role in any global deal, but if there isn’t a global deal then we won’t have sacrificed our own economy in pursuit of a ghost.

Indeed, the only downside from this approach is for people who believe Australia should pay the cost, even if there is no climate benefit. While some people might subscribe to this sort of religious self-flagellation, it is hard to see such a position being widely popular.

Some skeptics will still oppose this policy since they see no value in a global binding deal. That is a reasonable position, and it is worth debating whether a global binding deal would pass a benefit-cost analysis. But those skeptics should still realize that conditional legislation is better than unilateral action.

So for both sides of the shouting match, conditional legislation should be seen as a step in the right direction. Now the question is whether rational policy discussion has any place in modern political debates?

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  1. 2dogs
    August 13, 2012 at 12:51 pm

    Its actually the Left that would strike down such a proposal, usually insisting that Australia “must show leadership” – conditional legislation would not do this. Many skeptics would be quite happy, based on the track record of inactivity by the international bodies.

    The only real compromise is nuclear power – on this issue, it has always been the second choice of both sides. That should qualify it is the compromise of choice, but the debate has become too polarised to achieve that outcome.

    I am always dismayed at the Left’s opposition to this compromise. While defending scientific concensus so fiercely on the global warming matter itself, they so quickly abandon it to attack nuclear power when it is offered as an alternative.

  2. August 16, 2012 at 8:53 pm

    I think the principle is right but what would it look like in practice and would we find that palatable.

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