Since its introduction by U.S. Rep. Alexandria Ocasio-Cortez, D-N.Y., earlier this year, the Green New Deal — a sweeping proposal for widespread climate-centric reforms — has dominated political discussion on climate policy. I believe climate change is probably the most pressing and consequential issue facing the United States. I also oppose the Green New Deal.
Perhaps those statements seem contradictory, and perhaps “oppose” is a bit strong; implementing the GND is far better than doing nothing, and several of the plan’s components — such as modernizing our nation’s infrastructure and investing in renewable energy — are long overdue. I, along with many others on the center-left, am strongly skeptical that the Green New Deal is the right path forward. While many left-wing critics of the GND point to its political impracticality, the plan’s substance is equally concerning.
It’s difficult to estimate the quantitative effect the GND would have on carbon emissions, since the resolution Ocasio-Cortez introduced was more of a vague outline than a detailed piece of legislation. What is clear is that the GND is a hodge-podge of command-and-control style regulations such as building a high-speed rail network to “eliminate the need for air travel” and “upgrading all existing buildings” for energy efficiency. These proposals are bold ideas, but they will inefficiently, and perhaps insufficiently, reduce our carbon emissions.
The solution is far simpler: carbon pricing through either a carbon tax or a cap-and-trade system, which are the most efficient and cost-effective ways to reduce emissions. Carbon emissions, as any economist can tell you, are a classic externality. This means they have external social costs (including, for example, sea-level rise, extreme weather, health risks and much more) but emitters do not pay for — and therefore don’t consider — these costs when deciding how much to emit. This leads to excessive emissions of greenhouse gases.
Taxing carbon emissions at the rate of the social cost of these emissions will lead to a socially optimal amount of emissions, which will be lower than current amounts. A cap-and-trade system works similarly, but instead of setting the price of carbon emissions and letting the market figure out the quantity, a cap-and-trade plan caps the quantity of emissions by issuing permits to emit and letting the market trade permits and decide their price. Ideally, either plan would be revenue neutral: All government revenue from the tax or selling permits would be rebated to lower-income communities to assist with potentially high energy costs or invested in renewable energy technology.
There are still finer details to work out under either system — calculating the social cost of carbon to determine the ideal tax amount, covering other greenhouse gases like methane, creating a border carbon adjustment for imported goods, among others — but compared to other policy priorities like reducing poverty or fixing the health care system, solving climate change is tantalizingly achievable. Moreover, carbon pricing is more easily incorporated into an international system, which is critical since international collaboration and globally coordinated policies are essential to solve climate change.
For all the Green New Deal’s bold ideas, noticeably absent is any carbon pricing proposal. Some proponents point to a line briefly stating the need to “account for the true cost of emissions,” as a reference to carbon pricing, but this vague statement hardly constitutes a true proposal.
Ocasio-Cortez confirmed the absence of carbon pricing in statements to NPR, in which she said that a carbon tax or cap-and-trade plan would be at most a “tiny part” of the GND and be initially “off the table.” She continued to say that carbon pricing “misses the point” and “assumes the existing market will solve this problem for us.”
This characterization of carbon pricing is egregiously inaccurate and borderline nonsensical. Carbon pricing doesn’t “assume the existing market will solve the problem for us” — it recognizes the failure of the current market to address emissions. The whole point of carbon pricing is to intervene with sensible taxes or emission caps to allow market forces to reduce emissions in a way that maximizes efficiency and minimizes economic loss. Keep in mind that these answers were prepared, written statements, not off-the-cuff remarks — they represent a grave flaw in Ocasio-Cortez’s understanding of climate policy, not an innocent misstatement.
It is discouraging to see so many other Democrats abandon market-based solutions to climate change. Despite the fact that the most promising state-level and international climate plans are carbon tax and cap-and-trade systems, through four rounds of Democratic debates, each of which devoted time to discussing climate change, only U.S. Sen. Kirsten Gillibrand, D-N.Y., and former U.S. Rep. John Delaney, D-Md., brought up market-based carbon pricing mechanisms.
Lastly, a carbon tax proposal is far more practical to pass than the GND. Far-left Democrats have grown fond of scoffing at the importance of practicality, but the hard truth is that a climate plan is virtually meaningless at this stage unless it can be enacted. The GND has met universal opposition from Republicans and several red-state Democrats. It is frankly unpassable, even if Democrats manage to retake the Senate and the White House in 2020.
Passing a carbon pricing plan will also be difficult but far more realistic. The late Senator John McCain supported a cap-and-trade system during his 2008 presidential campaign, and an admittedly imperfect carbon tax bill in the House has Democratic and Republican co-sponsors. While those on the far-left jeer at market solutions, they’d be wise to remember the urgency of climate change. We only have time for one major push to get emissions under control, and it’s imperative we get it right.
Noah Harrison can be reached at noahharr@umich.edu.