The issue of climate change is very complicated and the science of climate change is far less “settled” than one side of the debate believes. Even if we accept that mankind is affecting the climate, the magnitude of the change, its consequences and the proper response is not obvious. The issue is made even more complicated because there are feedback loops and nonlinearities which mean that small changes and misjudgments could potentially have large results.
In this environment of fundamental uncertainty, we have to consider the consequences of making a mistake. We can make two types of mistakes: We can do nothing about climate change and find out, after the fact, that it has terrible consequences. Or we can do something costly about climate change and find out, after the fact, that it wasn’t necessary and we have wasted money.
On balance, I think that the first error would be worse and that we should be willing to pay for some “insurance” against the risk of disastrous climate change. However, we should do this efficiently.
Economics is very clear. The best way to reduce hydrocarbon consumption and promote energy alternatives is to use the price mechanism and then let the market decide. In fact, no climate change policy can be considered serious that is not willing to use the price mechanism.
I favor a carbon tax, but only on the conditions that (1) all other taxes, regulations and subsidies designed to reduce hydrocarbon consumption or promote alternative energy sources are eliminated and (2) the tax is revenue neutral, meaning that other taxes are reduced in any equal amount. The United States should return to the negotiating table of the Paris Accords and use its willingness to accept a carbon tax to achieve real constraints on other countries, instead of the often farcical commitments that have been made.
Part of the reason I favor a carbon tax is that, even if it ultimately proves unnecessary to combat climate change, reducing hydrocarbon consumption would have other benefits. Hydrocarbons emit pollutants which it would be better to reduce. There are also enormous political benefits to reducing our dependence on oil. Achieving independence from foreign supplies of oil would make it much easier for us to avoid disastrous wars in the Middle East and cut our exposures to places like Venezuela. Without the need to protect supply lines for foreign oil, we could cut military expenditures sharply.
We can create a sensible policy on climate change but only if both old parties are willing to give up their unreasonable demands. The Republicans must accept that insurance is the logical response to the fundamental uncertainty we face. The Democrats must accept that the right answer on carbon emissions is not zero and that a carbon tax should replace, not augment, the welter of laws, regulations and subsidies that currently exist. Only a candidate from the Libertarian Party is offering this alternative.