In response to my exchange with Ryan Avent (see Ryan’s reply here) Matt Yglesias says:
For basically Popperian reasons I don’t think it makes sense for political pundits to spend a lot of time debating the relative difficulty of developing different hypothetical future technologies. Instead, I would just say that the best way to find out whether human ingenuity is better at keeping atmospheric CO2 concentrations at a sustainable level by developing artificial trees or by developing better windmills is to . . . implement a binding emissions reduction scheme that puts a price on CO2 emissions.
This isn’t, in other words, an either/or choice. If you had a cap-and-trade system in place, that would put a range of modalities—better efficiency, more clean energy production, more trees & algae, and carbon-scrubbing machines—in a competitive framework. One assumes we’d be looking at some kind of mix. But defining the correct mix in advance seems very hard. Hence the appeal of a basically market-esque mechanism that creates incentives to work on these various ideas without unduly prejudging the appropriate level of investment in speculative technology.
I think the main problem here is that the kind of market for offsets that can be integrated into a cap-and-trade system is going to limit the market incentive for discovery to carbon-related technologies. As I understand the offset provisions in Waxman-Markey, painting a bunch of roofs white doesn’t count as an offset, even if this would offset the predicted warming effect of a certain amount of carbon emissions. And a lot of climate engineering is like this, focused on offsetting warming through channels unrelated to atmospheric carbon levels.
That very significant weakness aside, I think Matt’s suggestion that a cap-and-trade system would create a market-esque discovery mechanism for offsetting technology is probably the best argument I’ve ever heard for cap-and-trade, for what that’s worth. But feeling the force of this argument requires taking the potential of technological fixes a lot more seriously than most proponents of cap-and-trade have tended to do so far. Here’s what I’m thinking…
If the goal is primarily to reduce warming by reducing carbon emission by increasing carbon prices, cap-and-trade seems hopeless. The U.S.’s having a cap-and-trade system makes a dent in warming only if it helps generate an actually effective global emissions reduction scheme. And to my ear “Let’s just implement a globally binding emissions reduction scheme!” sounds even less sensible than “Let’s just invent artificial carbon-capturing trees?”
Look at it this way. Institutions are a kind of social technology. Having observed the horse-trading required to even get Waxman-Markey off the ground, it’s hard to avoid the thought that an actually effective domestic system of CO2 emissions controls is a pretty speculative technology. An actually effective international system of CO2 emissions controls is thus an exceedingly speculative technology. Effective global coordination is the cold fusion of institutional technology. The argument for a U.S. cap-and-trade system grounded on its imagined role in clinching global policy coordination strikes me as assuming a number of questionable judgments about the appropriate level of investment in speculative technology.
I think Matt’s right that we don’t face an either/or choice. But I don’t think he gets the relationship between strategies quite right. The stringency of emissions controls needed to slow warming is inversely related to the probability of success in forging an international agreement. As the expected cost of compliance rises, the credibility of commitments to comply falls. Now, this is an argument for trying for an agreement sooner rather than later, but it is also an argument for reducing the expected costs of compliance. The better the prospects for climate engineering look, the better the now-bleak prospects for global coordination becomes. In other words, the advance of technology technology makes the failure of global institutional technology less certain.
That’s why the cap-and-trade as climate engineering discovery mechanism argument looks better to me than most arguments for cap-and-trade. By stressing the discovery aspect of the system, the U.S. could productively signal a commitment to finding ways of reducing the costs of compliance to level a compatible with a stable international agreement.
Of course, if the parties to an international agreement expect that future technology will vitiate the need for an agreement, there will be no agreement. That this is so I think explains most of the motivation to downplay the potential of climate engineering. But I’m not so sure this makes strategic sense.
Why doesn’t the possibility that techno-optimism will diminish the felt need for an agreement lead thinkers like Ryan and Matt to encourage the U.S. to use its immense advantages in scientific and technical innovation as a bargaining chip? Why not communicate control over the causes of techno-optimism? The official U.S. position could be that it will commit to policies that will create special incentives to bring the U.S.’s world-leading capacity for scientific discovery to bear on finding technological solutions to warming only if other countries commit to reasonable emission reduction targets that reflect an expectation of limited progress on the technological front. It seems to me that the U.S. would be throwing away a good deal of its bargaining power by communicating that it considers the development of climate engineering technology a low priority. Now, I can see why one might think that the U.S. can’t credibly commit to keeping the threat in the event that international negotiation falls apart. But if it can’t succeed in running a conditional tech-as-last-resort strategy, it can’t succeed in running an unconditional tech-as-last-resort strategy either. (I am getting dizzy.)
Anyway, the fact that a cap-and-trade-plus-offsets market offers no incentive for the discovery of non-carbon-based technologies for offsetting warming suggests that we could do rather better than that both in encouraging technological discovery and international coordination.
