Climate Deal Badly Needs a Big Stick - NYTimes.com

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Few economists are as versed in the global diplomatic effort to combat climate change as Nicholas Stern of Britain.

So it was particularly distressing to hear him say, at a debate in New York  a few weeks ago, that the international effort to achieve a worldwide climate agreement in Paris next December is already falling short on its most critical goal.  The various pledges by nations to cut their emissions of heat-trapping greenhouse gases, he noted, will not be enough to prevent the Earth’s temperature from rising beyond the level scientists consider the tipping point to devastating environmental disruption.

Professor Stern does not call this “failure.”  At least emissions will be lower than without a deal.  And he expects the agreement to include a mechanism to review progress every few years, so countries might ramp up their efforts to cut emissions as needed.  “This is very much worth having,” he said.

Perhaps the word failure fits, however.  More than a quarter-century of fruitless efforts to induce the world’s major greenhouse gas polluters like China and the United States to significantly cut their emissions suggests the entire approach may be fundamentally flawed.

Such failure indicates that getting countries to make the costly but necessary investments to reduce their greenhouse gas emissions will require more than diplomacy.  It will require a big stick.

Consider the United States, the world’s second-largest greenhouse gas emitter.

What if every other advanced nation, as a way to encourage energy efficiency and spur investments in alternatives to fossil fuels, agreed to put a price of $25 per ton on carbon dioxide emitted into the atmosphere?  As a tax, that would add some 22 cents to the price of a gallon of gas, something few American politicians — fearing public anger — are yet ready to consider.

According to calculations by William Nordhaus, an expert on the economics of climate change at Yale, the United States, on net, would gain $8 billion a year by benefiting from everybody else’s efforts to slow down the Earth’s warming without having to exert any effort itself.

But if the other advanced nations had a stick — a tariff of 4 percent on the imports from countries not in the “climate club” — the cost-benefit calculation for the United States would flip.  Not participating in the club would cost Americans $44 billion a year.

This sort of approach offers perhaps the best chance of preventing a climatic upheaval.

In an article published in April in The American Economic Review, Professor Nordhaus proposed just such a climate club, in which countries committed to reducing carbon emissions would impose a uniform tariff on imports from nonmembers.

Even if they agreed on a carbon price of as much as $50 a ton — which is consistent with the White House’s estimates of the overall costs imposed by climate change on society — a fairly low external tariff could induce near-universal participation in the club.

“The idea is exciting and provocative,” said Scott Barrett of Columbia University, one of the world’s leading experts on the dynamics of climate diplomacy.  “He is aiming at a central problem in a direct and ambitious way.”

Martin Weitzman, a professor of economics at Harvard and co-author of Climate Shock, published by Princeton University Press in February, agreed.  “Bill’s proposal kind of wins by default,” he said.  “I don’t see anything else out there.”

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