The climate crisis worsens with each passing year — and even the current levels of warming are disastrous, affecting ecosystems as well as social and environmental conditions of health. People in the world’s poorest countries remain most vulnerable to the crisis. The world’s governments are slow to react to the greatest challenge facing humanity today, even though potential solutions are not in short supply, with the transition to a green economy offering the most effective pathway to tackling the problem of global warming at its roots.
There are also intermediate steps that can help climate stabilization. These include carbon pricing and the adoption of a universal basic-income scheme to combat the effects of global warming. As James K. Boyce, an economist and renowned author, points out, policies for climate adaptation are necessary. Boyce is a professor emeritus of Economics and senior fellow at The Political Economy Research Institute of University of Massachusetts at Amherst. He graduated from Oxford University with a PhD in economics and is the author or co-author of numerous books, including the most recent, The Case for Carbon Dividends (2019) Economics for People and the Planet (2021). He was awarded the Leontief Prize 2017 for Advancing Economic Thought.
C.J. Polychroniou – The climate crisis is the greatest challenge facing humanity in the 21st Century. Diverse approaches have been developed to combat climate change. They range from simple technological solutions to a social and economic revolution, as proposed in the Green New Deal project, and everything in between. Two of those “in between” approaches for cutting carbon emissions are cap-and-trade, a system already implemented in the state of California, and carbon pricing and carbon dividends, which is the approach you are advocating. Why do we need a price for carbon? What does carbon pricing look like?
James K. Boyce: First, let me say that I do not think it is useful to invoke the language of a coming “apocalypse.” It’s a vision with a lot of historical baggage, much of it downright reactionary, as my partner Betsy Hartmann explains in her book, The America Syndrome: War, Apocalypse, and Our Call to Greatness (Seven Stories Press, 2019). It misrepresents climate crisis as a cliff edge. A question that can be answered only by a nuclear war. Instead, it is a continuing process with ever-worsening implications for humans and all living things. It can also instill a sense despair and hopelessness, which is deeply counterproductive. I agree with the late Raymond Williams that the task of the true radical is “to make hope possible, not despair convincing.”
Similar sentiments can be expressed about the differences between technological fixes and revolutionary changes. The process of economic and social revolution is not a one-off event. Technological change can be used to drive institutional change and vice versa. Often, there is a close connection between the two. I don’t think we can solve climate crisis using only new technologies. The transition to a cleaner energy economy will require fundamental changes in not only how we relate with the natural environment but also how we relate each other. It will require a reduction in inequality and a strengthening of democracy, as I have argued. It would be foolish to wait for social and economic revolution before we tackle the climate problem.
Both carbon dividend policies and cap-and-trade put a price tag on carbon. Instead of being allowed to dump carbon into our atmosphere for free (or at least, without any monetary cost, since nature is charging us hugely), pollution would have to be regulated. These policies have important differences. Cap-and trade gives corporations pollution permits for free up to the cap. As with the oil cartel, consumers feel the pinch when there are higher prices for electricity, heating and transportation fuels. The extra money they spend goes as windfall profits to the corporations that got free permits. This may reduce opposition to a carbon price by fossil fuel lobbyists. However, their first preference is no cap at all as demonstrated in the repeated failures of attempts to pass cap and trade bills in Washington, D.C. during the first decade.
Carbon dividend policies also place a price on carbon. This can be done either by a cap with auctioned permits (not free) or by a tax. But instead of fueling windfall profits, the money from higher prices goes directly back to the public in equal per-person payments, consistent with the principle that we all own the gifts of nature — in this case, the limited capacity of the biosphere to absorb carbon emissions — in common and equal measure. As I discuss, The Case for Carbon Dividends(Polity Press 2019,) This is an example of universal ownership. The right to receive carbon dividends is not something that can be sold or bought. It cannot be accumulated in a few hands or owned by corporations. Universal property is unique, inalienable, and completely egalitarian. This new kind of property, which is more akin to traditional common property than to private property or state property, could be a cornerstone for what is sometimes called “libertarian socialism.”
It’s not that we simply need to put a price — any price — on carbon, although anything is better than the prevailing de factoPrice of zero. What we need to do is to keep the fossil fuels in the ground, to curtail their extraction at a pace and scale ambitious enough to stabilize the Earth’s climate by the middle of the century. This is the Paris Agreement’s ultimate goal. It means that high-consuming countries like the United States must reduce their use of fossil fuels by around 8 to 9 percent per annum, year after year, from now until 2050. The easiest way to arrive at the “right” price on carbon is to cap the amount of fossil fuels we allow to enter our economy to meet this trajectory. Fossil fuel companies would have to surrender permits for each ton of carbon that they sell. They would purchase permits at auctions (up to the limit of the cap that tightens over the time). This is not rocket science. Since 2009, quarterly auctions have been conducted under the Regional Greenhouse Gas Initiative to power plants in the northeastern U.S. states. The carbon price is not an end in and of itself, but a side effect to keeping fossil fuels in place.
Carbon dividends would not only stabilize the climate, but also help to reduce economic inequality. This has been a problem in many countries, including the United States. Carbon dividends would make it easier for most households to get more money than they pay in higher fuel costs. This is because their carbon footprints are smaller than the average. High-income households, with their large carbon consumption and all other costs, would pay more than what they get back but can afford it.
As a solution to inequality, and the effects of global climate change, you have advocated for universal basic income. How would a universal income fund? Would it be an additional welfare program or a replacement for existing ones?
Correction: Universal basic Income can be achieved Part ofThe solution. Guaranteed employment can also be part the solution. My colleagues Bob Pollin, his coauthors, have demonstrated that the clean energy transition will create new jobs. millions of jobs. The extent to which existing welfare programs become redundant would depend on how much money we’re talking about. Universal income is a better option than means-tested welfare payments in that it unites society, rather than dividing it between welfare-eligible people and the rest of us. Universality helps to ensure political durability, as we’ve seen with Social Security and Medicare here in the U.S.
The key question for universal basic income is how to pay it. Most proposals rely upon government funding. Redistributive taxation is not an easy task. It can also be very costly and its viability is subject to the whims of party politics. This is why I support universal property as a source for universal basic income. [universal property refers to the idea of a universal birthright to an equal share of co-inherited wealth]. Carbon dividends are just one example. His new book, Ours: The Case for Universal PropertyPeter Barnes talks about a variety of other possibilities.
We now know that a massive climate catastrophe is likely, especially for coastal areas and mega-cities. What are the changes (involving migration and changes in how cities are built, changes in how nations interact with each other, technologies etc. That could help humans as a community survive these disasters without huge human deaths. What are the pressures and dynamics (protests legislation international cooperation) that would make these changes possible to implement in time?
Every year that goes by without serious policies to keep carbon from escaping the ground, it increases the suffering climate change will cause. The most severely affected will be the coastal populations, but they won’t be the only ones. For example, drought-prone areas in Africa are also at risk.
Not long ago, proponents of action to halt climate change (“mitigation” in the official lingo), including many governments in the Global South, were averse to discussing adaptation, fearing that it would let the big polluters off the mitigation hook. The times have changed. Today, adaptation is essential and urgent. The key questions here are how adaptation resources will cross-border and within countries, and who will pay for them.
In principle, the 1992 Framework Convention on Climate Change, an international treaty which today has near-universal membership, addresses the “who will pay” question by saying that countries will contribute “in accordance with their common but differentiated responsibilities and respective capabilities.” The advanced industrialized countries bear greater responsibility and have greater capabilities, so they should pay for adjustment costs accordingly. It remains to be seen if and in what manner this principle will be implemented into concrete action. The results so far are not encouraging.
The issue of how scarce resources for adaptation will be allocated — and whatever happens, they will be scarce relative to needs — is a critical question that has yet to receive much serious attention. The default setting of neoclassical economics will dictate that the allocation of resources should be followed. This is because the rich have more ability and therefore willingness to pay. Sea walls will be constructed to protect the “most valuable” real estate in Manhattan and Mumbai, for example, diverting flood waters to the locales where poor people live. I consider this a travesty. If we believe that safe and clean environments are a human right, and not a commodity, then adaptation policies should prioritize those who are most at risk, regardless of their ability pay. Protests, legislation, international cooperation — all of these will be needed to make this happen. This is not just a matter of economics and ethics; it’s a matter of life and death.
