There’s an interesting exchange going on between writers on The American Scene (a haven for non-doctrinaire conservatives) and econ/city guy Ryan Avent on the perpetually vexed subject of climate change and innovation.

It begins with Noah Millman’s thoughtful post, which is worth reading in full, but his basic conclusion is that technological innovation is the crucial piece of climate policy. He endorses a carbon tax to drive incremental innovation and government basic research money to pursue “breakthrough” innovations.

Jim Manzi takes issue with this. He wants government funding only for basic geoengineering research and doesn’t believe in pricing carbon at all. He is skeptical that it will drive any innovation, citing Western Europe, where gas prices have been high for a long while now without producing any particularly notable automotive innovations.

Avent thinks this is batty. Manzi has simply defined innovation as “better cars,” so he misses all the other kinds of innovation in Europe. There have been better cars, but also better transit, denser living arrangements, more bicycle infrastructure, and so on:

… if you allow prices to do some of the work, you get many different solutions to the problem, many of which are far cheaper and more effective than the pre-conceived idea you had in mind. You get folks coming up with bike-sharing programs, car-sharing programs, and so on. You get effective innovation, which is exactly what we want. Manzi looks for the innovation he thinks he should see, and in the process he misses all the innovations that are actually there. And that’s precisely why the carbon price signal is so crucial.

Manzi responds that Avent is playing word games. Car sharing and the rest are simple substitution and conservation, not innovation. “This is like saying that in response to an increase in the price of peanut butter, I ‘innovated’ by making smaller sandwiches and eating ham-and-cheese more often.”

Avent says Manzi misses the point. It’s not just that Western Europe has substituted other transportation modes and practices, but that it has innovated on those substitutions, to the point that people there have a commensurate quality of life with much less driving. They innovated around gas prices.

That’s where things stand, for now at least. The exchange raises two crucial climate policy questions:

  1. Can government policy and money accelerate technological innovation, and if so, how? (Does a carbon price do it? Research grants? Both? Or is government just bad at this sort of thing?)
  2. Do adaptive changes in social, economic, legal, and behavioral practice count as “innovation,” or is the term reserved for technology? What is the potential of social innovation, relative to technological innovation, to reduce greenhouse-gas emissions?

On one, I obviously answer yes. I gather Avent and Millman are somewhere in the middle, and Manzi says no.

On two, it seems to me there’s a weird color blindness in the climate conversation, which tends to dwell obsessively on technology. “Efficiency” is the wan term for what gets overlooked. “Resource intelligence” would be better: achieving a better quality of life using fewer primary resources. Many of the changes that will get us there are shifts in the way we order our affairs and structure our physical surroundings, not just new technology but new ways of arranging the available pieces to get more of what we want with less waste. Any number of analyses have found that the potential greenhouse-gas reductions from such changes are enormous, often at negative cost. (I won’t drag the McKinsey chart out again.) Changing public policy and economic practice requires creativity and entrepreneurship too. I don’t know why we shouldn’t call it innovation.

If nothing else, greens and conservatives ought to be able to agree on rationalizing existing regulations. Some regulatory incentives degrade environmental and economic performance. You could point to fossil-fuel subsidies, antediluvian utility regulations, unpriced carbon emissions, any number of tax breaks and incentives that favor industry incumbents, even parts of the Clean Air Act. These are market distortions that incentivize inefficiency (i.e., stupidity) and therefore waste (i.e., pollution). Removing or rationalizing them — making a more perfect market, with more competition, better information, and lower barriers to entry — would improve environmental performance.

There is, or ought to be, a win-win space in climate politics: reforming or removing government policies that do violence to both market and ecological principles. Libertarians and greens could go a decent distance together just on that basis, maybe building a little trust along the way. Tim Carney and Reihan Salam are on board with reducing subsidies and regulatory incentives for roads, traffic, and parking. Avent too, of course. Let’s start there!