Government-financed construction plus carbon pricing is the key
With NYT columnist Nicholas Kristof’s seeming endorsement of Roger Pielke Jr.’s ideas about mitigating global warming, it seems that we have two main arguments developing: the “breakthrough” argument, which says we must have technology breakthroughs in order to solve the problem, and, as articulated (for instance) by Joseph Romm, the “just do it” argument that we have the technologies now to minimize global warming. Most of my posts have been an attempt to show how current technologies can move us toward a “zero emissions” society.
The “breakthrough” people do raise an interesting question, but then they veer off into the wrong answer. They ask, effectively, Is there something the government can do to solve global warming, besides carbon pricing? Their answer: Spend $30 billion a year on energy R&D, hoping for a breakthrough.
I will argue in this post that the answer to their question is, Yes, the government can do something beyond carbon pricing — governments at all levels can, first, provide some of the finance capital to the private sector to build renewable energy systems, and second, governments can build the necessary transportation systems and in some cases the energy systems. And by doing so, support for and the effectiveness of carbon pricing policies will be improved.
In order to make this argument, let’s back up a little and ask, “What kind of society are the authors of the various plans for global warming mitigation envisioning?” I think that, at their core, most global warming initiatives embed a conception of what is practical, considering both political and cultural constraints.
For the “breakthrough” authors, it seems that the ideal would be a society that looked identical to today’s, except that if you looked “under the hood” — either of the cars or the electricity-generating plants — there would be all kinds of nifty renewable energy technologies pumping out carbon-free energy. However, even for Joseph Romm and most of the “just do it” authors (including Al Gore, I think), there is a concern to conserve the reigning culture as well. For instance, Romm, even though he is pro-public transit, devotes his entire proposal for transportation to plug-in or electric car technology. For “just do it” proposals, the changes might be more noticeable — PV on roofs, a general awareness of efficiency of appliances and buildings — but it still would not require a great change in lifestyle.
The desire to conserve the culture is perfectly understandable. Thus, as Ryan Avent has written, public transit is a forgotten solution, even among environmentalists, probably (in my estimation) because it would mean, for the vast majority of Americans, a culture change from a car- and suburbia-oriented lifestyle.
This is where the problem with carbon pricing comes in: If having a big house and a big car becomes prohibitively expensive, people will have to change their lifestyles, and so their attitude toward carbon pricing will be negative. Therefore, government-directed financing and construction may be an essential selling point: If we build the transit and transit-oriented communities that would be preferred in a carbon-constrained world, people will be much more willing to accept carbon pricing. They’ll have alternatives.
For instance, it can be very difficult to provide the upfront money to add the solar energy or geothermal systems to a building that would drastically decrease the use of fossil fuels — but the city of Berkeley is providing that upfront money, to be paid back from the savings gained.
As electricity provided from utilities becomes more expensive, there will be greater and greater demand to cut energy requirements for buildings. If programs like those of Berkeley are available, more expensive electricity will not lead to an outcry to scale back or dump carbon pricing altogether. Instead, people will be relatively cheery about putting up those photovoltaics or retrofitting their buildings.
Governmental loans have the added advantage that they will cost the taxpayer very little, over the long run, because most of the loans will be paid back. If governments at all levels were to provide the finance capital to developers to build dense housing and retail in town and city centers, those loans would also be repaid eventually.
Governments could directly provide several parts of a green energy and transportation infrastructure: the construction of high-speed rail, light rail, commuter rail, and bus rapid transit (plus improvements to make bicycle riding safe), making all government buildings zero-emission buildings, the construction of a national high-voltage direct current energy grid, and perhaps even TVA-like national wind and solar farms in appropriate parts of the country.
In turn, depending on how it’s set up, carbon pricing could provide most of the funds for the upfront capital and the infrastructure construction.
There is one more argument to be made for combining carbon pricing and government-directed financing and construction: if all the products bought as a result of government-provided finance capital or bought in the course of construction were required to be American-made, building a carbon-free economy would lead to an explosion of good manufacturing jobs. If all or most of the machinery used in the manufacturing process were also American-made, the restoration of American manufacturing as well as much of the prosperity of the middle class would be assured.
The pitch could be the following: “Everything that uses fossil fuels will become more and more expensive. But while that is happening, we’ll be building high-speed rail, urban and suburban transit, dense housing and retail in cities and town centers, and providing loans to everybody to make all buildings emission-free. In order to build all of this fossil fuel-free stuff, we will need to revive our manufacturing sector and the supporting services, and this will create millions of good middle-class and green-collar jobs.”
That sounds more appealing than “we’re sunk unless a technological miracle happens,” doesn’t it?