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.
For more, see Climate deal badly needs a big stick.
ecoquant
Thanks for the comment jlredford.
I don’t think any “Carbon Tax” makes sense UNLESS the carbon content of imported products and, preferably, the upstream carbon emissions are taxes as well as carbon context are taxed as well.
Don’t know where this stands with respect to World Bank policy.
Paul Krugman has mentioned the idea of a carbon tariff as well. When I ask people about it, though, they’re aghast. The low-tariffs=unconditional-good mindset is so set that even when the planet’s at stake people are reluctant to embrace it.
But I think the Chinese leadership knows that this is coming. They’re far and away the world’s largest emitters, producing as much as the US, EU and Japan combined. All the developed countries have been cutting emissions since the peak year of 2005, but not them. When people start getting serious about penalizing emission, their exports are going to be first to be hurt. Thus all the greenwashing stories from there, even as they continue to build coal plants.