Professor Paul Krugman of The New York Times has what in my opinon is a great economics op-ed in today’s paper, one called “Wonking Out: Two Cheers for Carbon Tariffs.” He explains how Carbon Tariffs and Carbon Border Adjustment Mechanisms (CBAM) are like a VAT and how while this is a tremendous step forward, given the way accounting is now done, it doesn’t directly incentivize countries like China to clean up their act in their domestic economy.
This is, again in my opinion, one of the best pieces Dr Krugman has written. But, of course, I’m seriously interested in climate policy.
The only bit I wonder about is why this kind of mechanism can’t deal with domestic economic emissions. After all, aren’t greenhouse gas emissions an export? Sure, they are not destined to any particular port of receipt. Rather they are destined everywhere. But can’t a CBAM mechanism penalize exporters from a host country which has prodigious emissions by an amount proportional to those emissions?
Moreover, such a mechanism could well be used to reduce packaging and other waste, since these have significant upstream emissions in their production. It would also help — although not solve — working the problem of developing a circular recycling economy. It would also reduce consumption.
D’accord, but Krugman is not free from a problematic, US power exertion, we can force everybody to do everything perspective: The problematic part: “We’d have to go beyond that to the threat of sanctions against nations behaving irresponsibly.”
That’s incomplete, missing context. The context is an earlier statement in the same piece: “And some form of international sanctions against countries that don’t take steps to limit emissions is essential if we’re going to do anything about an existential environmental threat.” So the “We” in your statement is not the United States but, rather, the global economic and political community. — Ed.
This is powerthink and going to cause a crash. We’ll only succeed in cooperation, even if difficult.
The thing of it is, it might “cause a crash” in the United States, but it’s not clear anywhere else. Given the propensity for a powerful chunk of the U.S. political class and some of their supporters to eschew anything limiting emissions, it’s quite plausible that such sanctions would be directed at the United States. I’ll grant you Krugman spoke of China as being the naughty child. Then again, China has signed and ratified the Paris Agreement and the United States has not. The United States has signed and ratified the UNFCCC Treaty, something advocated and seen into reality by President George H. W. Bush. — Ed.