On the complexity level of climate policies

When it comes to policies for regulating greenhouse gas emissions, complexity can conceivably serve three purposes. Two of them have some justification, while the third is largely reprehensible but entirely obvious and largely unavoidable. Unfortunately, it is the two dodgier options that are overwhelmingly more likely to emerge.

The first purpose is environmental effectiveness. For instance, we might add complexity to a pure carbon tax by also banning the construction of new coal-fired power plants. Doing so is likely to reduce emissions somewhat further, especially given that once a coal power plant is built, it takes a brave politician to refuse to grant an exception that will stop a carbon tax from bankrupting it, tossing out those who work there, and nullifying the investments of the financial backers.

The second purpose is economic efficiency. In some cases, it may be that a more complicated policy can achieve the same level of emissions reduction at a lower cost than a simpler one. It may also be that other economic objectives need to be sought in concert with greenhouse gas mitigation. For instance, we might want to increase the total portion of our energy use that comes from domestic sources.

The third purpose is being able to grant hidden favours to friends and contributors. As soon as you start giving away ‘grandfathered’ permits, creating tax exemptions, and the like you, open the door to both soft and hard forms of corruption. The more complex the set of regulations, the easier it is to conceal this. Once you start stacking on special rules for new facilities, different modes of compliance, and complex interactions between carbon policies and other forms of taxation and subsidy, you gain a dense canopy of rules, under which all sorts of shady business can be undertaken.

A government that realized the scope of the threat we face could put a simple policy in place in a matter of weeks or months. They could say:

“If we continue to emit at the level we are now doing, we will probably destroy the ability of the planet to sustain human civilization. This may well happen by the end of this century, especially if our emissions remain on an upward trajectory. To respond to this risk, we are implementing an economy-wide carbon tax. Every time fuel that generates greenhouse gasses is produced or imported, the producer or importer will pay the tax. The cost will then spread through the rest of the economy. This year, the tax will be $20 per tonne of CO2 equivalent. It will rise by $5 per year until at least 2030. We will use the revenues to provide financing for efficiency improvements in all sectors.”

Instead, we are likely to see governments that fail to appreciate the magnitude of the danger, but fully appreciate the opportunities new regulations provide for them to strengthen their electoral positions. As a consequence, there is a very strong possibility that we will fail to respond effectively to the threat of climate change before it becomes impossible to avoid catastrophic harm.

Author: Milan

In the spring of 2005, I graduated from the University of British Columbia with a degree in International Relations and a general focus in the area of environmental politics. In the fall of 2005, I began reading for an M.Phil in IR at Wadham College, Oxford. Outside school, I am very interested in photography, writing, and the outdoors. I am writing this blog to keep in touch with friends and family around the world, provide a more personal view of graduate student life in Oxford, and pass on some lessons I've learned here. View all posts by Milan