The Climate Law – Cool World Institute

Now that we in the U.S. have an incoming administration that takes climate change seriously, it’s time to think about what sort of climate legislation it should pass. This is a summary of the ideal climate law, without taking politics into account. The purpose of this article is to orient the discussion so we can see what needs to be done, and to sketch out a possible way to do it. This is not a proposal for legislation. Current political realities would prohibit it from being passed.

Of course the U.S. federal government cannot, by itself, “solve” the climate crisis. The U.S. emits just 19% of the world’s GHG emissions, though it is responsible for 25% of the greenhouse gases (GHGs) currently in the atmosphere, more than any other country. Because we have contributed so much to the problem, we should take leadership on the solution. As the world’s largest economy, we have the resources to provide an example of the measures that other countries should take. Our strong leadership can induce other countries to take stronger action. But, to have the moral authority to lead, we need to get our own house in order.

Sovereignty in the U.S. is divided between the federal and state governments. The commerce clause in the U.S. Constitution would empower the federal government to take the actions outlined in this article. A good climate law would encourage states to take further actions. Federalism – state and local governments working together as they do in the Clean Air Act, for example – could push the states into taking action.

There is a consensus among experts that the world needs to get to net-zero GHG emissions by 2050, and that goal will be the basis for the policies discussed here. The largest contributor to GHG emissions is the burning of coal, oil, and gas – fossil fuels. We must stop burning them, except for a small amount that will be unavoidable, and which must be offset by “carbon” removal technologies. (I put the word “carbon” inside quotation marks because it is a slightly inaccurate word for GHGs. Not all GHGs contain carbon.) But, in allowing these offsets we should plan to ramp fossil-fuel use down to zero by 2050, and allow emissions only to the degree negative-carbon solutions actually come on line as we go along.

GHG emissions also come from industry, and from forestry and agricultural practices. For example, the production of Portland cement, which involves heating of limestone and clay to very high temperatures, accounts for about 8% of global GHG emissions. Land use and forestry changes, mostly deforestation, account for about 11% of global GHG emissions. We need to reduce these emissions to zero.

As we phase out our burning of fossil fuels, we need to phase out the production of coal, oil, and natural gas. We will still need fossil fuels for the manufacture of plastics and for some industrial processes, but we should stop producing them in the U.S. to show our leadership on this issue.

We need a strong climate policy. Even under President Obama, the U.S. took just half-hearted steps, like the Clean Power Plan. We need to adopt a policy that will guarantee the U.S. reaches carbon neutrality by 2050, not one that just moves in that direction without ensuring we meet the goal.

Economics

Economics is the main countervailing force in dealing with the climate crisis. The U.S. Congress could probably ban the burning of fossil fuels in the U.S. now, but, without a proper transition, such a ban would cripple the economy. It would shut down the 60% of electric power generation that comes from burning coal and gas, leaving most of the country without electric power. It would sideline the gasoline-powered vehicles on our roads, about 99% of all vehicles. It would ground all the airlines. And it would cripple many industrial processes, such as the manufacture of Portland cement.

The big economic picture for the climate crisis is outlined in three important books: William Nordhaus’ The Climate Casino, Nicholas Stern’s The Economics of Climate Change, and Richard Tol’s Climate Economics. There are three types of costs. Mitigating climate change by reducing the burning of fossil fuels will cost money, and will cost more money the sooner we do it. Adapting to climate change will also cost money. We’ll need to fortify some coastal towns against sea-level rise, change agricultural processes because of increased temperatures, and provide for refugees that need to move out of areas that become uninhabitable, for example. And there will be damages from the climate crisis, such as increased forest fires and hurricanes.

From a solely macroeconomic perspective, the optimal course of action is to minimize the sum total of mitigation costs, adaptation costs, and climate damages. If we ignore the climate crisis and allow the atmospheric GHG concentration to grow large, we can pay nothing for mitigation, but the adaptation costs and damages will be huge. Conversely, we would minimize adaptation costs and damages by stopping emissions now but, as discussed above, that would add huge mitigation costs. We need to be somewhere in the middle, and there is a political and scientific consensus on the proper middle course, not based solely on economics. The consensus says that we should ramp down our GHG emissions to zero by 2050, to stay under 2℃ of heating.

Climate change is a long-term phenomenon. The degree of heating that prevails for the next several hundred years will be determined by the concentration of GHGs in the atmosphere when we reach net-zero emissions. That, in turn, depends on how much more GHG we emit before then. We’re on a track to 4℃ increase in temperature or more, which will be catastrophic. We may still be able to limit global heating to 2℃ if we take action soon. Global heating is unique among environmental problems because it will affect so many future generations, and everyone on the planet – tens or hundreds of billions of people. That should prompt us to take more aggressive action to avoid harm.

And economics doesn’t fully capture the harms that the climate crisis will cause. We’re fast losing species, at many times the normal background extinction rate. We’re destroying the Arctic landscape and harming many others. There will be tens of millions of global climate refugees, most of them very poor, and the wrenching impacts of forcing them out of their homes and into some strange land are not adequately represented by the economic costs.

The actions we need take will be strongly distributive. The benefits will not accrue primarily to those paying the costs. For example, we will need to shut down all of our natural gas-fired power plants, many of them before the end of their useful life. Thus will make them “stranded assets,” which need to be written off on the accounting books of their owners, who will receive no more benefit than the average person receives from limiting global heating. We can use taxation or other fiscal mechanisms to modify the redistributive effects of our climate law so they are as fair as possible.

What We Need to Accomplish

We need to:

Immediately stop all subsidies of fossil-fuel companies;
Stop almost all burning of coal, oil and gas;
Stop almost all production of coal, oil and gas;
Stop the sales of petroleum-powered vehicles – cars, trucks, trains, planes;
Greatly expand public transportation and high-speed rail;
Get almost all of the petroleum-powered vehicles off the road and out of the air;
Upgrade buildings to eliminate the use of coal, oil, and gas, and to get as close to net zero in electricity use as possible;
Develop, fund, and implement forestry and agriculture practices that minimize GHG emissions and promote carbon sequestration;
Fund research and development on how we can modify industrial processes, like Portland cement production, so they do not emit GHGs;
Fund research on carbon capture and other negative-emissions technologies.

These are the bare-bones higher-level goals. There are many subgoals and problems to solve in implementing them. One of the biggest problems is that eliminating fossil fuel-related industries such as oil production, coal mines, and gas-fired electric plants will put a lot of folks out of work. And many of the jobs that would be lost are high-paying blue-collar jobs. Two things are required to deal with this problem. First, we need a massive retraining program for these workers. They will have to develop new skills for new jobs and the federal government should ensure they get free training for skills that are in demand.

Second, we need to ensure there are good, well-paying jobs displaced workers can transition into. The above program will require a lot of new infrastructure to be built, and that will provide jobs. Most of the jobs will be in the private sector, but the U.S. government should monitor job creation and make sure that the incentives and regulations are in place to facilitate the transition. And we need to look at how shutting down GHG-emitting industries will affect state and local governments, which, in some cases, heavily rely on tax revenues from these industries. We may need to distribute some funds to some of these jurisdictions that are heavily impacted.

There are numerous things listed above that we need to do, but don’t yet understand how to do them. For example, the most promising prospect for zero-emissions airplanes is some sort of renewable biofuel. Electric airplanes don’t appear to be practical due to the weight of the batteries that would be required to fly long distances. Airplane engines would presumably need to be adapted to burn biofuels instead of jet fuel, and there would need to be a guaranteed supply of such fuels. How much land would that take? Would the economics work out for the airlines and the producers of the biofuel?

Another good example is Portland cement. Making it starts with heating up limestone and clay, along with other ingredients, to a very high temperature, which releases a great deal of CO2. Emissions from this process account for around 11% of global GHG emissions. Portland cement is the main ingredient in concrete, which is used to construct all manner of large facilities, such as buildings, stadiums, and highways. We need concentrated research on how we can produce cement, or a functional equivalent, without all these GHG emissions.

Climate change is the most important problem the world, including the U.S., is facing for the next thirty years, until we get it under control. We need a cabinet-level U.S. Dept. of Climate, created in the Climate Law, which would be responsible for ensuring that the Climate Law is effectively implemented.

How to Do It

The Climate Law should use market-based mechanisms whenever possible, but also use regulation to ensure that the goals are met. The Climate Dept. will need to be given authority to tightly regulate the production and burning of fossil fuels. The end-state in 2050 should be that GHG emissions are strictly limited to the amount of GHGs that are removed from the atmosphere by negative-emissions technologies. Since, at this point, no negative-emissions technology has been shown to be feasible at a large scale, the plan should be to ramp completely down to zero GHG emissions in 2050. That limit can be increased gradually as more negative-emissions technologies are proven and deployed.

The two main market-based mechanisms are cap-and-trade and a carbon tax. Economists say they are roughly equivalent in effect, though they operate differently. Both mechanisms have been tried in the climate arena, with mixed success. The lesson we can learn from previous implementations is that the programs’ specifics matter a lot to their success. Which emissions are covered? How are they accounted for, for enforcement purposes? How are the costs and rates of allowances and taxes set? What is done with the money raised? How can we make sure the impacts are not regressive?

The advantage market mechanisms have over command-and-control regulation is that they allow the market to decide between alternatives in an economically efficient way. Does it cost more to reduce emissions by increasing building energy standards or by increasing automobile fuel efficiency standards? The market can make tradeoffs like this based on cost, if GHG emissions are factored into the equation as costs. But a market mechanism can allow such tradeoffs only when the alternatives are covered by the mechanism. California’s cap-and-trade system, for example, covers electricity production and the production of fuel for cars and trucks, but it does not apply to housing projects. So it does not help mediate the tradeoff between automobile fuel efficiency and building energy efficiency.

Market mechanisms will stop working when emissions get low enough that we will want an infinite price for the social cost of carbon. They will not be a good way to squeeze the last few gas cars off the road, or the last few power plants to shut down. In some of those cases, it will make sense to combine a law mandating phase-out by 2050 with a market-based mechanism to allow flexibility in the details. For example, the Law must mandate that all oil wells be shut down by 2050, but it is too complicated for the government to control exactly when each of the nearly one million oil wells in the U.S. will be capped. A national tax on oil and gas extraction that increases as the years go by, will encourage the operators to shut down production in an economically optimal way.

The Program

The Climate Law should do the following:

Immediately stop all subsidies to fossil-fuel companies, and stop issuing permits for gas and oil exploration and production on federal land, including the Arctic National Wildlife Refuge.

Create a cabinet-level Department of Climate to oversee climate-related activities of the federal government, and to coordinate climate activities of state and local governments. The department needs to have a substantial budget.

Create an office within the Dept. of State to provide guidance and resources to help other countries reduce their GHG emissions.

Provide substantial funding for the Green Climate Fund and other funds for climate work in developing countries.

Require linear ramping down to zero by 2050 of all fossil-fuel emissions on a sector-by-sector basis:

Prohibit sales of gas-powered automobiles and trucks starting in 2030.
Retire all gas-powered automobiles and trucks from the road by 2050. In addition to a prohibition of fossil vehicles starting in 2050 we should use a market mechanism – cap-and-trade or tax – to make it progressively more expensive to continue driving a fossil vehicle.
Prohibit the construction of new fossil fuel-fired electric plants immediately. The Climate Dept. should be allowed to make exceptions for extraordinary circumstances.
Require ramping down production of all coal, oil, and gas production facilities to zero by 2050.
Prohibit the use of fossil fuels for heating, cooling, cooking, etc. in buildings, starting in 2050.

The above are mostly prohibitions and negative provisions. We need to build infrastructure in many areas to replace the old fossil fuel-based infrastructure. Market forces will help in this effort. For example, if utilities cannot build a natural gas-fired plant to supply more electricity, it will build a solar or wind project instead. But we can’t depend completely on market forces to build all the infrastructure we need. There may be places where providing electricity to everyone would be unprofitable and subsidies or some other non-market incentive might be necessary to get the infrastructure built.

The Climate Law should require the Climate Department to:

Study the best way to transition from gas stations to electric and hydrogen charging stations, and implement the plan. We cannot rely solely on market mechanisms to fill in a new vehicle-fueling infrastructure. There may be locations where charging stations are needed, but will not be profitable. For postal service, electric service, and phone service, we have required providers to offer universal service, even where it’s not profitable.
Develop a program for ramping down coal, oil, and natural-gas production by 2050. A market mechanism such as an increasing federal severance tax or a cap-and-trade program for extraction allowances should be used in the earlier part of the program to make the shut-down as economically efficient as possible.
Develop a free, comprehensive job-training program for workers displaced by the fossil-fuel shutdowns.
Survey the revenues that will be lost to states and local governments as a result of the fossil-fuel shutdown, and develop a plan to cushion the financial impact of the transition off fossil fuels. Perhaps revenues from climate taxes or allowances can be tapped for this purpose.
Develop a plan to adapt the electric power grids nationwide to renewables. This may require battery storage, distributed generation and microgrids. Require grid operators to develop detailed plans consistent with the national plan. Provide subsidies to the grid operators where necessary.
Develop a plan to retrofit all buildings that currently use fossil fuels for space heating and cooling, water heating, cooking, or any other purpose. Provide subsidies consistent with the plan.
Catalog important research areas for GHG reductions, such as Portland cement production, aviation fuels, agricultural and forestry practices, and fund these programs at a high level.
Fund research on carbon capture and other negative-emissions technologies.
Develop regulations requiring that jobs created as a result of the actions or subsidies of the Climate Dept. are well paying, and suitable for workers laid off fossil-fuel jobs.
Develop a plan to increase public transit.

Conclusion

We need a large, cabinet-level department in the federal government to guide us over the next 30 years to effectively zero out our GHG emissions in this country, and to help other countries do the same. The process will be expensive. It can’t be left to market forces, as there will be too many gaps where the market will not provide an appropriate solution. Since The U.S. has contributed more GHG emissions to the atmosphere than any other country, we have a moral responsibility to lead the world, both by our example, and our advocacy for real solutions to the problem.