Back from a visit to China, New York Times columnist Paul Krugman yesterday confronted the ever worsening Co2 emissions problems that plague the globe as most nations are finally taking the consequences of climate change seriously. His China-malaise column noted that the country is the world's largest carbon producer (they're building new coal-burning plants at the insane rate of at least two a month), but they seem to care less about the construction's devastating implications. What that means, says Krugman, is a possible carbon tariff on goods from China if they don't comply with carbon regulations -- an option that few economists or politicians have been willing to endorse.
Somewhat understandably, China argues that the U.S. has no right to limit their economic growth (which fuels Co2 emissions growth) when our nation has flown carbon off the handle for so long and with no regulation. Point granted, and with the U.S. leading in per-capita carbon emissions, China may hold a bit of a moral upperhand given its emissions seem driven by population, while ours more by consumption. But still, this is a new new world order -- what the U.S. didn't know 50 to 100 ago, it almost certainly knows now. So if the U.S. and most developed nations are coming to terms with climate change, then it's imperative China does as well. Writes Krugman:
But they refused to accept the logical implication of this view — that the burden should fall on those foreign consumers instead, that shoppers who buy Chinese products should pay a “carbon tariff” that reflects the emissions associated with those goods’ production. That, said the Chinese, would violate the principles of free trade.
I guess what we're learning today, if nothing else, is that free trade is not free. It comes at a cost to the environment, not to mention a cost to the protection of workers' and citizens' health. Economists fear that talk of carbon tariffs will trigger an ugly trade war, which Krugman seems not to fear at all.
They will complain bitterly that this is protectionism, but so what?
Them's fightin' words, but hell, carbon reductions won't be possible without a fight. The U.S. could avoid the worst of that struggle if Congress takes it upon itself to pass a climate bill that shows a serious commitment to decreasing its emissions. That means sticking to the "cap" principle of its cap-and-trade plans by not over-allocating permits. The compromise on the Waxman-Markey bill already generates free allocations of over half of its permits. But if a carbon tariff was implemented, as Krugman calls for, then Congress will have to ensure that it auctions as many permits as possible and uses that revenue to rebate or tax break relief for consumers. But without serious U.S. action, China will have little incentive step their clean energy game up.
-- Brentin Mock
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