"Climate and Collective Action"
Yesterday’s complaints aside, by far the biggest problem with David Brooks’ proposal to “just raise the price on carbon and let everybody else figure out how to innovate our way toward a solution” is that our energy use is inextricably bound up with collective decision-making about infrastructure.
That’s people taking the bus in Stockholm. Their decision to take the bus, like my own, was of course influences in part by individual calculation about the costs and benefits of different courses of action. But it was also heavily influenced by someone’s decision about where to put the bus stops, where to make the routes go, how frequently to run the buses, and other aspects of Stockholm’s bus-related infrastructure. Stockholm bus ridership is also influenced by the relative paucity of parking spaces in the city, which in turn relates to public policy decisions about minimum parking regulations, maximum allowable density and so forth. Similarly, in Washington DC at one point they wanted to build more urban freeways cutting through the city. But people protested and instead they wound up building the Metro. Lots of people take the Metro, but that’s only because they built it. And lots of people drive on the urban freeways they did build, but nobody drives on freeways that weren’t built anymore than anyone rides subways that don’t exist.
Similarly, whether or not putting a solar panel on your roof makes economic sense depends in part on whether you can sell energy to the grid during surplus periods. But that’s a political/regulatory issue. And whether or not it makes sense to build a huge wind warm in Kansas depends on whether you have a grid robust enough to transmit that energy to population centers, which again is a political/regulatory issue.
We also have regulatory issues limiting our ability to innovate. If we raise the price of carbon emissions, one thing that will happen is that we’ll see innovations around finding more efficient ways to heat buildings. One thing we already know is that multi-family structures are more efficient to heat than are detached houses (it’s a surface area to volume thing) but in many places it’s illegal to build a multi-family structure. So if what you want to do is leave this up to the market, you need to take active legislative steps, not just impose a price and say we’ll let the chips fall where they may.