How to make the Green New Deal global
Earlier this week, socialists in Spain gave fans of a Green New Deal here in America something to cheer for. Their party won the country's latest round of snap elections, and central to the socialists' campaign platform was a sweeping program to cut Spain's carbon emissions 90 percent by the middle of the century, through mandates and massive public investment.
But that victory also raises a challenge: For climate efforts to actually be meaningful, some version of the Green New Deal (GND) will need to happen in every major country. Even if the U.S. manages to pass some version of the initiative, how could it possibly take it global?
As it turns out, a carbon tax might be the answer.
That might sound a little surprising, as recent U.S. politics have painted a carbon tax and a Green New Deal as somewhat at odds. Some GND supporters are skittish about a tax policy that could be punitive and regressive towards the poor. And a lot of mainstream centrists are pushing a carbon tax as the bipartisan, market-friendly climate policy to go with instead of a GND.
But the two policies are perfectly compatible. A GND could fill in the race- and class-justice gaps that a pure market mechanism couldn't deal with on its own. And a carbon tax would hasten the transition off of fossil fuels and onto the green energy infrastructure the GND builds out. Finally, most carbon tax proposals come with a dividend system that returns the revenue as an equal per person check to all Americans, to cushion the blow from any increase in energy prices.
And there's another way they compliment as well.
Right now, the GND has no concrete mechanism for pushing other countries to cut their own CO2 output with similar urgency. That's a problem, since at this point the U.S. only accounts for 15 percent or so of global carbon emissions. If we don't get the rest of the world on board, then passing a domestic GND will serve as little more than a symbolic gesture in the fight against climate change.
The early success of the GND in American politics can certainly serve as an inspiration to people in other countries; that seems to be what gave rise to the Spanish socialists' program. And the soft-power diplomacy of leading by example is absolutely important. America is no longer the world's biggest emitter on an annual basis, but it's still the world’s biggest cumulative emitter — most of the total CO2 that has been dumped into the atmosphere came from us. If we cut our own emissions down to zero in the next few decades, other countries may or may not follow suit. But they certainly won't take on any sacrifices themselves if we don't go first. The good faith gesture of unilaterally passing our own domestic GND, regardless of what the rest of the world does, may not be sufficient to solve the global climate crisis — but it's certainly necessary.
That still leaves the question of what would be an effective diplomatic mechanism, though. How do we motivate the rest of the world beyond just appeals to goodwill? What about the foreign governments or political parties that aren't as ideologically friendly to the climate effort, and need a harder push?
That's where the carbon tax comes in. As it turns out, most of the actual proposals for a national carbon tax — even the ones pushed by conservatives — include a "border adjustment." Basically, if an American producer exports to a foreign country, they get a rebate for whatever tax they would've paid on emissions generated by that good or service, if it had been sold domestically. Meanwhile, anything Americans import from foreign producers gets slapped with the carbon tax.
The original motivation for the proposal was simple economic efficiency: Policymakers didn't want to disadvantage American exporters in a global market where their competitors wouldn't necessarily face carbon taxes too. And they didn't want to unduly advantage any foreign producers who don't pay for their carbon emissions even as they sell to American customers.
But border adjustments also wind up operating as a de facto "carbon tariff." America is a huge domestic consumer market that supplies much-needed demand to the rest of the world. If we passed a carbon tax with border adjustments, every other country would suddenly find it more difficult to sell to Americans — unless they started weeding carbon emissions out of their own economies as well.
Other governments, particularly the European Union, have fiddled with the idea of carbon tariffs in various forms. But no one has done it yet, partially out of fear of sparking a trade war or falling afoul of World Trade Organization (WTO) rules. The advantage of doing a "carbon tariff equivalent" via a carbon tax is that it's more fair: Whether you're a domestic producer or a foreign producer, if you sell to American customers, you pay America's carbon tax. That will help the policy avoid setting off diplomatic spats with other countries, and make it much more likely to pass WTO muster.
Of course, no policy is perfect. For all the talk about how carbon taxes are simpler and more efficient, you still have to actually track the CO2 emissions (and other greenhouse gas emissions) in the economy's supply chains. That's a big bureaucratic data-gathering effort, and one that becomes doubly hard once you're talking about data on other countries' emissions. Yet international agencies and studies already gather much of this data. Any international climate change diplomacy would need to involve efforts to harmonize that data and share it across everyone's carbon tax programs. There's also the more fundamental question of how steep the carbon tax's price per ton of CO2 would need to be to actually influence international behavior. But just because it would be hard does not mean it shouldn't be done.
We should be realistic that organizing a true international effort to contain global temperatures will require some sticks as well as carrots. And a carbon tax with border adjustments could make for a pretty good stick.