Historically, there have been tensions between the climate movement, which seeks to reduce emissions of greenhouse gases (GHGs) in order to stop the heating of the planet, and the environmental justice (EJ) movement, which focuses on the harms caused by more localized pollution such as smog. Many people associate the climate movement with middle-class whites and the EJ movement with working-class people of color. This distinction is problematic given that poor and nonwhite people are the foremost victims of climate change and also play leading roles in the climate movement. But the division is real, and it’s partly based on a real grievance: climate movements and policies have often paid little attention to EJ communities that experience the greatest environmental harms here and now.
Leading environmental economist James K. Boyce is the author of Economics for People and the Planet: Inequality in the Era of Climate Change, and co-author, with Bridget Diana and Michael Ash, of the March 2021 study, “Green for All: Integrating Air Quality and Environmental Justice into the Clean Energy Transition.” In this interview, Boyce discusses how we can confront the climate emergency while fighting for equity and justice.
Kevin A. Young: Recent discussion of climate policy in the U.S. has focused on the need for a Green New Deal centered on large-scale investments in renewable energy and energy efficiency. But you’ve argued that these alone won’t necessarily keep us within the 1.5oC warming limit. To be safe, we also need policies that directly limit the burning of fossil fuels. What’s the best way to do that?
James K. Boyce: There is no single “best way” to fight climate change. Public investments in things like smart power grids and rail transportation can do a great deal to reduce demand for fossil fuels. Smart regulations — “smart” is an important qualifier here — are crucial, too: policies like fuel economy standards for vehicles and renewable power standards for electricity have been key drivers of cost-reducing technological change. Smart regulations are also crucial to make sure that GHG reductions bring comparable reductions in hazardous co-pollutants like sulfur dioxide and nitrogen oxides that are emitted along with carbon, especially in EJ communities that suffer the heaviest pollution burdens from fossil fuels.
The only way we can guarantee, beyond a doubt, that we will meet specific targets for cutting carbon emissions, anchored to the 1.5oC limit, is to pair demand-reduction measures with a strict limit on the total amount of fossil carbon we allow to enter our economy. For example, if our target is a 50 percent cut in carbon emissions by the end of one decade, this requires reducing emissions by about 7 percent per year (the math is the magic of compound interest operating in reverse). The most straightforward way to ensure this is to issue permits up to that amount, with the number of permits steadily declining at the same pace. The permits could be auctioned to the fossil fuel firms, much as permits are currently auctioned to power plants under the Regional Greenhouse Gas Initiative in the northeastern states. For every ton of carbon dioxide that will be released when the fuel is burned, the firm would have to turn in a permit.
If public investments and regulations prove to be effective enough to bring about the needed emission reductions on their own, the supply of permits will exceed demand and no auction is needed. Or there could be a floor price that gradually rises over time, equivalent to a carbon tax. But if demand-reduction measures are not sufficient, the permits guarantee that we stay on target. (To guarantee this, there cannot be a ceiling price for permits: a price floor is okay, but the hard limit is the amount of carbon, not its price.)
The only way we can guarantee we will meet specific targets for cutting carbon emissions is to pair demand-reduction measures with a strict limit on the total amount of fossil carbon we allow to enter our economy.
If the permit price turns out to be high, fossil fuel prices will rise perceptibly. This is a feature of the policy, not a bug, as the higher prices will spur more investments in renewables and energy efficiency. But we need to face squarely the crucial issue of protecting the purchasing power of working people in the event of rising fuel prices, and doing this in a way that’s very visible and widely seen as fair. This is eminently do-able. But it won’t happen automatically: it must be baked into climate policy.
The bills now being advanced by President Biden and the Democratic leadership do not include a carbon-pricing mechanism that would disincentivize the burning of fossil fuels by requiring polluters to buy permits or pay carbon taxes. Instead, they propose a Clean Energy Standard (CES) that will require power plants to use more alternative energy. Meanwhile, some in industry — even the American Petroleum Institute — have recently reversed position and now call for a price on carbon, hoping to set this price low while preempting direct regulation. What’s at stake here, and what should the left be demanding?
CES legislation will be a major step forward. But it comes with several concerns not only for the left but for anyone serious about fighting climate change and environmental injustice. First, the CES applies only to electricity generation, not the entire economy. Second, “clean” is often taken to mean anything other than fossil fuels, including nuclear power. Third, electricity distributors will be able to buy clean energy “credits” from others; in this respect, there is only a razor-thin difference between CES and cap-and-trade. CES caps the percentage of electricity generated by fossil fuels, cap-and-trade caps total carbon emissions, but both allow trading among firms. So from an EJ standpoint, there is still a real danger that emissions in some “hot spots” will not be reduced commensurately and may even go up.
The fact that some fossil fuel firms now accept the prospect of a carbon price is a step forward, too. But your question flags two key concerns. First, what will be the price? For oil companies with big investments in natural gas, a modest carbon price would be not only tolerable but profitable, since it would accelerate the shift from coal to natural gas and expand their market. But if the carbon price is set low, and held down by a ceiling, it won’t guarantee emission reductions at the needed pace to meet the climate target.
Climate policies like carbon pricing will [not] automatically improve air quality across the board by reducing co-pollutants along with carbon. It can be guaranteed only if the policy is designed with this explicit aim.
The second concern is whether the price is a complement to regulations or a substitute for them. There is no reason why prices should preclude smart regulations. Think about how we manage parking in congested urban areas. We have regulations on where and when you can park. We also have parking meters and parking lots with fees. Regulations and prices go together. In the case of climate change, we’re talking about a congestion problem, too: we’re talking about parking carbon emissions in the sky.
In “Green for All” you show that decarbonization programs could be designed to improve local air quality and advance environmental justice “at little extra cost” — in fact, the benefits would far outweigh the costs, even from an economic standpoint. How can air quality and equity be incorporated into decarbonization policies, including current programs like California’s cap-and-trade system and future programs like the CES envisioned in current bills?
Policies to cut carbon emissions also affect “co-pollutants” like sulfur dioxide and particulate matter that damage human health, especially the health of children. Proponents sometimes assume that climate policies like CES or carbon pricing will automatically improve air quality across the board by reducing co-pollutants along with carbon. But this result is not automatic — it can be guaranteed only if the policy is designed with this explicit aim in mind.
To see why, consider what happens when decarbonization in the electricity sector spurs a shift from coal to natural gas (which emits about 40 percent less carbon per kilowatt hour). Coal-fired power plants tend to be located relatively far from population centers; gas-fired plants often are smaller and sited in more populated areas — and within them, in proximity to EJ communities. In these locations, emissions may actually increase. Researchers have found that this is exactly what happened when California implemented its cap-and-trade system for carbon emissions from power plants about a decade ago. This is the main reason why EJ advocates in California opposed cap-and-trade. They worried about this outcome, and they were right to be worried.
California moved to tackle this problem in 2017 by passing Assembly Bill 617, which mandates air monitoring and emissions reductions in vulnerable communities. Similar provisions could be built into CES and other decarbonization policies from the outset. For example, the CLEAN Future Act introduced by House Democrats in March requires electricity suppliers to provide 80 percent carbon-free power by 2030. It would be a simple matter to also mandate an 80 percent reduction in co-pollutant emissions overall and specifically from power plants in proximity to EJ communities.
In other research, you address additional ways that we can reconcile the needs of constituencies that are often pitted against one another. How, for example, would carbon dividends work, and why are they important for building a progressive climate coalition?
As I mentioned, policies that limit the supply of fossil fuels will raise their price. The same is true of a carbon tax. Anything that raises fuel prices will hit consumers, and because fuels are a necessity, this includes working people. This is a political as well as an economic issue, as was vividly shown by the Yellow Vest movement that swept France when the Macron government announced an increase in fuel taxes.
Carbon dividends embody the principle that the carbon revenue from permit auctions or a carbon tax belongs to the people, not the government.
Carbon dividends are a transparent and fair way to protect the purchasing power of low-income and middle-income households by recycling the money that’s paid as higher fuel prices into equal quarterly (or monthly) payments to every woman, man and child. Dividends embody the principle that the carbon revenue from permit auctions or a carbon tax belongs to the people, not the government. The money comes from charging for the use of a resource — the limited capacity of the biosphere to safely absorb emissions — that belongs to all of us equally. Those who use more should pay more, those who use less should pay less, but everyone receives the same dividend. The majority of people consume less than average amounts of carbon, because of the outsized carbon footprints of the rich. So they come out ahead financially, receiving more in dividends than they pay in higher fuel prices, not even counting the benefits of protecting the environment.
The basic idea can be illustrated by returning to the parking analogy. Imagine that 1,000 people work in an office building whose parking lot has only 300 spots. If everyone could park free, the result would be excess demand and chronic congestion. To avoid this outcome, a parking fee is charged that limits demand to the capacity of the lot. Every month the revenue from the fees is paid equally to all who work in the building. Those who take public transport or bicycle to work come out well ahead: they pay nothing and still get their share of the money. Those who carpool more or less break even. And those who commute daily in a single-occupancy vehicle pay more into the parking fee pot than they get back. Carbon dividends apply the same logic to parking fossil carbon in the atmosphere.
It’s not rocket science to collect the money and pay the dividends. The Congressional Budget Office estimates that an “upstream” system that mandates permits when fossil carbon first enters the economy would require only about 2,000 collection points nationwide. Alaska already pays equal per-person dividends to its residents from its oil revenues, a policy that not surprisingly enjoys wide support across the political spectrum. The main difference is that carbon dividends would come from cutting our use of fossil fuels instead of from producing them.
In addition to cleaning the air in EJ communities, and paying dividends to protect consumers, I think there is a third key constituency in climate policy: workers. Research by my colleague Robert Pollin and his co-authors has shown that the clean energy transition will create many more jobs in energy efficiency and renewables than will be lost in the fossil fuel sector. But it is crucial, for ethical as well as political reasons, that climate policy responds to the needs of workers and communities that have produced fossil fuels and met our energy needs in the past, by ensuring what is sometimes described as a “just transition.”
Another common tool in climate policy is offsets, in which polluters can pay for emissions reductions elsewhere in order to maintain their own emission levels. All the recent talk about “net zero” by politicians and corporations tends to presume that GHG emissions won’t be totally eliminated, and that the remainder will either be “offset” or “captured and stored.” Yet critics argue that offsets create opportunities for fraud and manipulation. Can offset programs be properly designed and monitored in order to help reduce global emissions, or are they irredeemably flawed?
I’m not a fan of offsets for the reasons you mention. It is hard to be sure that the offsetting activities happen, and that they wouldn’t have happened without the offset incentive (in the policy literature these problems are called “verifiability” and “additionality”). I certainly think that we should do whatever we can to sequester carbon and to reduce GHG emissions from non-fuel sources — for example, by curbing deforestation and adopting land-use practices that increase carbon retention in soils. There is a good case for subsidizing these activities, instead of subsidizing the fossil fuel industry as we now do. But I think these things should be done in addition to limiting the use of fossil fuels, not instead of it.
What else should the left be demanding in terms of international climate policy?
There is a pressing need for international solidarity to confront this global challenge. On the mitigation front — that is, steps to curtail emissions to meet the Paris Agreement’s 1.5-2oC goal — the industrialized countries that account for the bulk of the world’s cumulative emissions have both the capacity and the responsibility to help low-income countries leapfrog past fossil fuels into the clean energy economy of the future. On the adaptation front — that is, steps to build resilience in the face of climate changes we’ve failed to prevent — we need to raise the banner of “adaptation for all,” advocating policies to protect people and livelihoods regardless of race, class, ethnicity or nationality.
I believe that a clean and safe environment is a human right. It is not a commodity that ought to be allocated on the basis of purchasing power. Nor is it a privilege that ought to be allocated on the basis of political power. It is a right held in equal and common measure by every human being. This principle is the foundation for progressive climate policy.