Thursday, May 22, 2014

Could Climate Change Mitigation Be An Important Issue in the 2016 Election?

Tom Steyer is investing his own money to counter the Koch Brothers and to try to elevate climate change mitigation as a national policy issue.  Will the candidates for election in 2016 and the future Congress take this issue seriously?  His only real opening is to lobby for a broad suite of "tax reform" where carbon charges bundled with income tax reductions would be jointly voted on.

My pessimism about the likelihood of his valuable effort succeeding is based on my reading of my own three papers.

1.   This paper looks at Congressional voting on Waxman-Markey and documents that poorer, more Conservative, high carbon congressional districts feature leaders who vote against low carbon regulation.

2.  This paper uses Google Insights and documents that when people are worried about recession that they are less interested in searching for "global warming" and this reveals that they are less focused on long run issues when short run concerns have grabbed their focus.

3.  This recent paper uses data from California and documents that even in liberal sophisticated California that Republicans and those who live in the suburbs vote against low carbon policy.   I bet that Tom Steyer owns at least one suburban home. His fellow neighbors know that their current lifestyles are fossil fuel dependent and that they will pay a personal cost for embracing the zero carbon lifestyle.

The challenge that Mr. Steyer faces is one of stranded assets and the embrace of the suburban lifestyle. The U.S economy's durable capital stock features trillions of dollars of long lived durable capital such as fossil fuel fired cars, coal mines, and energy inefficient buildings that would all become much more costly to operate under a carbon tax.  These owners of this capital recognize that they will lose from a change in the status quo policy of a zero carbon tax.  Mr. Steyer should consider buying all of this capital and then we could start from scratch with his valuable zero carbon vision.

He would also have to wrestle with the point that most of the U.S lives and works in the suburbs and until we have electric vehicles and ample cheap power from renewables that this lifestyle would impose high costs on residents (millions of whom are not as rich as Mr. Steyer) and thus reduce their disposable income.

I would like to see Tom Steyer go to any suburban middle class neighborhood (perhaps Van Nuys, California) and explain to folks his proposal and see what they say and whether they support his agenda.

I respect that Mr. Steyer is investing hundreds of millions of his own $.  He must believe that somebody is at the margin such that persuasion would lead some suburbanites to change their mind on this topic.  Is he right about this?  How many voters are "at the margin"?  A structural political science approach would be needed to measure population heterogeneity and to dismiss "cheap talk" concerns about public opinion polls.  For example, suppose there is a suburbanite who opposes carbon pricing if it would raise his annual expenditures on electricity and transportation by $1,000 but would support it if this price fell to $750.  This is an example of a voter "at the margin" who might change his mind based on Mr. Steyer's PAC's actions.

If Mr. Steyer sought the help of academics, we would argue that mitigating our carbon emissions now is a type of insurance policy against low probability future horrible events.    Yes, the public would pay more in the short run but would reduce the likelihood of future disasters.   The challenge Mr. Steyer faces is that the typical tax payer is focused on today and there is also an element of moral hazard.  Such tax payers are likely to expect their government to come to their rescue in the future if something "terrible happens".