There is only one rational course of action when it comes to climate change: put a price on greenhouse gases, then see what happens. No multistep public-policy plan, complex regulatory scheme, or 1,000-page piece of legislation makes sense, because the knowledge necessary to stave off serious artificial climate change does not yet exist. And no proposed solution based on current knowledge works at the global scale, owing to inevitable increases in fossil-fuel consumption, mainly in the developing world. So rationally, we shouldn’t even try to figure out what rules or regulations would solve the climate change problem—because right now, we can’t solve the climate change problem. The rational course, then, is to seek that knowledge.

And here are two reasons to be optimistic about the quest. One is that experience suggests it will succeed. Two is that if the knowledge needed to control man-made greenhouse gases is found, nations will adopt that knowledge voluntarily, without any need for 10,000-page treaties.

The knowledge needed in this case falls into three categories: first, how to generate very large amounts of energy at an affordable price with little or no fossil-fuel use, and second, how to burn fossil fuels with drastically reduced carbon emissions. (Sorry, Al Gore, but in the next 50 years we will burn more coal and oil than in all of history so far.) Third, it is necessary to learn how to remove greenhouse gases from the atmosphere in an affordable manner. As researchers Stephen Pacala and Robert Solocow of Princeton University have shown,¹ even after extremely optimistic assumptions—using 50 times more wind turbines than we have today, running twice as many nuclear power plants, doubling the miles-per-gallon ratings of all the world’s cars—greenhouse gas buildup in the atmosphere will continue for decades.

It would be nice to think that existing green energy forms can solve climate change problems, but then, it would be nice to think a chest of gold is buried in the backyard. Solar, wind, geothermal, nuclear, and other existing technologies are either too expensive or too slow to scale up. Denmark, the country most committed to wind energy, has already maxed out wind potential without reaching even 20 percent of Danish electricity baseload.

If there are knowledge breakthroughs, all this may change. Greenhouse gases must be priced if we want to create a profit incentive to invent control systems and new energy technology and to devise new business models. Most economists agree that the simplest and most economically efficient way to price the problem would be through a revenue-neutral greenhouse gas t_x. Whoops! I live in Washington, DC, and find I am unable even to type the three-letter term that starts with “t” and ends with “x.” Nearly all of Washington is like that today, even though a revenue-neutral carbon tax (that is, one that offset its costs by reducing, say, Social Security taxes) would not harm businesses or consumers and would be economically efficient, discouraging pollution while reducing taxes on capital and labor. If the “t_x” word stays toxic, maybe we could call it something else, like a “Carbon Freedom Charge.” A lesser, though more politically viable alternative, would be a cap-and-trade scheme.

The odds are good that inventors, engineers, and businesses will succeed in discovering the knowledge necessary to prevent runaway climate change. Here’s why: greenhouse gases are at heart an air-pollution problem, and all previous air-pollution problems have been addressed more rapidly and cheaply than expected, without economic harm. Airborne lead, for example, has nearly vanished from the European Union and the United States, and is declining even in fast-growing developing nations, owing to the advent of unleaded gasoline and other cost-effective technical advances. In the mid-1980s, the Montréal Protocol dealt effectively with the stratospheric ozone depletion. Airborne toxic emissions have declined more than 60 percent in the United States in the last 20 years, even as the US petrochemical industry output has risen.

The biggest examples, though, are smog and acid rain. Thirty years ago, the doomsday rhetoric about smog was much like the doomsday rhetoric about greenhouse gases today. Instead, several relatively inexpensive technical breakthroughs (the three-stage catalytic converter, “reformulated” gasoline, clean diesel fuel, vapor capture) made smog control happen much faster, at much lower cost, than anyone predicted. As recently as the late 1970s, smog was reaching emergency levels in Los Angeles and many other cities: Los Angeles was averaging more than 100 Stage One ozone alerts per summer. In the last five years, Los Angeles has experienced just one Stage One ozone alert, despite economic and population growth. Smog levels have fallen in most European and US cities, and in many developing world cities too, such as Mexico City. Even China has a decade-long trend of less urban smog. You should have seen how bad Chinese smog was before the world noticed during the Olympics!

Similarly, in the 1980s acid rain levels were rising: the deaths of Appalachian forests and the Black Forest region of Europe were widely predicted. Congress enacted a cap-and-trade system for emissions of the compounds that form acid rain. Market forces and innovation quickly drove the control cost to a much lower price than expected. Today acid rain is no longer a concern in the United States, because emissions have declined so much; and the health of Appalachian forests and the Black Forest have rebounded spectacularly. Acid rain remains a concern in China, which is building new power plants at a head-spinning clip. But many of the new generating stations have the same types of controls that brought the problem to heel here or employ modern high-efficiency turbines, which cut coal waste.

It seems likely, though of course no one can be certain, that putting a price on greenhouse gases will trigger the same sequence of events. Namely, the United States, innovation leader among nations, will invent the technology and devise the strategies that make greenhouse gas controls affordable, and then other countries will use American inventions and strategies voluntarily. And the beauty of this is, once ideas for controlling greenhouse gases are found, nations will adopt them voluntarily because it will be in their self-interest to do so. There may never be a need for a 192-party, ultracomplex Daughter of Kyoto treaty.

Two notes: of course we should be doing more to improve energy efficiency using existing technology, especially vehicle efficiency. And of course the European Union has already started a modest experiment in pricing greenhouse gases with, so far, few encouraging results. But the United States is the world’s think tank. Big changes won’t happen until greenhouse gases are priced there, and until both the US economy and the American can-do spirit are brought to bear on the problem. Also, involving the United States in greenhouse gas progress will convince the developing world the issue is real.

Optimism is what should drive the United States to embrace climate change action. Ideally, a fresh new world leader will take an optimistic stance on climate change, and say something like, “The reason we should begin action on the greenhouse problem is that reform is going to work. We’re going to win. Now let’s get started.”

Today nearly all global-warming commentary is gloomy or defeatist. Liberals say the world is ending (no evidence of that), conservatives say environmental regulations strangle economies (no evidence of that either!). Sure, global warming is the Super Bowl of environmental issues. But history suggests it’s a Super Bowl we can win.

¹ See Stephen Pacala and Robert Socolow, “Stabilization wedges: Solving the climate problem for the next 50 years with current technologies,” Science, 2004, Volume 305, Number 5686, pp. 968–72.

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