In the April 16, 2019 edition of the Resource Radio podcast, Ford Lecturer Daniel Raimi interviewed his colleague Barry Rabe, Ford School professor and director of the Center for Local State and Urban Policy, about his book Can We Price Carbon? which offers a political analysis of the feasibility and potential implementation of widespread carbon pricing policy.
As Raimi defines it, “Carbon pricing is the basic idea that the government applies some kind of price signal to the carbon content of fossil fuels that are consumed in the economy which discourages their use and encourages the uptake of alternatives…that can reduce carbon dioxide emissions.”
Despite the potential for carbon pricing, the policy is yet to receive widespread support in the political arena. Yet, in Rabe’s examination of the political landscape, the tide may be turning. “I think [political scientists are] beginning to formulate, not a counter to the economics literature, but hopefully a compliment,” Rabe said. Proponents of carbon pricing must therefore capitalize on what may be a limited opportunity.
The first political concern for the viability of carbon pricing, according to Rabe, is “Developing a constituency is hugely important because those supportive leaders, those policy entrepreneurs, will inevitably leave the scene.” In this train of thought, electoral cycles prove immensely consequential. Several of the Democratic candidates for the 2020 election have expressed support for a carbon pricing policy and in doing so, refine the policy. Should an opponent of such policy secure the nomination, however, carbon pricing may be set aside in favor of other policies.
The second concern Rabe enumerates in the podcast is the construction of public support given that a carbon pricing policy would impose some form of economic hardship as a result of higher energy prices. The investment of the subsequent revenue may quiet the contention. “How you use the revenue,” Rabe told Raimi, can comprise “a compelling story the people get behind…[and is] part of the recipe of developing long-term support for a political strategy that involves some imposition of pain through tax.”
Regardless of the pros and cons of a carbon pricing policy, Professor Rabe remains cautiously optimistic on the future of carbon pricing. When asked the question for which his book is named, Rabe responded: I would not want to make a bet…but I think it’s a fairly strong possibility in coming years.”
Daniel Raimi, MPP, is a policy researcher and analyst with expertise on energy policy issues including oil and gas markets and policy, regulation of unconventional oil and gas production, state fiscal policy design for oil and gas production, the climate implications of shale gas development, and federal climate policy design.
Barry Rabe is the J. Ira and Nicki Harris Family Professor of Public Policy and the director of the Center for Local, State, and Urban Policy (CLOSUP) at the Ford School. He is also the Arthur Thurnau Professor of Environmental Policy and holds courtesy appointments in the Program in the Environment, the Department of Political Science, and the School for Environment and Sustainability.