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Let free enterprise solve climate change (with the accountability that only government can provide)

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Conservatives can dramatically improve President Bidens climate infrastructure package. By supplying the border-adjustable, carbon-pricing mechanism we can fulfill Americas destiny as the indispensable nation in solving climate change. Roads and bridges and charging stations are great, and the focus on environmental justice is crucial. Whats needed is a larger, worldwide vision that harnesses the power of free enterprise.

Climate change is a worldwide problem of economics that has environmental consequences. The problem is that we dont see the whole cost of the burning of fossil fuels. Those costs arent reflected in the price of the things that we buy. Rather, those costs are externalized” away from those products and dumped on neighbors near and far.

If we fix the economics through a border-adjustable carbon tax, we can fix the problem worldwide. If we limit our ambition to domestic policies, well improve local air quality, but we wont be solving the global challenge of climate change.

So far, it looks like Biden is thinking globally and acting locally. Thats the mantra weve all learned, but climate change turns it on its head. To solve climate change, weve got to act globally and think locally. Conservatives can be the ones who come forward with the worldwide, economy-wide answer. We can help get this right before big government gets it wrong.

There are three ways to address climate change: regulate emissions, incentivize new technology, or price-in the negative effects of the burning of fossil fuels.



Conservatives arent so big on the expansion of the regulatory state. Even if that werent our orientation, wed see the obvious limit of the regulatory approach. Its American-only. We cant regulate emissions in China. Worse, if we regulate here and they dont regulate there, regulated firms will pick up and move there. Once there, theyll emit more than theyre emitting here because America is more energy efficient than those non-regulating countries. This leakage problem may make the regulatory answer worse than doing nothing. Of course, its possible that those non-regulating countries would respond to our moral signaling, but that has yet to work for us on basic things like human rights. Why would it work on climate?



Incentives for clean energy are attractive to politicians on the right and on the left. Tax expenditures (credits, exemptions and deductions) are always easier to support than direct expenditures (appropriations) even though they both produce similar budget deficits. Unfortunately, incentives carry the same American-only weakness as regulations because our American tax incentives dont apply abroad. Proponents counter that incentives can kick-start new technologies, and thats true, especially where theres a mass market for a product like cell phones. But in smaller markets — for something like power production equipment — the cost may remain too high for worldwide penetration. As a result, incentives may help us clean up local air without delivering a worldwide climate solution.



Climate impacts can be priced into products by taxing carbon dioxide at the mine and at the pipeline. This accountability would cause sooty energy to lose out to solar, wind, hydro and nuclear power and better batteries — not because government favored them, but because consumers begin to see that the cleaner fuels are actually cheaper when all of the costs are considered. Let the liberty of enlightened self-interest and good economics drive innovation — not fickle tax incentives, clumsy mandates or intrusive regulations. Redress the harm that would be done to poor people in the regressivity of a carbon tax by reducing payroll taxes or by a dividend of all of the carbon tax revenue back to the citizenry. Apply the tax to imports coming from countries that dont have the same price on carbon dioxide. Win Chinas challenge to that border adjustment by appealing to precedents in the chemical industry that permit the application of content taxes. Use the prize of access to the American market to make it in the interest of our trading partners to follow our lead. Dispense with the need for complicated international agreements and bowing and scraping at the United Nations.

The pricing solution places a great deal of faith in the free enterprise system, and not everyone shares that faith. It must be admitted, though, that free enterprise and government, acting in concert, have produced amazing results. The development of the coronavirus vaccine in record time is an example. The development of the internet and the PC is an example. Lets make consumer-driven clean energy the next example.


Inglis represented South Carolinas 4th District as a Republican from 1993-1999 and again from 2005-2011. He directs, one of the growing number of ecoRight organizations that care about climate change.

Tags Joe Biden Sustainability Imperative

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