A new paper makes the case for supply-side climate policy.
There is a bias in climate policy shared by analysts, politicians, and pundits across the political spectrum so common it is rarely remarked upon. To put it bluntly: Nobody, at least nobody in power, wants to restrict the supply of fossil fuels.
Policies that choke off fossil fuels at their origin — shutting down mines and wells; banning new ones; opting against new pipelines, refineries, and export terminals — have been embraced by climate activists, picking up steam with the Keystone pipeline protests and the recent direct action of the Valve Turners.
But they are looked upon with some disdain by the climate intelligentsia, who are united in their belief that such strategies are economically suboptimal and politically counterproductive.
Now a pair of economists has offered a cogent argument that the activists are onto something — that restrictive supply-side (RSS) climate policies have unique economic and political benefits and deserve a place alongside carbon prices and renewable energy supports in the climate policy toolkit.
“In our experience,” the authors write, “the climate policy community has for too long been excessively narrow in its preference for certain kinds of policy instruments (carbon taxes, cap-and trade), largely ignoring the characteristics of such instruments that affect their political feasibility and feedback effects.” I have written the same thing many times, so I think a climate policy argument that takes politics seriously deserves a close look.
To understand it, it helps to have a framework for classifying climate policies.
The four quadrants of climate policy
Climate policies can apply to the supply side (production of fossil fuels) or the demand side (consumption of FF), and they can be restrictive or supportive. That creates a grid with four quadrants:
1. Restrictive supply side: policies that cut off FF supply, including declining quotas, supply taxes, and subsidy reductions
2. Restrictive demand side: policies that restrict demand for FF, including carbon prices and declining emission caps
3. Supportive supply side: policies that support the supply of FF alternatives, like renewable energy subsidies and mandates
4. Supportive demand side: policies that support demand for FF alternatives, like subsidies for purchase of energy-efficiency appliances or favorable government procurement policies...
https://www.vox.com/energy-and-environm ... uel-supply
(Thanks to sig at asif for this)
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