This article is perhaps the most important I've read this year. h/t to @drvox. The take home: oil extraction is so profitable that even a carbon price of $200 per tonne would reduce emissions by only 4%. $600 (!) would only deliver 60%. 1/ papers.nber.org/tmp/57241-w260…
It is sobering to confront how inelastic fossil fuel extraction is to market pressures. And unfortunately these results match up perfectly with a case in my forthcoming book on carbon pricing: Norway 2/
Norway has one of the highest carbon prices in the world. It is one of only 5 countries with a carbon price that the World Bank classifies as consistent with the Paris agreement. 3/
For offshore platforms, the Norwegian carbon tax has existed since 1991. But in the nearly three decades since, the tax has had a negligible impact on Norwegian oil production. A few offshore platforms electrified their operations - and that is really it. 4/
Instead the carbon tax behaves more like a severance tax, letting the government capture slightly more of the rents associated with Norwegian oil. @BarryRabe has written about severances taxes recently in his excellent book: mitpress.mit.edu/books/can-we-p… 5/
In principle, a carbon tax should reduce profitability of extracting oil from marginal fields - but Norway simultaneously implemented policies to mitigate costs in mature fields: generous depreciation regimes for offshore platforms; tax deferrals until mature fields profited. 6/
Even a coalition government with strong environmentalists representation released a 2011 energy White Paper that proposed changes to investment rules to promote new development in the offshore sector. 7/
Political discussions around accelerating extraction in these fields proceeds with almost no recognition that these incentives counteract the marginal effects of the country's carbon price. 8/
In Norway and around the world, as Heal and Schlenker capture so well, the ongoing profitability of oil extraction is staggering. These are not industries that can be quietly taxed into oblivion. 9/9
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Been reading more and more takes that climate bill failed because of shifting public opinion: e.g. the NYT "reported" this week (without empirical evidence!) that the public has soured on climate as the economy weakened. Nonsense. A short 🧵 1/
This zombie idea gets rehearsed every couple months. The central thesis: the public has a finite pool of worry, so when the economy goes downhill, they privilege immediate "economic" security over long-term climate concerns. But is climate opinion really structured this way? 2/
Not really. Evidence mostly suggests the public rewards walking and chewing gum at the same time on climate. And, to state the obvious, Manchin didn't kill the climate bill in response to public opinion, in WV or anywhere. 3/
New research in @NatureClimate w/ @erickUdeM, @ProfKHarrison and I. Stadelmann-Steffen. Two countries have set up carbon tax + rebates: Canada + Switzerland. Have these rebates increased public carbon pricing support, as advocates hope? Not really. 1/🧵 nature.com/articles/s4155…
2/ The politics of carbon pricing are challenging, as @leahstokes and I have written about in the @BostonReview and as I've discussed in my book Carbon Captured. Key problem: carbon taxes make salient policy costs while keeping benefits hidden.
3/ Rebates promise to change this political economy. Redistribute carbon tax revenue through lump-sum dividends and you create a visible benefit. This builds a political support coalition (people like getting money!) And it makes carbon tax progressive. A win-win?
Exciting news! @MichaelAklin and my new provocation is out in @GepJournal. We make a simple but far-reaching claim. **Empirically, climate politics is NOT primarily about collective action or free-riding**. A quick 🧵on why we've all been prisoners of the wrong dilemma 1/
For decades now, we've all assumed that free-riding is the binding constraint on global climate politics. Google "climate change" and "free-riding", and it generates 18000+ unique hits. Economists mince few words about this. Here's a Nordhaus quote for flavor: 2/
The logic of free-riding seems powerful. No country can solve climate change alone. But acting is costly. So every country wants to free-ride off of other country's action. But then no-one has an incentive to act. 3/
Will climate change change political behavior? In new @apsrjournal article, @chadhazlett and I find that experiencing a wildfire drives pro-environmental voting - but only in Democratic areas. Short 🧵 1/ cup.org/309PWte
The politics of climate change politics is tough. Leaders need to impose short-term policy costs to deliver long-term climate benefits. Today, the impacts of climate change are impacting Americans. Will this break the climate policymaking stalemate? 2/
Research is pretty mixed on this topic, as I recently reviewed with @peterdhowe, @mudfire and Brittany Shield in ERL. Also, most work focusses on public opinion, not on the ground political behavior 3/ iopscience.iop.org/article/10.108…
My new book Carbon Captured is out! In it, I explain differences across countries in the timing and substance of their climate reforms. A quick 🧵here on one of the book's key arguments - something I call the logic of "double representation" 1/
Often, we talk about climate change as a left-right thing. But this doesn't line up with empirical reality of climate policy debates in most countries. We can't understand climate politics without recognizing this. 2/
The basic idea: climate change became an object of political conflict beginning in the late 1980s as climate science developed. But across advanced economies, political parties and economic interest groups were already well established 3/
I can't pull my mind away from the horrifying loss of life and land in 🇦🇺. Climate politics in Oz have been insane for decades. (The insanity gets a full chapter in my book). Will these fires change anything? Can they undermine the climate skeptics in power? A short 🧵1/
On the surface of it, it's hard to be hopeful. Current PM Morrison refuses to acknowledge that climate change is happening and wants to expand coal production. Here he is, no joke, bringing a lump of it into the Australian parliament. 2/
Kind of like that time when Oklahoma Senator James Inhofe threw a snowball inside the US Senate to disprove climate change. It was snowing outside, you see. 3/