Taking initiatives on climate policy

States and cities cannot prevent the Trump administration from doing damage on climate change policy, but they can mitigate the harm through global warming policies of their own.

Thankfully, many are doing so, showing by example that fighting climate change does not have to come at an intolerable cost. Recently announced climate initiatives in Virginia and the District of Columbia offer a sense of how that is done.

Some of the most common greenhouse-gas emissions policies are really second- or third-best approaches. States and cities that subsidise renewables or require certain amounts of their electricity to come from particular sources unnecessarily close off other options that could be cheaper and just as effective. The best policies keep any and all emissions-cutting pathways open, enabling the least costly ones.

Economists have known how to do this for decades: put a steadily rising price on carbon emissions. Consumers and businesses would respond over time by wasting less energy and favouring low-carbon products and services. Private economic activity would naturally sort out how much to rely on renewables, energy efficiency and other emissions-cutting measures, maximising freedom, minimising costs and cutting greenhouse gases.

The primary objection to such plans is that they are regressive, hitting the poor harder than the rich. Both plans have provisions offsetting this effect, with the District’s being particularly well thought out. Most of the money it would raise would be rebated directly back to residents. All but the wealthiest households would be made whole or better.

Pricing carbon is the right approach. Other states should embrace the concept. The more that do, the more effective the policy will be. /Washington DC, May 29.