How do you talk to leaders in Washington DC about the climate challenge? Is there a way to frame the risk that will inspire policymakers on both sides of the aisle to take action? How might a carbon tax work—and would that be preferable to a regulatory approach?
Full Transcript
Alexsandra Guerra: You’re listening to the Reversing Climate Change podcast by Nori, the world’s first carbon removal marketplace. Here are your hosts, Ross Kenyon and Christophe Jospe.
Christophe Jospe: Hello and welcome to the Reversing Climate Change podcast. I’m Christophe Jospe here with my colleagues, Ross Kenyon and Paul Gamble. We’re still in Washington, DC. You know, I didn’t think I would hear myself say these words. It’s a great town and I want to come back.
Ross Kenyon: We had a good time last night. I’m glad you got my name right. The security guard in the building thought my name was Rothkenny. Didn’t have the heart to correct it, though. This is the Reversing Climate Change podcast with Kristoff Giuseppe and Rothkenny.
Unknown speaker: That’s good. Great name mess ups.
Ross Kenyon: Well, we’re really excited to be here today. We’re in the Niskanen Center. We’re here with Joseph Mikit, their Director of Climate Policy. Really excited about what Niskanen works on, the attitude that they try to take. They tend to be... Well, I don’t want to put words in the mouth of the good folks who work here, but maybe, Joseph, you could tell us a little bit about yourself, how you got here, and what makes this place special.
Joseph Majkut: Yeah, happy to do it. Thank you guys, first off, for having me. It’s a real pleasure to meet you all, and I’m interested to hear more about what you’re working on and talk about these issues. I do it all the time, every day, and so it’s always a delight to actually sit down and have a conversation. So I really appreciate the opportunity to do so. I work at the Niskanen Center. I lead our climate work. We are a federally focused think tank and advocacy organization. And we work across a variety of issues with a sort of libertarian or practical libertarian view.
We work on poverty and welfare, immigration, foreign affairs in the national defense, and climate is probably our biggest issue. And what sort of makes us unique or distinguishing compared to a lot of other groups is we take a very activist stance on climate change. We think that the science tells us that there’s a real set of risks that we need to deal with, that carbon emissions, particularly at the volumes that we’re emitting now, are really going to harm people in the near and the far future. And that is something that the government has a role to play in addressing.
And so... We work primarily like my kid actually phrases it best, right? He says, dad talks to the government.
Unknown speaker: Do you in fact do that?
Joseph Majkut: I do. We talk with policymakers and other sort of people who inform how policymakers or what you would call governing elites is the political science term of art. Think about the issues of climate change, energy policy, and how we should deal with this ever increasing emergent issue. That is our sort of operational model because we come from – or most of our senior leadership come from the libertarian world. I don’t know how familiar your listeners are with all that but they were executives at the Cato Institute. A lot of our staff comes out of other libertarian organizations.
Our sort of unique ability in this world is to really see and understand the arguments against meaningful climate action and the beliefs that are held by conservatives and Republicans particularly, and to sort of address their concerns and their worries about climate change from an empathetic and meaningful perspective rather than trying to bludgeon them to death with the latest IPCC report.
Ross Kenyon: 12 years to die. We’re all going to. Yeah. Yeah. You’re not a fan of that approach. You think that somehow turns people’s brains off. Oh, man. Before we get into it, I want to hear more of this background.
Christophe Jospe: Yeah. You very graciously didn’t correct us. It said, Dr. Mike, get to you. Yeah. You’re actually a scientist, right? You should claim it.
Unknown speaker: You got to force us to do it. Own your expertise, Joseph.
Joseph Majkut: Yeah, I do. So I have a unique take on this issue. I have interestingly came from a research science position before I moved to Washington. I was a chemical oceanographer. I worked on trying to update our estimates of how much anthropogenic CO2 is absorbed by the ocean. Over the run of industrial history, we’ve emitted so much carbon dioxide that has elevated the amount that’s in the atmosphere. A lot of that has been taken up by the ocean. CO2 is a soluble gas in seawater. And that is really important because ocean capture and additionally capture by plants and soils on land has actually taken a lot of what we’ve added out of the atmosphere.
It doesn’t work fast enough that we can just continue to pour tonnes and tonnes and tonnes, you know, what, 40 gigatons of CO2.
Unknown speaker: Good guy ocean, right?
Joseph Majkut: Yeah. But it actually has prevented a significant amount of warming. And when we think about trying to get a handle on how big this issue is going forward or any question of how much do you need to cut emissions to stabilize atmospheric CO2 or to, as you guys work on, reverse climate change, we need to understand what’s called the carbon budget and the response of the ocean to increasing CO2. And how ocean uptake can vary because of the effects of climate change, because of the varying chemistry that you introduce when you pour a lot of CO2 into the atmosphere are all really interesting academic and intellectual questions.
So I worked on that for, I’ve been working on climate change for about a decade and for most of the time I was a practicing research scientist.
Ross Kenyon: That’s one of the pieces of confusion over climate change, too, is the ocean’s role has some degree of lag in the system. And it also works the opposite direction, too. When we’re pulling carbon dioxide out of the atmosphere, the ocean can off-gas and pour it back in. There’s a complex relationship with the ocean that sometimes people seize on to say that the correlation between carbon concentrations in the atmosphere or the ocean are not directly linked to rising temperatures or something like that. The ocean is just very complex, is it not?
Joseph Majkut: Yeah, it is. I mean, it’s complex at the issue that From the perspective of somebody who used to study it, right? So the great danger is I used to kind of dive into ocean measurements and computer models. And so the danger is you oversell the complexity a little bit. But it makes me sound so smart.
Unknown speaker: Is it going to rip the tennis ball out of my mouth? Only a little.
Joseph Majkut: I think what’s important to know when you think about this issue is because very few people want to think about climate change as a scientific issue. If it wasn’t a massive political and economic issue, then it would be consigned to the same number of people who study esoteric matters of quantum physics. It just wouldn’t be that interesting to a lot of folks, for better or for worse. When you’re thinking about this in the sense, how do we use science to help us think about climate better? The ocean just, it holds an enormous amount of CO2.
Way more CO2 is dissolved in the ocean than exists in the atmosphere or on land. And so when you have these large climate changes of the past, which could be driven by numerous things, change in the brightness of the sun, changes in the orbit of the planet, the oceans inevitably respond because they’re part of the climate system or part of the earth system is probably a better way to phrase it. And then they can release or change the CO2 balance that they maintain with the atmosphere and land. And that can work to amplify or to dampen the changes that are initially happening.
So the worry on a part of many people is that the ocean can work to amplify some of the changes that are introduced, either when you dump a lot of CO2 in the atmosphere or when you warm it for some other reason, like a change in the orbital parameters. And that appears to have happened in the past, right? So the ocean played a role in sort of like, you know, small orbital wobbles, caused the end of an ice age. The ocean warmed up a little bit, farted out some more CO2, which served to prolong and...
Unknown speaker: Get away with words. Beautiful.
Joseph Majkut: Which can serve to like prolong or amplify these warming periods. So that’s one example. And then in the case of human-caused climate change, or, you know, you think about like CO2 management or whatever... We’ve dumped a bunch of CO2 into the atmosphere. A lot of it gets captured by the ocean. That has prevented some warming, but warming occurs. And because that has downstream effects on wind fields and the chemistry at the surface ocean, the possibility is, or there are some hypotheses for why or how, excuse me, the ability of the ocean to continue to take up with the same efficacy or efficiency might change.
And that can kind of change the amount of CO2 you can emit before you hit certain climate thresholds or certain accumulations of carbon in the atmosphere. And then too, as you mentioned, if you are entering a world where you’re going to start actually actively managing atmospheric CO2 or drawing it down... Because you have supersaturated the surface ocean, the possibility is that some of it actually starts coming out because the system is trying to be in equilibrium all the time.
Christophe Jospe: Yeah, there’s a lot there. We’re talking about carbon budgets, drawing CO2 back out. I mean, we really like the simple arithmetic that says if you’ve emitted a ton of CO2, you need to draw another ton back down. And for the emitters, it makes the calculation quite... Quite straightforward. And ultimately, we’re in DC, so people need to talk about a price on carbon. How that price gets determined, I think is a little bit unclear, but some of the things that you’ve written about are the social cost of carbon. Could you start with defining what the social cost of carbon is, kind of why that matters, and what some of the variations around the ranges of what that might even look like?
And I’m going to stop just peppering you with questions. We’ll start there. Okay.
Joseph Majkut: So, sure, yeah, that’s a great question. The social cost of carbon is used in several ways. I think about it sort of in two. You know, the first is it’s an attempt to quantify using economic and scientific analysis the financial damages associated with a unit of marginal carbon dioxide emissions. Marginal meaning we’re already emitting so much. What is the expected cost of emitting one more ton? Since that’s a relatively symmetric number, you can also think about it as being the benefit of emitting one less ton. The other way to think about it, That’s the way that you would read about in the newspaper.
That’s what gets used in regulatory impact analyses if the EPA is currently rewriting all of the rules around how greenhouse gas emissions are regulated from cars or from power plants. And they use the social cost of carbon to estimate the benefits associated with reducing greenhouse gas emissions. The other way to think about it that is also, I think, pretty interesting is the social cost of carbon is what we’re willing to pay to reduce greenhouse gas emissions or to change the atmospheric content of CO2. Those are not necessarily the same thing.
I think it’s pretty clear that The social cost of carbon, at least as it is – there are a lot of estimates out there for what it is. I’m happy to dive deeper into the range of possible values. But like $50 per ton is like academically and intellectually defensible value. Yeah, generally it’s like loss of economic productivity, the effects of sea level rise.
Unknown speaker: Ecosystem services are very hard to price.
Joseph Majkut: Sure, they definitely are.
Ross Kenyon: That gets into the social bit, right? I’ve never seen a non-arbitrary looking number for ecosystem services estimations.
Joseph Majkut: Yeah, they exist. There’s actually some super fascinating research about that we can talk about if you want. The traditional work is like... Let me take a step back and say how you value these damages is actually pretty difficult, right? So for some things like agricultural productivity, that’s not necessarily something that’s difficult.
Ross Kenyon: Yeah, it’s pretty simple. There’s already prices in play.
Joseph Majkut: But what is the value of a polar bear? Or what is the economic, what is the value of a coral reef, right? You can sort of estimate what it’s worth in terms of tourism dollars, or you can estimate what people are willing to pay to preserve coral reefs. But it’s not clear that, you know, like it is inherently a subjective question as to how much a coral reef is worth or the existence of coral reefs generally. One coral reef may not be that big a deal. I don’t lose sleep over one coral reef.
But the existence of coral reefs generally, which are imperiled by the effects of climate change, actually does seem pretty valuable to me. But those are subjective.
Christophe Jospe: Absolutely. And I was going to add one of the additional challenges. We know that climate change is exacerbating storms, forest fires, some of these great feedback loops, which cause economic damages. Of course, those things have always happened.
Ross Kenyon: I’ve seen people fight back and forth on this one, too. And I don’t really have a strong perspective because I think it’s above my science pay grade. But where do you fall on that? Are they as connected as people think? Is it looser than some might want to attribute?
Joseph Majkut: I think it’s very hard to make general statements as to whether or not the weather is getting worse.
Ross Kenyon: Very safe, conservative answer.
Joseph Majkut: That’s one I would probably take too. I mean, I, you know, I think hard about that, this kind of stuff. I think they’re, you know, given when we’re recording, hurricanes are probably the thing I’ve thought about most recently. Are hurricanes getting worse because of climate change is actually a really interesting question. Worse is a subjective measure. Science can, you know, technical analysis can tell you all sorts of things about what is happening to wind speeds or what is happening to the total amount of energy being dissipated by tropical cyclones every year.
Depending on how you ask the question, you can get a different answer. And I think that ends up being the case with a lot of these expressions of climate change, whether that be their effect on forest fires or rainstorms or what have you. How you ask the question really matters. It’s safe to say that we are, from a technical perspective, much more sophisticated, much more able to say, for individual events, we know the role that global climate change is having. You can say, this storm, scientists are frequently now saying and being able to estimate relatively quickly, This storm was made X percent worse by climate change, rainier or more severe, or the storm surges accompanied by a hurricane is higher because of sea level rise.
Because you’re inherently talking about things that are extreme, it takes longer for those effects to manifest in long-term climatological records, which is why you can ask the question two ways and get different answers.
Ross Kenyon: That’s quite interesting. I want to ask about just the center as a whole and its relation to climate change. Paul and I in particular have been influenced by classical liberal and libertarian thinking in addition to many other things.
Paul Gambill: That might be the first time we’ve outed ourselves in that way on this podcast.
Ross Kenyon: Yeah. Why? I don’t know. I... I don’t know that I strongly self-apply a label in that way because I’ve read a huge amount of social science from all perspectives. I’ve taken good things from conservative thought, reading like Robert Nisbet or you read David Hume. I’ve read a lot of left-wing literature and I’ve read a lot of libertarian stuff and communitarian. I like to keep things interesting in that way. But whenever the classical liberal slash libertarian ideas come to the forefront, Especially in environmental or green areas, there’s a tendency to be immediately distrustful, that we’re trying to turn everything into a market, that libertarians don’t believe in climate change.
I know this is at least partially why the Niskanen Center originated, right? There was a lot of conflict with how Cato was approaching it. How exactly did that all fit? And where should libertarians fit into the climate movement? Yeah.
Christophe Jospe: I’d just like to say two things for the record. You know, Nori is decidedly apolitical. One. Two, when Ross was talking about sort of combative natures, he put his hands into fists and was doing like small fist motions.
Joseph Majkut: Super interesting question. So Niskanen’s origin story really centers around our president. His name is Jerry Taylor. He worked at the Cato Institute, which is the most prominent libertarian think tank in the United States and definitely in the world. And he led their work on energy and environmental policy for two decades. Thus far, most libertarians and libertarians in the US have a lot of sympathy with the conservative movement around what their opinion of the role of government is, tax rates. There’s lots of reasons why they work together.
Unknown speaker: It’s called fusionism, right?
Joseph Majkut: Yeah. Libertarian think tanks generally have adopted a conservative view of climate. So there’s the empirical, what is, and then there’s the what should be. And Niskanen is trying to change what is to what should be. And in our opinion, market liberals, classical liberals, should actually be much more concerned about climate change than they are. And I’m happy to dive deeper onto that question, but it generally centers around the idea that If you believe climate science, I think that’s a big, important precursor. It tells you that there are significant risks associated with greenhouse gas emissions and that those risks are going to manifest as damages to people’s ability to hold property and to live the lives that they want to live soon, mostly, maybe a little bit now, and for a long time in the future.
There are easy examples. If you buy coastal property, It’s going to be infringed upon by sea level rise to some extent. There’s a geophysical traceability to that sea level rise to greenhouse gas emissions. One of the fundamental roles of government that libertarians view as legitimate is protecting the rights to life, liberty, and property. When the courts or other agents are not able to do that, and climate’s a good example, right? We don’t know exactly whom is going to be harmed by the effects of the greenhouse gas emissions we emit today.
They don’t exist yet. They’re not identifiable in a lot of cases. And because there’s significant scientific uncertainty around what the effects of climate change are going to be, we don’t know exactly how they’re going to be harmed. This creates a perfect incentive for the government to take some role rather than courts or other mechanisms of answering the coordination problem or repairing those damages. So that’s how we feel today. Niskanen got involved in this issue because for lots of reasons, historical fusionism, path dependency.
Unknown speaker: Solution aversion.
Joseph Majkut: Solution aversion. That’s a great one. Libertarians and conservatives have tended to not take this problem seriously. And that has, you know, that has also manifested itself in, you know, rejection of the science or trying to undercut scientific messages, things like denialism.
Ross Kenyon: Well, it’s a slam dunk. I read Naomi Klein’s Just This Changes Everything, Capitalism vs. the Climate, not too long ago. And she, have you read that, by the way?
Joseph Majkut: Oh, yeah, of course.
Ross Kenyon: Oh, okay. Well, I thought it was so fascinating because she says that Right of center people don’t oppose climate change because they’re wrong about the science. It’s because they’re paying attention to what it would mean for the transformation of quite a lot of policy and trying to use it opportunistically. If the left wing of the climate movement is trying to use climate change to advance other goals, you can see that the right is going to recoil horribly against it.
Joseph Majkut: Yeah, I mean, that’s understandable, right? I mentioned empathy earlier, right? I would say the vast majority of Americans are too. Like it’s not just libertarians that are worried about that sort of thing. That’s a very American ethos. That is a fair point. You know, like you’re sort of looking at a massive central planning problem, right? Like we’re worried about one number and that is the amount of CO2 in the atmosphere, right? We can all go to the Mauna Loa website and I don’t know the value today, but we know it’s about 400 and probably like 410 PPM, something like that.
Unknown speaker: Something like that, yeah.
Christophe Jospe: Yeah, I would even say, you know, I heard Paul Hawken the other week say, let’s use the number 498 when you look at all the greenhouse gas equivalents and it’s much higher than that. I haven’t heard that yet.
Joseph Majkut: So like, and then, you know, like lots of organizations that work on this issue is like, we need to bring it down to 350. And it’s true that, you know, fossil fuel use and greenhouse gas emissions are like a fundamental part of just normal everyday activities that people do that are good. Driving to work, flying to Washington, D. C. , eating hamburgers, whatever it is. And so there are profound transitions that are going to occur for you to like treat this problem. And I, you know, so that gives you a solution aversion, right?
Because it’s possible that the amount of government intervention might be quite large. And it also, you know, for people who like central planning or people who don’t like capitalism or people who don’t like the way that our system is organized today or has been for the last few hundred years, it creates an opportunity, right? You can imagine a bunch of anti-capitalist or people who view planetary boundary type thinking, right? Malthusian type thinking. Seeing this issue and kind of creating, going on a fusionist project of their own, right? We actually do need to get rid of capitalism.
That doesn’t mean the problem statement is wrong. It’s just the solution set isn’t necessarily what’s right for the United States or isn’t necessarily, in my opinion, what’s going to help solve the problem anyway. Right. So one of the things we work on and one of the things that is an emphasis of our work is saying, you know, what has been presented as solutions to this issue in some cases would be okay, in some cases would be deeply problematic, but it doesn’t, you know, your feelings about the radiative impact of atmospheric CO2 or how much the planet is going to warm if we double CO2 in the atmosphere.
Are not issues of dogma, right? That’s a scientific issue. There are scientific answers to that question. And moreover, the science doesn’t tell us what to do about it. That’s a question of our values. And we are trying to move thinking on the Republican and conservative side because we work in Washington, D. C. , and that’s our mission. That’s where you find kind of the most degenerate thinking probably, though not always true.
Unknown speaker: A more wretched hive of scum and villainy.
Joseph Majkut: Yeah, that’s it. Because we think we kind of need to split the streams of thinking a little bit on that moral or on the political versus scientific opinions.
Christophe Jospe: And I think it’s really interesting. I mean, it kind of comes down to framing, right? Because how you frame the problem, people can, you know, on the right, if you say the solution to climate change is big government. Markets have failed us. Dead on the water, right? Dead upon arrival. And it’s kind of interesting even to think about... I learned this term yesterday, the factual deniers. So a conservative farmer in Iowa, they might, you know, remember cold winters and they say, no, climate’s not changing. But at the end of the day, I think one of the things and I’m really glad that there’s a bit of outing is libertarianism because although we’re not political, it transcends.
It says climate change is not a right or left issue. It affects everyone. It affects all of us. And so I guess my question to you is a framing question. Like what is the – and obviously, it’s different audiences that you need to frame it differently. But in your view, how do we properly frame the climate change challenge?
Joseph Majkut: So I, you know, properly is a tough question to answer because it like could mean a lot of things.
Ross Kenyon: I might be audience dependent too.
Joseph Majkut: Yeah. Right. I’ll tell you how I think about it, you know, and that’s informed by having thought about climate for a long time. I have a scientific background. I have, I like to phrase it, I have the heart of an engineer. Where I think about it as it’s like greenhouse gas emissions are a byproduct of lots of good stuff, economic activity, driving around, all these things that I love to participate in as much as anybody. Flying around. And then they create risks. It’s like byproducts that create risks are not like some crazy new idea.
It’s just these are particularly hard to deal with because the pervasity of the issue and the time lag associated with it. So we don’t really know 50 years from now or 100 years from now exactly how bad climate change will be. We think it’s Likely to be worse rather than better because you’re suffering these transitions. Climate’s changing, sea level is rising, going up. You know, weather patterns and other things are changing. And it’s, you know, we’ve built our society and organized it around the climate as it exists when we built it.
And, you know, ecosystems are organized around the climate in which they had developed too, right? And the trouble is you’re going to move the system faster than the response is going to be able to naturally keep up. That’s where you incur costs. That’s where people are forced to adapt. And we don’t know how big that is. We don’t know how big that problem is. But we know that we can reduce the severity of the problem by reducing greenhouse gas emissions. Atop that, there is some possibility. There’s some finite probability that climate change turns out to not be this nuisance that I just described, but a really bad problem.
And you can think about that in terms of geophysical effects like Large scale changes to the monsoon circulation or the closing down of the ocean conveyor belt or its dramatic slowing. Things that would bring us to what I would call a fundamentally different climate state. Not one that’s necessarily just warmer, but is reorganized in some profound way for a large section of the human population or a large section of the Earth’s surface. That’s really bad. That’s potentially really bad. And if we can lower the risk or the probability of those really severe things happening, that’s also good.
So I think about reducing greenhouse gas emissions as a risk management issue. It’s like we’re not going to heal every problem that society faces. We’re not going to prevent weather events from harming people in the future entirely. But what we’re trying to do is avoid really bad things happening. And that approach to the issue is one we take on lots of different issues.
Paul Gambill: This gets to one of my big frustrations with the way that society has been approaching climate change for now. And this goes back to the Naomi Klein thing that climate change is such a large and complex problem on its own. Let’s just focus on solving that one thing. Let’s... Let’s not wrap up all of the problems that ail the world into this giant agglomerate thing because that’s impossible.
Ross Kenyon: And it has a millenarian vibe too, like coming to save the world. It’s like the one chance that we’ll get, the last chance. It almost feels like that.
Paul Gambill: Yeah. And like from a so I used to be a project manager building software and from a strictly project management approach, like you got to focus on what is the next task that you can accomplish and produce some sort of value out. And then you finish that and then you move on to the next thing. But if you start trying to work on like six different things at once and you’re only getting like 40 to 80% of the way done on each of them, but you’re not finishing anything. If we could just focus on putting aside the tribalism that exists around climate change and just focus on, like you say, it’s a risk management issue and we can solve it in very straightforward ways, then we would solve it a lot faster and for a lot less money than it’s going to take if we were to do it otherwise.
Ross Kenyon: Can we solve it in a simple, straightforward way? What do we do, Joseph? Give us the answer. One sentence. Okay.
Joseph Majkut: Well, we should have a carbon tax. That’s what Niskanen traffic’s in. I think that’s what is probably going to be most effective. It’s the most important thing we could do. I try to avoid the phrase solving climate change. We’re managing risk. One way or another, the fact that greenhouse gases capture heat is going to cost us. And so what we’re trying to do is minimize the costs associated with that physical, immutable... I think the best way to reduce those costs is to start early, put a price on carbon dioxide emissions so that everybody doing all these pervasive activities that result in greenhouse gas emissions get some sense that their activities are contributing to greenhouse gas emissions implicitly.
They don’t have to think about it every time, but you integrate over all these transactions with And you reduce greenhouse gas emissions using price structures. And one of the things, I mean, that’s like a very libertarian idea, right? Like prices are a super efficient way to communicate information to people who are making decisions.
Paul Gambill: So I’m 100% in agreement with you on that. Pricing is important. This is like the Hayekian argument. We had an episode of our podcast, I think it was episode 31, where one of our co-founders, Alden Donnelly, is an economist and she’s been working in the carbon market space for well over 25 years and had worked in other And the whole point of that episode was talking about the attempts that have been made at carbon taxes so far have all completely failed and they’ve basically just become a super regressive tax on poor people and transferring wealth from.
And the way that works is because, and we’re dealing with this, by the time this airs, we’ll have already had the election in November. So I don’t know right now what the result is for the carbon fee in Washington State, where we’re headquartered. The argument is that by putting a price on it that people will start to internalize this cost is no longer an externality. But if the emitters who are facing the tax then just pass on the cost to their end consumers, which is of course what’s going to happen because that’s how all taxes work.
The fear is that the people who are capable of actually dealing with reducing the amount of emissions that come out of their supply chain are not the ones that are bearing the cost for that. So you’re abstracting it. Does that do you follow? So if I pull up to the gas station, I fill up my gas tank and the gas is a little bit more expensive. I think the estimates in Washington state where if this passes initially, it could go maybe as high as like 14 cents. Much higher, which is like well within normal volatility of gas prices.
Right. So we’re not even going to notice that. So does that have any effect on the emitters or the source of the emissions? So the oil and gas industry, does that have any effect on them actually reducing the net emissions that are happening? Yeah.
Joseph Majkut: Two part answer. And if you permit me a brief self plug.
Unknown speaker: Yeah. Only two parts for all of that.
Joseph Majkut: I just published an op-ed in October of 2018, a couple weeks ago, in The Hill talking about why Exxon Mobil wants a carbon tax, right? Because, you know, very, very famous oil company, huge, successful capitalist enterprise, which has brought great wealth and a lot of benefit to us, but also produces a product which we know its intended use causes harms, right? Or will cause harms. They’ve been a supporter of carbon taxation for, I don’t know, 10 years or so in a public sense. And they just started donating money to a political campaign and advocacy campaign supporting carbon taxes at the federal level.
Now, and I promise I’m going to get to this criticism. One of the reasons why a carbon tax works and why economists love it is it finds relatively inexpensive trade-offs, right? So I admit more than I probably need to or even necessarily want to. I just don’t know it. And so when you put a tax on the fossil fuel supply chain at some point and then as a gas consumer, I eventually see that at the pump. And it’s important that it’s a secular change. It’s not volatility. So you’ll see that and there is empirical evidence that people respond to secular changes in gas prices by using less.
Maybe I drive less. Maybe next time I buy a car, I buy a slightly more efficient one. And part of the economic argument for carbon taxes is actually that you increase prices on people because then they use the resource more efficiently.
Paul Gambill: But how much does the cost of that resource have to change in order to actually change behavior?
Joseph Majkut: Um... I mean, it’s all a continuum. So, like, gas prices are a tough example because people tend to be relatively inflexible in how much- Yeah. They’re going to drive almost no matter what. Right. They have to get to work. So, and this gets to the second part of the argument for why I think carbon taxes are an important part of our approach to climate change because what you really need are the Exxon Mobiles or other company, you know, other businesses to eventually supplant that business model. Right. Yeah. You know, if you’re an engineer working at a fossil fuel company and you’ve got a ton of bright ideas about how we’re going to reduce the carbon intensity of the fuels we provide either by like growing algae and synthesizing fuels from that or capturing CO2 from the atmosphere and putting that into fuels and sort of a recycling process.
I’m sure there are lots of bright ideas out there. But if it’s not part of the profit motive for ExxonMobil to compete with other companies to provide lower carbon fuels and therefore have lower prices and hopefully more customers, you’re never going to turn the efforts of all those engineers... Toward the problem that we want to solve, right? So that’s the second part of the carbon pricing formula that I think is also really important in the long term.
Paul Gambill: So how does that incentive get to them though? Because if they’re just passing their costs on to the consumers, And the consumers are largely inflexible on that. Then it doesn’t really exist. And what I would put forward instead is, well, they’re really, and this is Alden’s argument. So I’m going to strongly attribute this to her. Or give her credit for it. There are only two ways to reduce the concentrations of greenhouse gases, right? It’s one is you can draw them out, which is what Nori is doing and taking that like market based approach to do that.
And the other is that you can prevent existing terrestrial stores of carbon from leaving the earth and going up into the air. Sure. And there are a bunch of historical precedents for how we solve similar types of problems. How we got the lead out of gasoline going back to the 1970s through the 1990s. How we got chlorofluorocarbons out so that we stopped... Creating the hole in the ozone. And the way that regulators went about it was instead of putting a tax on these things, they just went to the sources of those and said, you have so many years to reduce the amount of this pollutant in your supply chain by X percent.
And then left it to them to figure out their own market-based approach to remove that from the system. And that worked really, really, really well for those examples. And in fact, Alden told the story about how North America, US and Canada took the approach with getting lead out by doing that. Whereas Europe tried to implement some sort of taxation based thing. And after eight years or so, the US and Canada had passed. Basically, gotten the job done and Europe had made very little progress. And so, you had this like somewhat controlled experiment in comparison.
So, what do you think of that in terms of like taking the most efficient approach possible to reducing the amount of greenhouse gases that are in the atmosphere?
Joseph Majkut: I reckon, you know, that it’s actually a very deep critique, right? But... I think about that in two ways. The first is the pervasity of greenhouse gas emissions in the economy is different from those other examples you’ve cited, right? If you want to substitute gasoline, lead out of gasoline, there’s a limited number of companies you need to talk to about doing that. That’s true. The functional replacement for the consumer is relatively small, right? I remember my grandfather complaining about unleaded gasoline and its performance characteristics. But by and large, people’s lives didn’t change that much.
CFCs are an even better example of that, right? I don’t really care what kind of refrigerant I have in my refrigerator. I just wanted to keep the ice cream cold. Mm-hmm. So, like, I think, you know, it’s not clear that these are, like, necessarily great analogies for the greenhouse gas problem. The other thing is that I don’t think of greenhouse gases as, like, a criteria pollutant is probably the way I would phrase it, right? Like, we don’t actually know what the safe amount of greenhouse gas emissions are. It’s kind of a degenerate question, even.
Paul Gambill: That’s a fair response, yeah.
Joseph Majkut: Or, like, the safe amount in the atmosphere, right?
Paul Gambill: Oh, I think we can get closer to knowing what that is. But I do agree with you that we don’t know what the safe amount of flux is.
Joseph Majkut: Right. So it’s not clear to me that it’s a problem where we are able to say, well, we know what we want the flux to be, so we’re going to cap it there. And then we’re just going to make everybody figure out how to make that happen. Now, that’s an approach that’s been tried, right? Like what you describe are kind of fundamentally cap and trade systems or other sort of like, here’s where we’re going to set the limit and you guys go figure out how to do it.
Unknown speaker: Performance standards, right?
Joseph Majkut: Yes. Yeah. Those are super common.
Paul Gambill: And those have been pretty effective. But the problem with cap and trade, though, is that because they’re issuing all these surplus free allowances, it doesn’t actually have the effect that we want to see.
Joseph Majkut: Right. Well, I think that actually gets to the more fundamental problem that reducing greenhouse gas emissions is kind of hard.
Ross Kenyon: Yeah, for sure it is. So if you’ve listened this far, you didn’t get much out of it.
Joseph Majkut: The second part is like that stuff, like, you know, renewable portfolio standards, which are standards for how much low carbon energy you have in your energy system are super common. And they’ve been very effective at reducing greenhouse gas emissions. So it’s not like these models aren’t being used. The problem is they generally result in higher carbon prices over smaller segments of the economy. And what we’re pursuing at the Niskanen Center are carbon prices over a large section of the economy because we don’t have time to go piecemeal.
Paul Gambill: Do you think then that another part of that trade-off, because that makes sense to me, and I always, always, so thank you, I always appreciate it when people lay out these things in terms of their policies are always about trade-offs. And there are people that are going to be helped and people are going to be harmed. Do you think then that the trade-off around the amount of time that this takes to deal with is part of that calculus? I think part of what motivates me to advocate for the regulatory approach that I was just saying is that I think that would be the fastest way to do it.
And I’m really eager to just get this heading down in the direction of lower CO2 concentrations as quickly as possible.
Joseph Majkut: Yeah, I do think it’s part of the trade-off. I think you and I probably have similar personal feelings on how quickly we’d like this to move along in terms of reducing greenhouse gas emissions. And certainly, if you look at the California example, which recently that state committed to a fully clean economy by date certain. Yeah. Always a question of like how they define that and whether or not in 20 years or whatever the time window they set, they’ll accomplish it. But I am not so doctrinaire as to not acknowledge that like in a lot of contexts that appears to work better.
I still think... If we want to approach this problem over the whole range of sources of greenhouse gas emissions, the best way to do it to start, and I’m not saying this isn’t going to be the only policy because I think that’s fantastical, but the best place to start is to get a price on carbon relatively soon and work from there.
Paul Gambill: Where then do you put the tax? Who pays? Yeah. At what point is the tax applied?
Joseph Majkut: It’s a super technical issue, but generally I would like it to be as high in the production chain as it can be. Like far from the end consumer. Yeah. And there are two reasons for that. One, it just sort of minimizes the number of compliance entities. So you get fewer people skirting their tax burden or cheating or trying to get out of it in some way. Also, generally, if you’re assessing it at like refinery Summaries or coal mines or natural gas processing stations, those are all already taxpaying entities. And as you know, the price effects are going to filter down to end consumers.
So you get the price effects, not just at the firm level, which I think is really important because then you do incentivize inter-firm competition to reduce how much of this they have to pass on to their consumers.
Paul Gambill: So is it like, to put it more simply, it’s a more like democratized approach this way because the burden of the cost is born a little bit more distributed than if you were to do it like straight at the end consumer. Like if you were to add just a bigger gas tax, for example. Yeah. The compliance costs aren’t born by the oil and gas producers. They’re just born by the retail. Yeah.
Joseph Majkut: Yeah. And like that’s also an indirect tax, right? So a volumetric gas tax assessed on a per gallon basis is not the same as a carbon tax. Right. And like if the carbon tax is working properly.
Paul Gambill: I just meant more for like how it gets applied.
Joseph Majkut: Right. Yeah. Well, I just like, you know, I want it to be really simple to assess. Yeah. And I don’t want people cheating.
Paul Gambill: Right. No, no, no.
Ross Kenyon: That totally makes sense. I’m turning your microphone off. No, it’s super interesting.
Joseph Majkut: Those are super interesting questions. We probably actually don’t talk about stuff like that enough. And the point that we started this on, that eventually this gets passed on and poor people are going to be paying a lot more for gasoline and they’re not necessarily in a position... Like I am to change their life to avoid that tax. That’s something we should take really seriously. I think it’s a matter of policy design to kind of figure out. I know that the Washington State Ballot Initiative has taken like a certain chunk of the revenue to try and offset costs on poor people.
I think that’s debate. You know, how they do that is super debatable. And there’s like really nasty and like mean politics about that in Washington. Yeah. But my intention at the Niskanen Center is to move our national conversation more toward where should we price carbon, how much should we price carbon, and what should we do to make sure that people aren’t adversely affected as we make a climate transition from, hey, I’ve got a snowball, therefore everything you guys are worried about is complete bunk. Which is...
Ross Kenyon: We should start wrapping it up, but we got into too many interesting rabbit holes, but for your specific carbon tax that you’re advocating, is this global or federal? Is it revenue neutral? Is there a citizen’s dividend? Give us a quick, what do you think is the most effective way to do this?
Joseph Majkut: Effective versus politically possible are different questions.
Unknown speaker: Why don’t you give us one of each?
Joseph Majkut: I think at Niskanen, we are committed to economic growth. When you assign a carbon tax, because we have a lot of carbon pollution in the United States, you’re going to raise a lot of money. And what you do with that money can be helpful in offsetting the negative impacts the tax on poor people. You can use it to cut other taxes. I generally would like it to be used for productive ends. I don’t have strong opinions about how exactly it gets used. That’s difficult. Different from a lot of other groups who are my colleagues in this fight who want to see 100% of it go back to households in a sort of bootstrapped universal basic income type structure or want to see it used to cut the corporate tax rate.
I think if we succeed, what we’ll eventually see is it’ll be some mixture of what folks want. Some of it will go back to households to offset the costs. Some of it will be used to help make the economy more productive. And some of it, I think, will invariably be used for investments in reducing the cost of green energy or in climate adaptation.
Ross Kenyon: And it’d be at the federal level? Yeah. Okay. Great. Well, there’s, we probably could have done another one of these. There’s a lot. I’ve never seen Paul so animated. You have a good time with that? You stealing my job over there?
Paul Gambill: I like having conversations on the podcast.
Ross Kenyon: Yeah. Yeah. Paul oftentimes is a little more reserved. So take that as a high compliment at how engaged she was.
Joseph Majkut: That’s great, man. I can talk for another 20 minutes if you want to. I’m interested to hear what you guys are talking about.
Ross Kenyon: Should we do it on the podcast or maybe we should, because how long have we gone?
Paul Gambill: We’re at, well, the recording time says 52 minutes. By the time this gets edited down to the listener, it’ll be less than that.
Ross Kenyon: Yeah. I think we should maybe take it off the air and just... We’ve pitched Nori on the air before.
Paul Gambill: The listeners know what we’re doing. Yeah. If you want to learn more, go to nori.com. If you want to invest in Nori and participate in this marketplace for the future, go to republic.co slash nori.
Ross Kenyon: Yeah. And share the podcast. Give it a nice review in your app of choice. Share our content. Thanks for listening. And we will see you next week. And thank you, Joseph.
Joseph Majkut: Yeah. Thank you for having me. Thank you. Oh, as a side note.
Unknown speaker: Thank you to our guest.
Joseph Majkut: Www. niscannoncenter.org. And I’m at josephmiket, M-A-J-K-U-T on Twitter.
Unknown speaker: Awesome. Thanks.
