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Is there a free-market solution to global warming?

Roland Peschetz/Flickr

There's a big partisan split on global warming in the United States. Democrats tend to believe it's a serious problem. Republicans don't. Check out the exit polls from the 2014 midterms:

But where did this divide come from? Do Republicans just have an innate distrust for scientists? Is it cultural? Did Al Gore polarize the issue?

Maybe. But here's another possibility: Chris Mooney writes up an interesting new study suggesting that many people first tend to think about potential solutions to global warming and then work backward to assess the problem itself.

So if you tell Republicans that there's a "free-market friendly" way to address rising greenhouse gases, they're far more likely to agree with the notion that greenhouse gases are warming the planet. But if you tell conservatives that the solution will require government regulation… well, suddenly they're not so keen to believe that humans are responsible for climate change:

(Campbell and Kay, "Solution Aversion: On the Relation Between Ideology and Motivated Disbelief," Journal of Personality and Social Psychology, 2014)

And that raises a follow-up question: Is there actually a "free-market friendly" way to address global warming? (One possibility is to do nothing, although that hasn't worked out so far.) Or is the whole notion completely incoherent?

One 'free market' idea: a revenue-neutral carbon tax

Back in 2013, I put this question to Jonathan Adler, a law professor at Case Western University. He argued that there was indeed a conservative approach to climate change — the revenue-neutral carbon tax.

There's no question that Adler is a committed conservative. He's one of the architects of King v. Burwell, the lawsuit that could end up dismantling Obamacare. But he also thinks global warming is a real problem. And he's written a lot about how conservatives should address it.

His basic starting point is that when people emit greenhouse gases, that causes damage elsewhere. Sea-level rise, in particular, is a big infringement of property rights — something that libertarians and conservatives care a lot about in other contexts. So doing nothing isn't an option. But he's also skeptical that heavy regulation will actually solve the problem.

"I'm not a fan of regulating greenhouse gases under the Clean Air Act [as the Obama administration is doing]," he told me. "I don't think that's particularly effective or efficient. But I don't see the argument for doing nothing. I don't think that's consistent with conservative principles. So I've done papers on adaptation and on how we get the degree of energy innovation many people think will be necessary. And most controversially, I've argued that a revenue-neutral carbon tax would be a good idea."

Here's his logic behind taxing consumption of oil, gas, and coal. The US government currently levies all sorts of taxes on people and companies, and many of these taxes end up discouraging work. That's bad. So why not repeal some of those taxes and replace them with a tax on something we actually want to discourage — namely, carbon emissions? Then companies can figure out on their own how best to reduce pollution, instead of being told by regulators.

"It's funny," Adler said, "when I first came to Washington, DC in 1988, there were tons of folks on the right talking about how they wanted to tax consumption rather than labor or wealth. And a revenue neutral carbon tax that's rebated the way folks like Art Laffer or Bob Inglis have proposed, that's effectively what it does. It shifts the incidence of taxation away from income and towards consumption."

It's even plausible that Democrats might be amenable to this approach. President Obama has signaled before that he'd be open to carbon pricing as an alternative to EPA regulation.

One problem? GOP officials really dislike carbon taxes

Rep. Steve Scalise (R-LA) is not a fan of carbon taxes. And he's the House Majority Whip. (Bill Clark/CQ Roll Call Group/Getty Images)

Unfortunately, that doesn't mean we've hit on a magic idea that will suddenly break the climate deadlock and push Congress to address the issue.

For one, most Republican officials really, really dislike carbon taxes. Back in 2013, Rep. Steve Scalise (R-Louisiana) held a press conference to introduce a resolution in Congress opposing the idea. "A national carbon tax would devastate an already struggling American economy, force the cost of gas at the pump to jump even higher, and kill millions more jobs here at home," Scalise said.

If anything, Republicans have become more and more hostile to carbon pricing over time. Back in 2008, John McCain supported a cap-and-trade program (which bears some similarities to a carbon tax) to address global warming. But once Barack Obama won the election and began pushing his own version of cap-and-trade, conservative support vanished. Even McCain turned against it. The idea became anathema to the GOP.

That matters a lot. Political scientists have long noted that voters broadly take their cues from political elites. As long as Democratic politicians like Obama are okay with a carbon tax and Republican politicians hate it, few conservatives are going to see this idea as a "market-friendly solution." It will be coded as precisely the opposite.

Now, that said, there are a few conservatives trying to shake up the politics here. Former South Carolina Representative Bob Inglis has been trying to convince his fellow Republicans to accept a carbon tax as a climate solution. Part of his pitch — although he doesn't phrase it this way — is to suggest a form of carbon tax that makes Democrats uncomfortable. A carbon tax, he argues, should be used to finance corporate tax cuts or income tax cuts. It shouldn't be used to provide public support for clean energy, as many green groups prefer.

"We have to be absolutely clear that we're not trying to grow the size of government," Inglis told me last year. He's still trying to sell the idea to the GOP — though there haven't been any major breakthroughs yet.

Carbon taxes are also an imperfect climate solution

Solar tracker panels follow the sun's path May 17, 2014 on a Champlain Valley dairy farm near West Haven, Vermont. (Robert Nickelsberg/Getty Images)

Meanwhile, Republican opposition isn't the only hitch here. There are also plenty of environmentalists and energy wonks who point out that a carbon tax alone simply won't be enough to avoid high levels of global warming. It would help, sure. But it wouldn't be sufficient.

For example, while a carbon tax would likely reduce consumption of oil, gas, and coal (and make polluters internalize the costs of the damage they cause), it doesn't tackle many of the other greenhouse gas emissions out there, like methane from livestock and landfills, or deforestation in the tropics. It also doesn't address potential barriers standing in the way of greater energy efficiency.

A carbon tax also doesn't, on its own, solve the tricky question of energy innovation (which, to be fair, is something Adler has written about). Do we currently have all the clean-energy technologies we need to zero out emissions by the end of the century? Probably not. Will companies automatically develop those technologies if there's a carbon tax? Or would it be better if the government chipped in with R&D? And if so, should the government restrict itself to funding basic research or help with deployment too? Should the money come out of carbon-tax revenues? Things get messy quickly.

There are other complications, too: Carbon taxes may be the most economically elegant way to tackle greenhouse-gas emissions, but they can also be unpopular. Australia had a carbon tax for a few years, and emissions went down, but many voters hated it — so it got repealed. Indeed, research by Jesse Jenkins has found that the public is only willing to pay so much for carbon taxes. That's why politicians often resort to indirect and clumsier regulations whose costs are easier to mask.

So a carbon tax would be a good start, but it's unlikely to be the last word on addressing climate change. Which makes it harder to argue that there's an easy "free-market friendly solution" to global warming just lying around out there. And so long as that's the case, a lot of conservatives are likely to remain skeptical that global warming is an urgent problem in need of solving.

Further reading

-- Here are my interviews with Jonathan Adler and Bob Inglis. There's a lot more detail at both links.

-- How to stop global warming, in 7 steps. This is the broad overview of what the Intergovernmental Panel on Climate Change says is needed to avoid more than 2°C (or 3.6°F) of global warming.

-- Over at Grist, David Roberts once wrote a great post titled "10 reasons a carbon tax is trickier than you think." It's an excellent summation of the "carbon tax is no panacea" viewpoint.

-- Michael Liebrich of Bloomberg New Energy Finance has also written an essay on what a conservative approach to climate policy might look like. One big step? Repealing $500 billion per year in fossil-fuel subsidies.