Climate mitigation needs a carbon tax and rich countries supporting clean energy in developing economies:

Robert O. Mendelsohn teaches environmental economics at Yale University. Speaking to ET, he discusses President Joe Biden’s 2030 timeline for the US to halve its greenhouse gas emissions, the likely impacts of climate change on India — and the importance of global synergy in climate mitigation schemes:

President Biden has announced a 2030 target for the US to halve its emissions — which American industries are likely to change most rapidly?
This depends on the programs President Biden can actually implement — his first target will be to incentivise American utilities to go as carbon-free as possible by 2030. His second target will be transportation. However, this is a much more difficult sector to wean away from oil, gasoline and diesel than power as these fuels are much cheaper relatively for transport. Switching to electricity-based transportation will be more expensive and harder to accomplish. Major emitters in manufacturing will also be affected. But President Biden’s overall chances of success will be tied to the cooperation he gets from the legislature which wi l l need to support more efficient mitigation mechanisms like carbon taxes and emissions trading schemes.

What is your assessment of the economic impacts of climate change on India?
My research indicates that the bulk of global climate damages will bear down worryingly on low latitude countries like India. Countries like India which are closer to the equator could endure up to 80% of the global damage of climate impacts. The primary reason therefore to think of climate change as a global challenge is to help reduce the damage in such countries. Ironically, it’s hard to convince many countries to invest in climate mitigation because they don’t want to spend on something that seems to benefit another nation — this behaviour makes it harder to stop climate change.


What are some recommendations you’d make to developed economies on mitigating global climate change?
I would first suggest establishing a carbon tax on emissions. This should be taxed at around ten dollars a ton of carbon. It should apply to main emitters and most mid-to high latitude economies, which are not going to be as hard hit by climate impacts, would thereby have to spend more on mitigation. Some countries are very poor and it would be unfair to burden them with the extra costs of climate mitigation. The world should help poorer households in those countries pay their share of mitigation costs — the energy expenditures of a poor household can be estimated and richer groups can increase climate aid to compensate for the higher costs of their moving to clean energy.

The science is extremely clear. Why are there still so many roadblocks in the path of mitigating climate change?
There are two main reasons. Firstly, most mitigation schemes are still very expensive. And as much as most people would like to see climate change disappear, they are not willing to make a sacrifice to do this. Mitigations do require sacrifices in terms of lifestyles, profits, investments into renewables and so on. The second reason is that climate change is a global problem and not a national one. Even if India were to make huge reductions in its emissions, that won’t change the climate situation of India — it is only if the entire world were to make huge reductions that India’s climate situation would change. We don’t have global governance for this. Yet, this needs good global decisions.

The situation calls for a different approach now. I’d like to see every country do something about their own emissions — each nation should intensively research how it can reduce emissions inexpensively. Each country should establish a national carbon reduction target and find affordable solutions to reach this. That would be a practical start. The problem is that climate change is often approached by envisioning dramatic mitigation steps — but these are very expensive, so, in fact, few people want to carry these out. Most people in reality end up doing nothing at all. But there are also relatively affordable mitigations that will help us get started. To solve global climate change, we need a realistic middle ground between wanting to do nothing and trying to do too much.

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