Democratic senators are busy negotiating the reconciliation package. Whether they will come to an agreement–and, if they do, what provisions will be included in the deal–remains unclear. Although the Senate passed the bipartisan infrastructure bill back in August, House Democrats want to focus on reconciliation negotiations before voting on the infrastructure bill. Meanwhile, the highly anticipated 2021 UN Climate Change Conference (COP26) starts on October 31. Under tremendous pressure to deliver ambitious climate policies before COP26 starts, the Washington Post reported that the Biden administration is turning to executive action to address climate change. But relying on executive action and command-and control regulations as a key component of U.S. climate policy will not get us to Biden’s net-zero emission goals.
A sound U.S. climate policy should at least meet three criteria: quick, ambitious, and efficient. Unfortunately, a climate policy centered on climate regulations through executive action meets none of those criteria.
Climate regulations are prone to challenges and delays. In his paper, Jonathan Adler, argues that climate regulations might be particularly vulnerable to “legal attacks, state resistance, and administrative delays” because “they are not clearly authorized by legislation.” One example Adler discusses is the Obama administration’s Clean Power Plan, which was intended to regulate power plants’ carbon emissions using EPA’s delegated power from the Clean Air Act. After the regulation was issued in August 2015, the Supreme Court voted in February 2016 to stay its implementation.
Climate regulations are not the best policy to encourage economy-wide decarbonization. Unlike a broad-based carbon tax, climate regulations would need to tackle climate change sector by sector. Regulators need to deploy significant resources and spend much time examining a specific sector to issue regulations tailored to that sector. Depending on the type of regulation, various elements would need to be defined, including emission standards, acceptable clean technologies, and emission monitoring processes. Regulators would need to repeat all these efforts to issue a regulation in another sector.
Command-and-control regulations are not economically efficient. A carbon tax is the most economically efficient policy to address climate change. It discourages the consumption of carbon-intensive goods and services by putting a price on per unit of emission directly. On the contrary, climate regulations are far from efficient in incentivizing decarbonization. In a white paper authored by Ed Dolan and me, we compare carbon pricing policies to climate regulations from an economic perspective. We conclude that carbon pricing is more efficient than regulations because it cuts emissions less costly and gives companies the flexibility to decarbonize most efficiently.
A carbon tax passed by Congress would be meaningful climate legislation that is quick, ambitious, and efficient. The Biden administration needs to remember that resorting to executive action to solve climate challenges will not help achieve Biden’s net-zero emission goals.