The State of Carbon Policy in America

I am writing from the SJF Summit at a panel on carbon policy.  This post is a summary of the state of carbon policy in America as articulated by Tim Profeta, Professor at the Nicholas School for the Environment.

America's carbon policy future  is uncertain.  There was a political  script that we thought would play out this year.  We thought a carbon market would be established.  And it didn't.  That script is gone.  We are not going to have a carbon market in this Congress, and most likely not in the next Congress.  The future is now very uncertain.

There are three  types of carbon markets:

  • Voluntary: Firms cut carbon simply because they want to cut carbon
  • Pre-compliance:  Firms who anticipate a price on carbon in the future and want to prepare for it.
  • Compliance

Voluntary markets do exist; however, they are small compared to what we need.  Pre-compliance suffers because no carbon policy is expected to pass in this Congress or next.  And compliance, well, we don't have a policy that would force companies to comply.

Yet opportunity does exist.  The next Congress is interested in addresses climate change through other channels such as revising the farm bill to help the agricultural sector to mitigate greenhouse gases.  There are also corporate coalitions (like those led by Walmart) which may drive faster mitigation than public policy can.  Indeed, exploring private policy through coalitions is an immediate strategy that we can pursue independent of what Congress does, or does not, pass.

To be clear, there will be a public policy reaction to wean the American economy off of fossil fuels because folks will agree that either greenhouse gases need to be cut or that fossil fuels will one day run dry.  The uncertain part is what that policy reaction will look like, namely in what form(s), and how aggressive it will be. -- Joel Thomas