What Pandemics Mean for Robots and Inequality [feedly]

I view this problem as the essential structural challenge that capitalism CANNOT solve.

What Pandemics Mean for Robots and Inequality
https://blogs.imf.org/2021/04/19/what-pandemics-mean-for-robots-and-inequality/

From car manufacture to self-service checkouts, we all see how automation can transform the world of work—with lower costs and higher productivity on one hand, and more precarious employment for people on the other. But the COVID-19 pandemic added fuel to the fire. The rise in telework, for example, is hurting low-wage workers and increasing inequality. More broadly, if the pandemic accelerates the pace of automation, then we may face a jobless recovery for low-skilled workers. Our recent IMF staff research suggests that such concerns are justified.

Low-skilled workers are more at risk of displacement by robots than high-skilled workers, which reinforces existing inequality dynamics.

We focus on one form of automation, industrial robots, and analyze the effect of past major pandemics on their adoption: SARS in 2003, H1N1 in 2009, MERS in 2012, and Ebola in 2014. We use econometric techniques and robot data at the sectoral level from the International Federation of Robotics covering 18 industries in 40 countries between 2000 and 2018.

We find that robot adoption (measured by new robot installations per 1000 employees) increases after a pandemic event, especially when the health impact is severe and when the pandemic is associated with a significant economic downturn.

Why do pandemics lead to the rise of robots? We see two key reasons.

First, after large shocks like recessions, firms restructure their businesses and adjust production toward technologies that lower labor costs. Second, firms may prefer robots because they are immune from health risks. Pandemic-induced uncertainty also adds to incentives for automation, as firms try to make sure they can withstand the next pandemic.

The rise of robots and inequality

Robots do not affect all workers in the same way. Low-skilled workers are more at risk of displacement by robots than high-skilled workers, which reinforces existing inequality dynamics.

Looking at country-level data and a larger sample, we find that following a pandemic the increase in inequality, measured by the Gini coefficient, over the medium term is larger where new robot adoption has increased more. Our results suggest that the acceleration of robotization is an important channel through which pandemics lead to higher inequality.

Looking forward, a corollary of our results is that while automation and robotization are accelerating from still-low levels, they will likely become even more important drivers of inequality in the future. Left unchecked, growing disparities may lead to long-lasting grievances and ultimately to social unrest, forming a vicious cycle.

Policymakers need to pay attention to preventing scarring effects on the livelihoods of the most vulnerable, including through appropriate labor market policies.

As automation intensifies following COVID-19 and transforms workplaces, more workers will need to find new jobs, especially those who are less skilled. Policies to mitigate rising inequality include revamping education to meet the demand for more flexible skill sets, and lifelong learning and new training—especially for the most affected workers. A good example is Singapore's SkillsFuture initiative, which promotes learning in all stages of life to address the challenges brought by technological changes.

These measures may still fall short if the training involves acquiring a substantively different and challenging set of skills, raising the possibility of dropouts. It is therefore important for policymakers to consider ways to address medium-term social challenges, including through strengthened social safety nets.

While robotization is inevitable, its distributional outcome will depend on policies. A society that is more willing to provide support to those who are left behind can accommodate a faster pace of innovation, while ensuring that all members of society are better off.

 -- via my feedly newsfeed

Is Saving the Planet Under Capitalism Really Possible? [feedly]

Is Saving the Planet Under Capitalism Really Possible?
https://www.globalpolicyjournal.com/blog/20/04/2021/saving-planet-under-capitalism-really-possible

C. J. Polychroniou looks at the evidence and wonders if our leaders' ever consider that capitalism is at the core of what's causing life on Earth to vanish.

The theme of the 51st Anniversary of Earth Day is "Restore Our Earth." To be sure, while there has been a growing level of environmental consciousness since the first Earth Day and environmental policies have changed dramatically over the last fifty years, we are really in a race to save the planet.

As things stand, the world now faces two existential crises that threaten organized human life as we know it, and life in general on planet Earth. The first one stems from the continued presence of nuclear weapons. The second one comes from global warming. However, while a nuclear war is actually preventable, we are not sure about global warming.

Allow me to elaborate.

The world has been faced with a threat from a nuclear war since the end of the Second World War. It is an intolerable threat to humanity, and it may just be the case that we have managed so far to avoid a nuclear holocaust by sheer accident. But a nuclear war can be prevented by addressing the sources of conflict and going beyond arms control. We can actually abolish nuclear weapons.

On the other hand, global warming is a certainty. It is already happening. According to the 2020 Global Climate Report from NOAA's National Centers for Environmental Information, the global annual temperature has increased at an average rate of 0.08 degrees Celsius per decade since 1880, but the average rate of increase since 1981 (0.18 degrees Celsius) has been more than twice that rate.

Moreover, the effects of global warming are already present and include excessive heat waves, frequent wildfires, more droughts, greater frequency, intensity and duration of hurricanes, and higher sea levels which will have profound impact on low-lying coastal areas.

The effects of global warming will also be felt most severely on all categories of human movement: displacement, migration, and planned relocation.  The data on human movement in the context of the climate emergency is already daunting. The Internal Displacement Monitoring Center (IDMC), which has been compiling data since 2008 on displacement due to natural disasters, estimated that between 2008 and 2019 there were 265 million new displacements associated with disasters such as storms, floods, and wildfires. This figure does not include estimates on displacement related to drought or estimates on migration and planned relocation  associated with the climate emergency.

The impact of human migration due to the climate crisis is expected to be simply overwhelming. A report released by the World Bank in 2018 estimates that three regions of the world (Latin America, sub-Saharan Africa, and Southeast Asia) will produce 143 million more environmental migrants by 2050.

Make no mistake, global warming is the defining crisis of our time. Climate change has always happened on planet Earth, but there is overwhelming scientific evidence that the Earth's globally averaged temperature surface temperature has been rising due to anthropogenic factors. According to the Intergovernmental Panel on Climate Change's (IPCC) fifth assessment report, human emissions and activities have caused 100% of the observed increase in temperature since 1950.

Global warming is human-caused and the culprit is industrial capitalism and its addiction to fossil fuels. The burning of fossil fuels (coal, oil, and natural gas) releases carbon dioxide and other greenhouse gases which trap heat in the atmosphere and contribute to temperature increases. Scientists have known for decades how exactly carbon dioxide causes global warming. Nuclear physicist Edward Teller warned the oil industry all the way back in 1959 that its product will end up having a catastrophic impact on human civilization.

Moreover, scientific studies have established a proportional correlation between global mean surface air warming and cumulative carbon dioxide emissions. Unsurprisingly, therefore, the 2010s, in which emissions from greenhouse gases grew faster over this decade than they did over the previous three decades, were the hottest decade.

So the heat is on, yet action to contain global warming has been very slow. At COP 21 in Paris, on December 12, 2015, nearly every nation on earth agreed to combat global warming by "holding the increase in the global average temperature well below 2 degrees Celsius above pre-industrial levels." This goal is to be attained through substantial cuts in carbon dioxide and other greenhouse gas emissions. However, the Paris Agreement is a toothless climate accord. It lacks an enforcement mechanism and contains very few direct requirements. Most of the countries that signed the Paris Agreement are not on track to meet their pledge, and while some investors move away from coal, new coal-fired plants continue to be built in many parts of the developing world. Indeed, perhaps indicative of all of the above, a recent United Nations Environment Programme report suggests that we are on track for an average temperature rise well above 3 degrees Celsius.   

At this stage, while a quick wind-down of fossil fuel production is absolutely critical to slow the rate of global warming, we must accept the fact that the Earth's temperature would continue to rise over the next several decades.  At this point, even reducing carbon dioxide and other greenhouse gases to zero won't stop global warming.

Nonetheless, zero emissions is a must if we don't want to see human civilization crumble within a few decades from now - a distinct possibility if we don't take immediate action this decade, according to a policy paper by the Breakthrough National Center for Climate Restoration in Melbourne. 

Decarbonizing the world economy is technically and financially feasible. Leading progressive economist Robert Pollin, co-author, with Noam Chomsky, of Climate Crisis and the Global Green New Deal: The Political Economy of Saving the Planet (Verso, 2020) has advanced a detailed Global Green New Deal project which points the way we can shift to clean and renewable energy source, while stimulating growth at the same time, providing millions of new jobs, and making a just transition.

Pollin estimates that it would require committing approximately 2.5 percent of global GDP per year to investment spending in areas designed to improve energy efficiency standards across the board (buildings, automobiles, transportation systems, industrial production processes) and to massively expand the availability of clean energy sources for zero emissions to be realized by 2050. This estimate was recently corroborated by a study released from the International Renewable Energy Agency. 

Pollin shows that the financing of a Global Green New Deal can be done through four large-scale funding sources: (1) a carbon tax, with 75 percent of the revenues going back to the public but 25 percent channeled into clean energy investment projects; (2) transfer funds out  of military budgets; (3) a Green Bond lending program introduced by the Federal Reserve and the European Central Bank; (4) the elimination of all fossil fuel subsidies and the transfer of 25 percent of those funds into clean energy investments

However, putting an end to the use of fossil fuels and relying instead on clean and renewable sources of energy is not the end of the story in the effort to save the planet. We also need to stop deforestation and embark on afforestation. The most recent data by the Intergovernmental Panel on Climate Change reveals that deforestation alone is responsible for about 12 percent of all greenhouse gas emissions.

Planet Earth is also confronted with a scale of biodiversity loss so great that scientists and conservationists speak of a sixth mass extinction. We are in the midst of witnessing the extinction of up to a million of species (plants and animals). Only five times before in the history of the planet have so many species been lost so quickly. However, the sixth extinction is an unnatural history, as the title and subtitle respectively of a book published by Elizabeth Kolbert in 2014 indicates, in that it is caused by human activities, related primarily to the burning of fossil fuels.  

Unsurprisingly, biodiversity agreements have failed thus far to stop biodiversity loss, although by failing to do so humanity risks its own extinction.

As world leaders come together for Earth Day 2021 (April 20-22), allegedly to seek ways to "Restore Our Earth," one wonders if the mere thought that capitalism is at the core of what's causing life on Earth to vanish ever crossed their mind. For, in the end, saving the planet may require even more than ending capitalism's addiction to fossil fuels. It may require an entirely new socio-economic system, one capable of sustaining the environment and respecting nature along with all life forms in it.

 

 

This is a revised article which originally appeared in Common Dreams under the title "Rescuing the Planet Is Still Possible: The Case for a Global Green New Deal" (April 18, 2021).

 -- via my feedly newsfeed

The union’s defeat at Amazon is shaking up the labor movement and exposing a rift between organizers [feedly]

The Post (Bezos) harvests the gold from splitter attacks on RWDSU. (e.g. the Nation)

The union's defeat at Amazon is shaking up the labor movement and exposing a rift between organizers
https://www.washingtonpost.com/technology/2021/04/18/after-amazon-bessemer-union-fight-labor-movement/?utm_source=feedly&utm_medium=referral&utm_campaign=wp_business

J.C. Thompson works the night shift at Amazon's warehouse in Bessemer, Ala., a job he started after his work as a hospice chaplain dried up at the beginning of the pandemic.

He says he's not anti-union but was never a supporter of the effort at the facility. He appreciated the stability of the job and felt the pay and benefits that the company provided were as good as anything a union could negotiate.

His experiences with organizers gave him no reason to change his mind, Thompson said. He received some text messages and phone calls, including one where he says a union supporter suggested workers could make $20 an hour, about $5 more than the starting wage at the facility. But Thompson questioned how that would be possible, and the caller did not answer with specifics, he said. Organizers never tried to make the case for the union away from work, at his home in person.

"The people who were calling, they were weak," he said.

The loss of the union drive at the United States' second-largest private employer — the first large-scale attempt at Amazon domestically — has sent reverberations through the world of labor, serving as a reminder of the steep obstacles that activist workers face even in what is shaping up to be the most pro-labor political climate in decades.

Amazon won a decisive 2-to-1 victory during the vote this month after months of organizing efforts by the New York-based Retail, Wholesale and Department Store Union, dashing hopes that a union win could help touch off an organizing renaissance amid the newly labor-friendly climate in Washington.

Now a debate is emerging over whether the RWDSU committed tactical blunders that hurt its ability to reach workers in the face of the company's relentless anti-union campaign.

Amazon held meetings at which attendance was required and peppered workers with anti-union materials that the union contended veered into false information about requirements to pay dues in a right-to-work state. The union was expected to file claims with the National Labor Relations Board to set aside the results last week. The union said its challenge, which was not immediately made public, would claim Amazon used tactics to mislead and intimidate workers.

Workers at Amazon warehouse in Alabama reject unionization, a major win for the e-commerce giant

Amazon declined to comment. In a blog post Amazon published after its victory, the company wrote, "It's easy to predict the union will say that Amazon won this election because we intimidated employees, but that's not true. Our employees heard far more anti-Amazon messages from the union, policymakers, and media outlets than they heard from us."

(Amazon chief executive Jeff Bezos owns The Washington Post.)

Meanwhile, the fight over the union's tactics spilled into open view last week on social media, where organizers and worker advocates debated the RWDSU's track record and strategy, and in left-leaning publications like The Nation, where veteran organizer-turned-scholar Jane McAlevey wrote a blistering critique of what she identified as mistakes made by the union.

Chief among these were the union's decision to go forward with the election with less than a resounding majority of support, McAlevey wrote. She also pointed to the union's decision to skip house calls in favor of the phone banking campaign experienced by workers like Thompson. She said organizers should have done "public structure tests," where a majority of workers demonstrate their support publicly in a petition or poster to show solidarity. And there was too much focus in the news media and elsewhere on the "out-of-state superstars" who joined the effort, like Sen. Bernie Sanders (I-Vt.) and professional athletes.

"Every senior organizer I've worked with in the labor movement in the last 20 years saw and shared the same exact concerns that I raised," McAlevey said in an interview. "They made strategic, tactical mistakes from the beginning straight through to the end."

Her piece has burned a hole through labor circles, already emotional after what was arguably the most high-profile union campaign in decades. Given the unequal playing field that still exists for workers, McAlevey said she believed the union's choices also deserved scrutiny — so organizers can learn from mistakes to achieve better results in the future.

Biden hails Amazon workers pressing to unionize in Alabama in unusual sign of support

Stuart Applebaum, the president of the RWDSU, said he was frustrated by the critique, saying it unfairly cast blame on the union, instead of on Amazon and the country's weak and outdated labor laws.

"We've always known the fight against Amazon was going to be a long one," he said. "It's not going to be one election that changes Amazon. But you have to begin somewhere."

Amazon has denied that it crossed legal lines pushing back on the union.

On Thursday, Bezos acknowledged that the e-commerce giant needs to "do a better job for our employees," his first public comments on the union drive since the election concluded. He defended Amazon's record as an employer but wrote that the company needs to commit to improving employee satisfaction as much as the company focuses on providing customer care.

Bezos acknowledges Amazon needs to do 'a better job' for employees after union vote

"Despite what we've accomplished, it's clear to me that we need a better vision for our employees' success," Bezos wrote in his annual letter to shareholders. He said he intends to include improving working conditions as part of his purview when he relinquishes his chief executive title for a less operational role this summer.

Publicly, many labor organizers are saying the Bessemer loss was still a net gain for workers through the awareness it raised about their plight.

It also provided a high-profile demonstration of what organizers say are typical anti-union tactics, setting the stage for Congress to debate the Pro Act, a robust set of laws already passed by the House — and endorsed by President Biden — that would outlaw many of these tactics.

The Pro Act would stop companies from holding so-called captive audience meetings, mandatory sessions where managers try to dissuade workers from joining, according to labor lawyer Brandon Magner. It would also deprive companies of the legal standing to alter the size of the bargaining unit to try to dilute those in support.

Do you work at Amazon? Tell us about your experience.

The union drive in Bessemer officially began in November, when a group of workers filed a notice with the NLRB that they wanted to hold an election to create a bargaining unit and be represented by the RWDSU. That initial filing sought to cover 1,500 full-time and part-time workers in that unit.

One of Amazon's first strategic moves that weakened the union drive was successfully arguing at a NLRB hearing to include nearly 6,000 workers in the unit. That larger figure threatened to dilute union support and came as the company added 500,000 workers globally, growing to 1.3 million employees, since the pandemic began.

Amazon argued at the time that the larger number of workers was the true size of the group of workers that should be allowed to vote.

Some veteran organizers say at least 60 percent of the bargaining unit, but ideally more like 70 percent, should publicly support the union before moving forward with an election, knowing that an aggressive company will always succeed in driving down that number as the election nears.

Amazon's anti-union blitz stalks Alabama warehouse workers everywhere, even the bathroom

The RWDSU eventually had more than 3,000 union cards signed, according to Applebaum, but converted only a fraction of those into votes — 738, as well as what the union believes was a majority of 505 contested votes that were never counted because the margin of defeat was so large. The votes against the union tallied 1,798.

One of RWDSU's lead organizers in Bessemer, Adam Obernauer, acknowledged Amazon "flooded the unit" by inflating the bargaining unit size but said fighting Amazon on that point would have delayed the vote and led to even more attrition among supporters.

"We were still getting a lot of traction on the ground," Obernauer said. "It's a calculation you have to make."

RWDSU's Applebaum said the new size of the bargaining unit — and relentless turnover in the company's workforce — posed a major risk for delaying the election.

"If you look at a facility with [such high] turnover in a year, that's not an option," he said.

The Trailer: Why Democrats are fighting for labor in Alabama

To make its case, the union enlisted prominent politicians such as Sanders and voting rights activist and former Georgia gubernatorial candidate Stacey Abrams to exhort workers to vote yes. It stationed representatives outside the warehouse to engage employees at the end of their shifts.

Amazon, meanwhile, sent some Bessemer workers four to five texts a day, exhorting them not to abandon "the winning team." It pulled workers off their shifts to mandated anti-union meetings and used fliers posted inside bathroom stalls at the warehouse to sow doubt about the process of paying union dues. Current labor laws allow those tactics.

It petitioned the county to change the timing of the traffic lights, something Amazon said was to improve traffic flow. But the union charged it was a way to speed workers through the intersection near the warehouse and make it harder for organizers to engage them.

The company also asked the U.S. Postal Service to place a mailbox out in front of the warehouse — something the union said may have intimidated or fooled workers into thinking Amazon was running the election. Amazon has argued that the mailbox was installed for the convenience of its employees as they voted in the election. And it said it told workers that only the Postal Service had access to the mailbox.

Emmit Ashford, a 26-year-old pro-union stower, said the company warned workers at meetings that "everything is on the table" and that "you might lose your pay" and benefits if the union were to pass.

The union, on the other hand, couldn't approach workers except outside the facility, hampering its ability to persuade people who were on the fence.

"It's hard for the people to get the message across, especially on the union side, because the union doesn't get to be in the warehouse," he said.

Amazon fights aggressively to defeat union drive in Alabama, fearing a coming wave

Robert Muehlenkamp, a former organizing director for the Teamsters, referenced the 1988 book "Confessions of a Union Buster," saying the union should have been more prepared for what are well-worn tactics.

"Nothing that Amazon did should come as a surprise," Muehlenkamp said. "They should have known to begin with what an appropriate unit was in that warehouse to begin with."

Still, other organizers say the deck was always stacked against them.

"When you win, you're always right. And when you lose, people want to look for reasons why you lost," said Richard Trumka, the president of the AFL-CIO, which had organizers assisting the RWDSU's effort.

Under current law, companies don't face significant financial penalties if they violate workers' rights to organize. Instead, companies have to rectify the violation — reinstating a worker fired for organizing and offering back pay, for example — after what can be a lengthy legal process for workers and unions.

The union drive at Amazon signals a potential sea change for the labor movement. Will it last?

Employers are accused of violating federal law by workers in 41.5 percent of all union election campaigns, according to a 2019 study of NLRB charges from the left-leaning Economic Policy Institute, and in nearly a third, employers were accused of illegally coercing, threatening or retaliating against workers for their union support. In nearly one-fifth of all elections, employers are accused of illegally firing workers.

Over the last couple of years, about a third of all NLRB charges resulted in settlements between the parties, and about 5 percent resulted in the board issuing a formal complaint.

John Logan, a labor historian at San Francisco State University who is an expert on anti-union tactics and legislation, wrote a lengthy rebuttal to McAlevey's piece for the self-described socialist journal Against the Current, saying it was based on misconceptions.

"I don't believe in most cases that unions here would win with smarter, more imaginative and harder working organizers, and that there's any sort of proven tactics to lead us to victory," he wrote.

The loss is reminiscent of other high-profile union defeats in red states in recent years — autoworkers at Volkswagen in Tennessee in 2014 and Nissan in Mississippi in 2017. At Amazon, too, nascent efforts to organize U.S. workers have failed, most recently when a small group of equipment maintenance and repair technicians at its Middletown, Del., warehouse voted against forming a union in 2014.

Biden took a chance in promoting the Amazon union push. What does its failure mean for him?

Maria Somma, the organizing director for the United Steelworkers, cited an unsuccessful campaign the union ran for workers at a tire factory in the South a few years ago.

Some 87 percent of a 300 person staff there had signed union cards expressing their support for the union. Organizers had a list of all the employees and their information. But a worker was terminated, others were disciplined, and the company used mandatory meetings — hours every day, Somma alleged — to peel off support for the union, she said. The company did not respond to a request for comment.

"We did all of those things that a good union is supposed to do in the middle of an organizing campaign, and we still lost," Somma said, although the union did regroup to win a follow-up election held later. "What we need to talk about is the broken legal system and what employers do that makes it really hard for unions to combat."

Some pro-union workers at the Amazon warehouse agreed, telling The Post that the problem with the effort was not the organizing but the pushback they faced from Amazon — a battle that was complicated by the pandemic.

Darryl Richardson, 51, pointed to tactics like the mailbox, the placement of which he believes could have influenced workers to oppose unionization. Keeping workers apart inside because of social distancing requirements also hampered organizing efforts, he said.

"At Amazon, we couldn't move about. We couldn't communicate," he said.

The latest frontier in worker activism: Zoom union campaigns

Obernauer, the RWDSU organizer, acknowledged the pandemic made the union drive more challenging. The inability to hold rallies and meet with workers in their homes took away one of labor's most effective organizing tools, he said.

"One of the best things during a drive is the feeling of solidarity during meetings, which we couldn't do during the pandemic," Obernauer said.
 -- via my feedly newsfeed

https://equitablegrowth.org/policy-workshop-addressed-promises-and-challenges-of-using-carbon-pricing-to-combat-climate-change/

Policy workshop addressed promises and challenges of using carbon pricing to combat climate change

https://equitablegrowth.org/policy-workshop-addressed-promises-and-challenges-of-using-carbon-pricing-to-combat-climate-change/

Climate change might be the world's most complex public policy problem. It is more global, more long-term, more irreversible, and more uncertain than most other policy challenges and probably unique in the combination of all four factors. Given this daunting mix, it is all too tempting to look for a simple fix.

Economists have long pointed to carbon pricing as just such a fix: Increase the price of carbon emissions and watch emissions decline. The theory is indeed compelling. In fact, it is based on the one and only law in all of economics—as the price of something goes up, the quantity demanded goes down.

The practice, alas, is not quite as simple. For one, there are other market failures and hurdles to overcome in transforming the world's economies from their current high-carbon, low-efficiency path toward a low-carbon, high-efficiency one. Second, politics. Despite the ample warnings and evidence we have been receiving for decades, the United States and others have taken only modest steps to reducing carbon dioxide and other greenhouse gases that contribute to climate change.

To help provide a path forward for policymakers, Jesse Jenkins of Princeton University, Leah Stokes of the University of California, Santa Barbara, and I convened a virtual workshop of academic and policy experts in March 2020 to discuss the current state of policy in the United States and around the world. The discussions addressed such challenges as how to:

• Price carbon and establish a politically viable regimen to significantly reduce its use
• Allocate any revenues that might accrue from a carbon pricing policy, including addressing effects on low-income households and communities, as well as those economically dependent on the production or use of fossil fuels
• Make such policies fit in with measures that regulate emissions and fuel use
• Foster low-carbon innovation

The participants included economists, political scientists, energy and innovation experts, lawyers, and leaders and experts from government agencies, nongovernmental organizations, foundations, and advocacy groups. More than 70 individuals gathered online to help make the workshop a success.

The convening was made possible by financial support from the William and Flora Hewlett Foundation, the Alfred P. Sloan Foundation, the Washington Center for Equitable Growth, and the Niskanen Center, and it was hosted and facilitated by New York University's Robert F. Wagner Graduate School of Public Service. The resulting workshop report  summarizes the discussions and conclusions of the participants. I summarize these results below.

Carbon Pricing and Innovation in a World of Political ConstraintsDownload

Carbon pricing

Carbon pricing can be one of many effective tools available for harnessing market forces to reduce the use of carbon-based fuels, drive innovation, and spur the adoption of clean energy technologies. Carbon pricing can be deployed through taxes or through a cap-and-trade system that limits overall greenhouse gas emissions from factories, utilities, and other facilities, and permits owners to buy and sell the ability to emit greenhouse gases within that overall limit, thus establishing a price for each ton emitted.

Political constraints, however, have made carbon pricing a difficult proposition in the United States and elsewhere for policymakers seeking to set either carbon taxes or cap-and-trade limits at levels sufficient to have a meaningful impact on emissions.

Carbon taxes are a direct means of both reducing the use of fuels that emit greenhouse gases and raising revenues to ameliorate the impact on low-income households—through such measures as "carbon dividends"—and invest in such initiatives as clean energy and mass transit. But while the public is supportive of some versions of a carbon tax, voters have a history of rejecting them at the polls when given the chance, often due to significant opposition from the fossil fuel industry.

The use of revenues can affect a policy's effectiveness and political feasibility. Dedicating some of or all revenues toward clean energy projects, research and development, and such infrastructure investments as smart grids and mass transit not only contributes to decarbonization but also increases public support. But the use of revenue to ameliorate the inequitable distribution of the costs and risks of climate change across households, firms, and regions can help address the issues of fairness and environmental justice.

This can be achieved by, say, rebating some revenues in the form of income tax cuts for low-income families or providing support for businesses or regions that are heavily energy-dependent, or even addressing other spending needs. These revenue uses are not mutually exclusive. A hybrid approach can balance competing imperatives.

The most significant political problem facing measures that raise the price of carbon to reduce its use is that the organized interests that face the concentrated costs imposed by those measures marshal resources to weaken or defeat them. Moreover, in countries with high economic inequality, such as the United States, carbon taxes can result in an unequal tax burden if they are not accompanied by complementary policies to assist low-income households. The societal benefits of reduced carbon emissions—the goal of these measures—are well-recognized by the public, but they also are diffuse and often delayed.

The political challenges facing carbon pricing policies lead to significantly weakened versions, but they also point to a broader approach. Public opinion research shows the highest support for indirect measures of establishing a price, such as clean energy standards and investments in energy research and development. Advocates for standards combined with investments in clean energy argue that these policies can more effectively achieve the desired, popular outcomes and that they are more politically achievable. Meanwhile, when regulations do not produce revenue, they leave less room to address the potential regressive impact of those measures through benefits for affected populations. Advocates argue that using revenues from the existing progressive tax system can help to assuage those concerns.

Addressing environmental justice also needs to be a key component of climate mitigation measures. Communities of color are burdened not only by their disproportionate proximity to sources of air and water pollution, but also by the disproportionate impact they experience from such climate change phenomena as natural disasters, increasing heat waves, and rising sea levels.

Solutions have the same potential. For instance, if polluting facilities located in these communities have the option of maintaining or even increasing emissions at those facilities by purchasing allowances or paying a tax, then communities could see their disproportionate exposure maintained or increased. Likewise, these communities can suffer the regressive effects of a carbon tax if revenues are not used to ameliorate the distributive impact. So, another question policymakers face is how mechanisms can be designed to support environmental justice.

Some states and countries have achieved significant results with pricing mechanisms

Policies to reduce carbon emissions typically show trade-offs among efficacy, economic cost-effectiveness, and political feasibility. While existing carbon pricing policies do reduce emissions, they often do so slowly because those policies rarely set a sufficiently high price. If they do impel polluters to reduce emissions, public backlash or interest group pressure might cause them to be weakened or repealed outright.

A number of other countries and U.S. states have established carbon pricing policies. Around 15 percent of global carbon emissions are subject to carbon pricing. The most significant example is the European Union Emissions Trading System, the world's largest carbon pricing program, limiting carbon emissions from more than 11,000 power plants, industrial facilities, and other large emitters. Yet the EU's significant success in reducing emissions to date might be more attributable to other policy measures, such as sectoral efficiency programs, clean energy targets, and direct subsidies for solar photovoltaics and other low-carbon energy sources on the one hand and research and development on the other.

California's system is the most significant in the United States. Its emissions trading system caps around 85 percent of all greenhouse gasses generated in the state. Here, too, the cap-and-trade system is embedded in a comprehensive suite of other policies, including discrete sectoral strategies; direct subsidies for renewable energy, public transit and zero-emission vehicles; environmental restoration; and more sustainable agriculture. The carbon price established by the emissions trading system can play an effective supporting role. Recent legislation further weakened the system.

Another important U.S. pricing system is the Regional Greenhouse Gas Initiative, a partnership of 11 Northeast and mid-Atlantic states that regulates emissions from power plants under an emissions cap. While emissions have decreased since the program got under way in 2008, this is likely due to factors unrelated to the initiative, as the carbon price set under the agreement is far too low to have a significant impact. The revenue raised, in contrast, has been put to good use to subsidize the deployment of low-carbon technologies and energy efficiency measures.

Others have made progress toward reducing greenhouse gas emissions. In Washington state, improvements have come primarily through a series of sectoral measures such as clean energy and efficiency standards. Washington's Clean Air Rule, issued in 2016 by Gov. Jay Inslee, effectively instituted a cap-and-trade system, but court challenges have prevented it from being fully implemented. In addition, 2016 and 2018 statewide ballot initiatives to impose a carbon tax were both defeated, in good part due to stiff opposition from the fossil fuel industry, though lukewarm support and outright skepticism from environmentalists also played a role.

Canada offers a wide variety of examples, as the national government set broad targets for carbon taxes but permitted provinces to establish their own policies, with a federal backstop available when they failed to follow through or to sustain a program. British Columbia has a particularly effective carbon tax, while Alberta tried several approaches, including establishing a carbon price, incentives for renewable energy, regulation of methane, and a phaseout of coal. But ultimately, the province repealed the measures it had taken and thus is now subject to the plan established at the national level.

Other countries have had mixed political results. Australia repealed a carbon tax in 2016, 2 years after it was approved. Sweden has had a carbon tax since 1991 that has significantly reduced emissions. Others, such as Norway, have similar explicit carbon taxes, while a French carbon tax law had been struck down by the highest court. China has also been experimenting with local and regional carbon pricing systems.

Setting the social cost of carbon

A critical issue in setting climate policy is the level of ambition. There, the social cost of carbon is an important yardstick. The United States measures the social cost of carbon based on the monetary damages linked to one ton of carbon dioxide emitted into the atmosphere. Importantly, calculating the social cost of carbon alone does not imply that carbon pricing is the only "correct" policy instrument, but the metric is an important yardstick. It is, thus, is a critical element informing regulatory decisions.

With the Biden administration preparing to seek significant climate-related legislation and advance an extensive regulatory agenda, an important first step was President Joe Biden's Inauguration Day executive order that calls for restoration of the process for determining the official social cost of carbon. The Obama administration started this process, which was then significantly weakened during the Trump administration.

The Biden executive order reestablished the Interagency Working Group on the Social Cost of Greenhouse Gases, which is co-chaired by three White House agencies and includes a number of other agencies and departments throughout government. The panel will spend this coming year reviewing the latest evidence and scientific and economic thinking to produce a new calculation that forms the backbone of regulatory policy and actions going forward.

In the meantime, the group has reestablished, on an interim basis, the social cost of carbon of around $50 per ton, originally set in the Obama administration, reversing the Trump administration's changes. This was, in fact, the first of eight recommendations that eight of us made to the Biden administration following an October 2020 workshop, which  was part of the same series as the March 2020 convening.

Lessons and key recommendations

Carbon pricing is one of many necessary tools for designing effective and equitable climate policy. Others include establishing specific sectoral limits on emissions, investments in clean energy and emissions-reducing infrastructure, and measures to reduce the impact of pollution on disadvantaged and marginalized communities. Pricing policies such as carbon taxes or cap-and-trade systems might play an important role with these other measures in an overall system, but they cannot and should not stand on their own.

Centering the challenge of setting equitable climate policy on nonpricing policies can minimize the problem of front-loaded household and business costs overshadowing the benefits of emissions reductions. This policy approach can both reduce carbon emissions significantly and survive the political wars that are never-ending. The evidence of the climate crisis is well-established, and experience with the science, economics, and politics of potential solutions is expanding. Convenings such as this carbon pricing workshop can help bridge disciplinary silos on the one hand, and the gap between academia and political practice on the other.