Re-entering Paris Agreement could reduce pollution, cost most Americans little

By Brent Sohngen

This article ran in the Columbus Dispatch on February 13, 2021:

One of the first official acts of President Joe Biden was to re-enter the Paris Agreement, that 2015 pact among most of the world’s countries to continue down the path of reducing carbon emissions. Although there is excitement across the U.S. and the world about this action, there also is plenty of concern.

Will it raise energy costs?  Will it create new regulations that sap job creation? Will it harm longer-term economic growth prospects and competitiveness?

The energy sector, and the economy, have changed a lot in the past five years. Natural gas, a low-carbon substitute for coal, has become abundant. Solar and wind power have become incredibly cheap. New-car fuel efficiency has increased 8% in five years.

The two questions surrounding our re-entry into the agreement are: How much will we try to reduce carbon emissions by 2035 and beyond, and what policies will we use?

Cap-and-trade would be effective for reducing carbon emissions but is not likely to be approved by Congress, because it would take 10 Republicans in the Senate to go along with it. Even Democrats are skittish, given the shredding they took in 2010 after passing cap-and-trade legislation in 2008. This is a shame: It’s a policy that could deliver the kind of large-scale reductions in carbon emissions envisioned by the Paris Agreement at a minimal cost to society.

In addition to promoting more renewable energy, carbon taxes have a chance of being enacted, in part because some Republicans in the Senate would support them if they are tied to rolling back income tax or other taxes. Carbon taxes will definitely raise energy costs, but if designed well, they need not increase the overall tax burden Americans face.

Re-entering the Paris Agreement definitely will affect Americans. But if the Biden administration is careful, we will see big differences in the energy we consume and small differences in everything else.

We will get more clean energy, less carbon emissions and more products made sustainably. We will pay higher prices for gasoline and natural gas for our homes, but we will have options to switch to low-cost renewable electricity, and will see lower income taxes. This definitely sounds different, but perhaps not all bad.