Economic Scene: Rethinking How to Split the Costs of Carbon

I have some good news for them, and some bad.

No, Apple hasn’t managed to produce the device without adding heat-trapping carbon to the air. The company expects an iPhone 5s to inject 70 kilograms — about 154 pounds — of carbon dioxide equivalent into the atmosphere over its lifetime, 11 pounds less than the iPhone 5 that Apple introduced last year.

The “good” news is that under the standard accounting of carbon emissions bandied about at climate talks, it’s not, mostly, Americans’ fault. About three-quarters of the carbon dioxide is considered the responsibility of other people — in places like China and Taiwan, South Korea and Inner Mongolia — where the phone and its parts were made.

The bad news is not just that the effort to curb global warming is as stuck as ever, but that, whether we like it or not, we’re all in this together.

The obstacles remain significant. Countless summit conferences since the Kyoto Protocol on climate change was adopted more than 15 years ago have failed to budge the fundamental roadblocks standing in the way of collective action: How should the costs be divided? Who did what to whom?

Globalization — which in the process of “exporting” production and jobs from rich to poor countries also “exported” the carbon dioxide emitted to make the products consumed by the rich countries — adds another complex twist to allocating responsibility for the carbon in the air. The disquieting question is this: Are emissions the responsibility of the countries that made them or of the countries for whom the products were made?

Two years ago, some of the greenest constituencies in the country asked Elizabeth Stanton and colleagues at the Stockholm Environment Institute-U.S. Center to perform a set of calculations on their carbon emissions. Rather than tally the carbon they produced, they wanted an inventory of the emissions generated in making, transporting, using and disposing of what they consumed.

They were in for a surprise. San Francisco, for example, generated only eight million metric tons of carbon dioxide equivalent in 2008. The city’s consumption, by contrast, added nearly 22 million tons of carbon to the air. Using consumption-based measurements, Oregon’s emissions in 2005 jumped to 78 million tons from 53 million.

“The people who hired us to do it saw themselves as so green and innovative,” said Frank Ackerman, who led the Climate Economics Group at the center at the time and now works with Ms. Stanton at Synapse Energy Economics, a consulting firm in Cambridge, Mass. “They thought that because they had nice initiatives going on they would come out lower, never mind the fact that a lot of the manufactures they consumed were made abroad.”

The focus on consumption makes sense. Understanding its impact on climate change is a necessary first step for families, and municipalities, to take concrete action to mitigate carbon emissions. This sort of recalculation, however, could have an unforeseen effect on the international politics of climate change by shifting responsibility on a global scale.

With the concentration of carbon dioxide in the air zooming last spring to its highest level since mastodons roamed the earth some three million years ago, the United Nations, against all odds, hopes 2014 will finally deliver the breakthroughs needed for the big carbon-spewing nations to agree on a plan by 2015.

“I challenge you to bring to the summit bold pledges,” urged the United Nations secretary Ban Ki-moon, as he invited global leaders to a nuts-and-bolts horse-trading meeting in New York next September.

The diplomacy of climate change appears as stuck as ever. Poor carbon-spewers like China justify their opposition to tight carbon limits on the grounds that, on a per-person basis, their emissions are still very low. Moreover, most of the carbon in the atmosphere now, they argue, was put there by Americans and other wealthy carbon-spewers, who burned a lot of fossil fuels on the way to getting rich. Forbidding the Chinese from doing the same would be tantamount to condemning them to stagnation.

Policy makers in Washington retort that while all this may be true, a deal that only required rich countries to limit emissions would be pointless: their carbon savings would be negated by growing emissions elsewhere. Heavy emitters of greenhouse gases — like the agriculture and chemical industry — would decamp from rich nations to the less carbon-restricted shores of the developing world.

Email: eporter@nytimes.com; Twitter: @portereduardo

This article has been revised to reflect the following correction:

Correction: December 24, 2013

An earlier version of this article gave incorrect figures for some emissions data. A study said that at least 1.2 billion tons’ worth of annual carbon dioxide emissions were exported from the developed to the developing world between 1990 and 2008, not 1.2 million tons’ worth. And in 2011 Europeans emitted 3.6 billion metric tons of carbon dioxide, not 3.6 million, and 4.8 billion tons were emitted to make things Europeans consumed, not 4.8 million.

This article has been revised to reflect the following correction:

Correction: December 25, 2013

An earlier version of a caption with this article misstated the emissions of the iPhone 5S relative to the iPhone 5. The 5S will release 11 pounds less carbon dioxide equivalent into the atmosphere than the iPhone 5, not 11 pounds more.

Letters: The Carbon Tax Debate

To the Editor:

N. Gregory Mankiw’s compelling case for a revenue-neutral carbon tax (“A Carbon Fee That America Could Live With,” Economic View, Sept. 1) was timely, as House Republicans will soon hold a hearing on climate change. Will this be a serious, practical examination of the issue, or just an excuse to attack President Obama’s climate policies for the midterm elections?

We shall see. But if it’s the former, Professor Mankiw’s proposal should be the star of the show. A truly revenue-neutral carbon tax would combine the proper roles of government and the private sector to get us moving away from fossil fuels.

Conservatives should like it because it does not grow government and would open the door to cutting back some inefficient regulations and subsidies. Liberals should like it because it would incentivize environmentally beneficial behavior without burdening the poor.

RICK KNIGHT

Brookfield, Ill., Aug. 31

The writer is a volunteer with the Citizens Climate Lobby.

To the Editor:

In his column, N. Gregory Mankiw argued for a carbon tax that would require offsetting reductions in other taxes.

But in doing so, he was dismissive of changes in societal values and regulation as paths to reduced carbon emissions. Such paths have been effective in other arenas — curtailing the use of tobacco, for example. And when it comes to gasoline use, social values about driving are already changing in an environment-saving direction, especially among young people.

So instead of dismissing those approaches, I would rather ask, “Where is the leadership in government, in the private sector, and in the media, to help make greenhouse gases as offensive to us as cigarette smoke has become?”

MARK KINNUCAN

Huntington Station, N.Y., Sept. 1

The writer is chairman of the Long Island Group of the Sierra Club.

Economic View: A Carbon Tax That America Could Live With

THIS summer, the Obama administration released the President’s Climate Action Plan. It is a grab bag of regulations and policy initiatives aimed at reducing the nation’s carbon emissions, which many scientists believe contribute to global warming.

This got me to thinking: What might I do to reduce my own carbon emissions? Here are some things I came up with. Think of them as Greg Mankiw’s Climate Action Plan.

• I could buy a smaller, more fuel-efficient car.

• I could swap my traditional car for one with new technology, like a hybrid or an electric vehicle.

• I could car-pool to work.

• I could use public transportation.

• I could move closer to my job.

• I could buy a smaller house that requires less energy to heat and cool.

• I could adjust the thermostat to keep my home cooler in winter and warmer in summer.

• I could put solar panels on my roof.

• I could buy more energy-efficient home appliances.

• I could eat more locally produced foods, which need less fuel to transport.

I could go on, but by now you get the idea. Every day, we all make lifestyle choices that affect how much carbon is emitted. These decisions are personal but have global impact. Economists call the effects of our personal decisions on others “externalities.”

The main question is how we, as a society, ensure that we all make the right decisions, taking into account both the personal impact of our actions and the externalities. There are three approaches.

One approach is to appeal to individuals’ sense of social responsibility. This is what President Jimmy Carter did during the energy crisis of the 1970s. He encouraged Americans to adjust their thermostats and insulate their homes. I can still picture Mr. Carter sitting in the chilly White House, wearing his cardigan sweater.

It’s true that as a socially responsible economist, I always weigh the global costs and global benefits before pushing the ignition button on my car. (Yes, my tongue is firmly planted in my cheek.) But expecting most people to act this way is unrealistic. Life is busy, everyone has his or her own priorities, and even knowing the global impact of one’s own actions is a daunting task.

THE second approach is to use government regulation to change the decisions that people make. An example is the Corporate Average Fuel Economy, or CAFE, standards that regulate the emissions of cars sold. The President’s Climate Action Plan is filled with small regulatory changes aimed at making Americans live more carbon-efficient lives.

Yet this regulatory approach is fraught with problems. One is that it creates an inevitable tension between the products that consumers want to buy and the products that companies are allowed to sell. Robert A. Lutz, the former General Motors executive, laments that CAFE standards are “a huge bureaucratic nightmare.” He says, “CAFE is like trying to cure obesity by requiring clothing manufacturers to make smaller sizes.”

Yet another problem with such regulations is that they can influence only a small number of crucial decisions. In a free society, the government can’t easily regulate how close I live to work, whether I car-pool with my neighbor or how often I don a cardigan. Yet if we are to reduce carbon emissions at minimum cost, we need a policy that encompasses all possible margins of adjustment.

Fortunately, a policy broader in scope is possible, which brings us to the third approach to dealing with climate externalities: putting a price on carbon emissions. If the government charged a fee for each emission of carbon, that fee would be built into the prices of products and lifestyles. When making everyday decisions, people would naturally look at the prices they face and, in effect, take into account the global impact of their choices. In economics jargon, a price on carbon would induce people to “internalize the externality.”

A bill introduced this year by Representatives Henry A. Waxman and Earl Blumenauer and Senators Sheldon Whitehouse and Brian Schatz does exactly that. Their proposed carbon fee — or carbon tax, if you prefer — is more effective and less invasive than the regulatory approach that the federal government has traditionally pursued.

The four sponsors are all Democrats, which raises the question of whether such legislation could ever make its way through the Republican-controlled House of Representatives. The crucial point is what is done with the revenue raised by the carbon fee. If it’s used to finance larger government, Republicans would have every reason to balk. But if the Democratic sponsors conceded to using the new revenue to reduce personal and corporate income tax rates, a bipartisan compromise is possible to imagine.

Among economists, the issue is largely a no-brainer. In December 2011, the IGM Forum asked a panel of 41 prominent economists about this statement: “A tax on the carbon content of fuels would be a less expensive way to reduce carbon-dioxide emissions than would a collection of policies such as ‘corporate average fuel economy’ requirements for automobiles.” Ninety percent of the panelists agreed.

Could such an overwhelming consensus of economists be wrong? Well, actually, yes. But in this case, I am confident that the economics profession has it right. The hard part is persuading the public and the politicians.

N. Gregory Mankiw is a professor of economics at Harvard. He was an adviser to President George W. Bush.