Pull vs. Push in Climate Change R&D

August 4, 2008

It’s election season, discussion of climate change ought to be at the center of discussion, and to a certain extent, it is, but only in buffoonish, jingoistic ways. I am saying nothing original when I claim that only technological change offers a (possible) “solution” to the threat of global warming. But one should not stop the discussion at this very vague, programmatic level. Instead, I’d like to make the case for a combination of push and pull policies.

Many (especially on the conservative side of the aisle) are skeptical of the rationales used to argue in favor of a carbon tax or a “cap and trade” system. In a world where new coal-fired electricity plants open every week in China, the direct effects on temperature levels from a US-only policy shift could be minute when compared to the very real costs it will impose on the economy. These critics have a point, but they miss the effects on the R&D incentives that a carbon tax would generate. That’s the example of a demand-pull policy shift: price carbon emissions at a price that reflects their true social cost, and entrepreneurs will rush in to devise a better carbon-trap.

But that is probably not enough, for these entrepreneurs do not have a very strong scientific base to draw upon.  Policy-makers should also attend to the supply-side of climate change R&D, by creating and/or reforming instiutions susceptible to quickly widen the world’s stock of climate-change relevant ideas. In the United States, much investment is channeled through sclerotic institutions (such as the DoE and the national labs), and not enough funds are awarded according to meritocratic criteria, and insulated from direct political control. To be sure, the sheer scale and capital-intensity of some energy-saving technologies will always justify a role for large institutional structures. But what is missing from the scientific landscape is something like a “National Institute of Climate Change Research,” operated along the line of the NIH, with a unique focus on extramural investments.

How about it, Barack Obama?

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