Across the Aisle: Prospects for Bipartisan Climate Change Legislation

With a new administration set to move into the White House this January, hopes for bipartisan action on climate change are in the air. In a recent online event hosted by the Stanford Environmental and Energy Policy Center (SEEPAC), U.S. Sens. Lisa Murkowski, (R-AK), and Sheldon Whitehouse, (D-RI) discussed the prospects of bipartisan climate change legislation (read about the event, and watch it here).

Below, Stanford economists Lawrence Goulder and Charles Kolstad reflect on key elements of the Murkowski-Whitehouse conversation that have taken on additional significance since the election. Goulder, director of SEEPAC and the Shuzo Nishihara Professor in Environmental and Resource Economics, moderated the event. Kolstad, a professor, by courtesy, of economics and senior fellow at the Stanford Woods Institute for the Environment, introduced the two senators at the event. Goulder and Kolstad are both senior fellows at the Stanford Institute for Economic Policy Research (SIEPR) and Stanford's Precourt Institute for Energy.

Goulder:

It was inspiring to see two of the most important federal leaders on climate policy having a cordial and substantive conversation.

Both senators favored federal support for improved energy efficiency (which implies lower greenhouse gas emissions), for carbon capture (sequestration of carbon dioxide emissions) and for technological innovation related to hydropower. Also, and importantly, there was a willingness by both senators to consider carbon pricing (i.e., a carbon tax) – a willingness seldom displayed by Republicans. Sen. Murkowski indicated that carbon pricing “should be one of the options that is on the table for discussion.” That seems very important. This common ground strikes me as encouraging. However, according to Sen. Whitehouse and most climate scientists, stronger legislation than what this common ground could bring would be necessary to avoid exceptionally serious future climate change.

Both senators emphasized that climate policy must aim to avoid imposing significant economic hardship on low-income households. In this connection, Sen. Whitehouse showed support for a revenue-neutral carbon tax in which much of the revenue is recycled back to households that otherwise would be significantly burdened by the higher energy prices that result from the tax. Sen. Murkowski was skeptical about whether the Congress could agree on the nature of revenue-recycling, claiming that it would lead to a “food fight,” with politicians competing for the revenues and disagreeing as to whether the revenues should be used to compensate households, reduce the federal deficit, or subsidize new technologies. 

Kolstad:

My biggest takeaway from the conversation is that there is bipartisan support for doing something about climate.

In the past, an obstacle to climate action in the U.S. was that only the costs of cutting back carbon were visible to many states – the benefits were way in the future. Now, we are seeing what many perceive as the damage from a changing climate and it is occurring in many red and blue states right now – Alaska being an excellent example, but also the Gulf states. In Alaska, Murkowski mentioned permafrost melting. In the Gulf of Mexico, hurricanes are growing more intense and damage increasing. 

If procedural blocking of action – like Senate Majority Leader Mitch McConnell’s blocking of anything that cannot pass with only Republican votes – can be overcome, there seems to be a coalition sufficient to pass meaningful climate action.

Another thing I took away from the conversation is that Republicans seem more opposed to prohibitions / bans or command-and-control than to market-oriented climate action. They much prefer incentives letting the market drive action, such as a revenue-neutral emission fee on carbon or some sort of greenhouse gas cap and trades system  in which pollution sources would buy and sell allowances to emit.  This was done for acid rain in the 1990s and it turned out to be a far cheaper way to achieve emission goals than the alternatives that had been proposed.