That is the topic of my latest Bloomberg column, here is one excerpt:
American elites like to argue for a carbon tax and other means of raising the price of carbon emissions, and I fall into that camp myself. Yet higher energy prices are extremely unpopular with many voters. A recent study found that most Americans would vote against a mere $24 annual climate tax on their energy bills. Many countries now have to ask themselves if they really are ready to start paying the bills for a transition away from carbon.
…the Biden administration has been playing a two-sided game. Policies strongly discourage domestic producers from adding fossil-fuel capacity, and indeed those investments remain depressed. Perhaps that is how it should be. Yet when it comes to global capacity, America is talking and playing a very different hand.
For instance, the Biden administration has criticized OPEC for insufficient production of crude oil. National security adviser Jake Sullivan said bluntly: “At a critical moment in the global recovery, this is simply not enough.” That kind of policy talk is hard to square coming from the same government that has revoked permits for the Keystone XL pipeline, limited oil and gas leases on federal land and in Alaska, and used the Endangered Species Act to limit energy development on private lands in the West.
The federal government’s strategy seems clear. It is discouraging fossil-fuel capacity in the U.S. and Canada, but to keep energy prices low it will tolerate and indeed encourage high fossil-fuel spending in other, more distant nations. That would give the U.S. some domestic “trophies” in the fight to limit fossil fuels, yet without higher energy prices for the world at large.
The problem is that the same mix of policies won’t do much to limit overall carbon emissions. It will hurt American industry, by penalizing domestic energy production, and also damage U.S. energy independence.
So far I am not seeing a lot of evidence that the world really is willing to tolerate higher energy prices. Countries all over are rushing back to coal — what are we supposed to conclude from that?