Under President Donald Trump, the United States has seen an impressive run of climate change denial. The rollback of signature climate and environmental initiatives, including Trump’s abrogation of the Paris Climate accord, unsettles those who think scientific and economic consensus should guide policy. Many Americans take a clean environment for granted, ignoring its origins in sound science and responsive policy.
At the same time, China is taking a page from the US playbook – our research shows that China is making independently verifiable progress in reducing sulfur dioxide from coal power plants – and this is good news for the world. Meanwhile, the US has signaled its indifference and even disdain for global environmental progress. How much should we worry?
We focus on recent trends in environmental policy by the two biggest national players: the US and China. Here, the US and China are moving in opposite directions. We argue China’s improved policies are real and, moreover, more newsworthy and significant than the US retrenchment insofar as global emissions are concerned.
It is a basic tenet of economics that regulations almost always have unintended consequences. While Adam Smith may have been one of the first to understand this, he could not have possibly foreseen the morass of expensive and unwanted consequences that could come from conflicting emission and fuel standards enacted by the state of California and federal programs, such as for greenhouse gases and Corporate Average Fuel Economy.
Both the state and federal regulations have worthy goals: to decrease greenhouse-gas emissions and lower petroleum consumption. Yet taken together, the federal standards effectively cancel out the California standard. Instead of promoting fuel reduction as intended, the California standard allows for the production of less-efficient vehicles, while facilitating a massive transfer of cash via credit trading. It also forms a de facto industrial policy that sends us down a path toward electric vehicles that may or may not be the best technological or environmental choice for the future.