There's a Simpler Way to Fight Climate Change, California

The golden state.

Photographer: David McNew/Getty Images

Say this for California's landmark bill to reduce carbon emissions: It doesn't lack for ambition. At the same time, it shows the pitfalls of relying too much on regulators instead of the market.

QuickTake The Cost of Carbon

The original bill would have set in law three extraordinary targets for 2030: Get half the state's power from renewable sources, double the savings from energy efficiency in California buildings, and cut the amount of gasoline used by half. The state's goal is to reduce emissions by 80 percent by 2050, compared with 1990 levels.

The oil industry lobbied furiously against the mandate to cut fuel use, arguing that it would force the board to ration gasoline or even ban certain types of cars. That argument proved successful: Governor Jerry Brown and Democrats in the state senate said last week they would leave the requirement for cutting gas consumption out of the bill.

Yet the rest of the bill, which has been approved by the legislature and awaits Brown's signature, is still likely to become law. The California Energy Commission, along with the state's Air Resources Board, will have to decide how the state meets the other two goals. And government regulations can be arbitrary, opaque and inefficient.

There is a simpler, better way to reduce planet-warming emissions, of course: Impose a price on every ton of carbon released into the atmosphere, and let the market handle the rest. That approach is transparent and fair, and evidence from other countries shows it works. And a carbon tax wouldn't require excessive government intrusion into people's lives; it would only require them to bear something closer to the full environmental and social cost of their choices.

This approach should be equally appealing to both proponents and opponents of the California bill's gasoline provision. Carbon taxes give gasoline refiners and power companies, as much as consumers, a clear and reliable picture of the costs they can expect.

By now there can be no debate over the need to reduce carbon emissions; the argument is about how best to do it. California's vision is impressive, but the difficulty its plan has already encountered shows that fighting climate change will take more than just stricter regulations.

If businesses and governments want to work together to reduce climate change, it's better to choose a policy that's agnostic on which specific steps are required. The alternative, as California demonstrates, is for governments to try to lower emissions by fiat. The best way to avoid that approach is to support a carbon tax.

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.