Let policy follow science: Tie a carbon tax to actual warming

The temperature of the troposphere above the tropics has changed little.

Climate change is one of the most complex topics in science. New insights arise every month. Key discoveries are anticipated in the next few years. Yet politicians seem to think we've learned everything there is to know about the climate. And they keep designing static policy plans based on that assumption.

We have seen the failure of this approach with the Kyoto Protocol. So as world leaders meet in Bali, Indonesia, this week to discuss a replacement treaty, they should keep this simple principle in mind: Good climate policy must be dynamic, not static, and this requires incorporating a learning process.

Politicians like long-term commitments because they can push costs into the future. But long-term commitments are foolish when you are still awaiting key information about the nature of the problem.

For instance, scientists from nine countriesare conducting experiments in Switzerland to test the influence of the sun's magnetic field on our climate. There is evidence that the constant shower of cosmic rays from space enhances cloud formation. The sun's magnetic field partly shields the Earth from cosmic rays. Research suggests that the sun's magnetic field has strengthened since 1900, weakening the cosmic-ray flow and reducing average cloud cover – which allows temperatures to rise. The experiments could show that the sun, not greenhouse gases, explains most global warming. Results are expected as early as 2010.

Or consider the tropical troposphere, the vast atmospheric region centered about 10 miles above the earth, ringing the equator. Climate models project that, if carbon emissions cause warming, the strongest effect will be up there. But both the Intergovernmental Panel on Climate Change and the US Climate Change Science Program (CCSP) have found no significant warming there. A 2006 CCSP report called this a "potentially serious inconsistency" and pointed out that the models with the best fit to the data show low amounts of greenhouse warming. If warming in the tropical troposphere is not soon observed, it will convincingly refute the standard greenhouse warming model.

The bottom line is that, over the next few years, we will acquire new information that might overturn current beliefs about greenhouse warming. To lock into a policy path that ignores future information makes no sense.

Policymakers should implement a dynamic strategy that ties the stringency of emissions controls to actual greenhouse warming. The best way to do this would be to base a revenue-neutral carbon emissions fee on the mean temperature of the tropical troposphere. The formula I have proposed (ross.mckitrick.googlepages.com) would start low, at about $5 per ton of carbon, similar to what most economists have proposed.

My "T3" formula – short for Temperature of the Tropical Troposphere – guarantees that, if carbon emissions do not cause global warming, the charge will not go up. But if they do cause warming as the IPCC projects, the emissions tax will start rising by between $4 and $24 per ton per decade. The upper-end corresponds to a very aggressive emissions-control scheme. Because the emissions fee would depend on actual warming, the stringency of the policy would depend on the actual, observed severity of the problem.

Some people have responded to my T3 idea with the concern that essential increases in the carbon fee might be delayed due to lags in the climate system. But the lags are associated with oceanic responses. According to models, the tropical troposphere responds relatively quickly to carbon emissions. And even if there is a short delay, it is better to learn with a lag than not to learn at all, which is the problem with all other policy plans.

Another advantage of the T3 tax is that it would create a market for accurate climate forecasting. Someone building a billion-dollar power plant would want an objective estimate of the likely carbon emissions price five or 10 years out. Competition would create strong incentives to get the science right. The T3 rule would create market incentives for climate modelers to eliminate sources of exaggeration in their models. And investors would search out the best forecasts to guide their current planning, thereby factoring long-term greenhouse warming changes into today's investment decisions.

Nor would we need politicians to argue about how weak or strong the long-term policy should be – the atmosphere would decide. If the policy turns out to be too weak to force emission reductions, it would indicate that the climate is not sensitive to emissions.

Climate policy needs to shift from static to dynamic thinking. This requires tying policy to actual greenhouse warming. Anything else is like taking a shot in the dark.

Ross McKitrick is an associate professor of environmental economics at the University of Guelph in Canada.