Why are some policies enacted quickly, while others are delayed or never enacted at all? One might argue that if the aggregate benefits of a policy exceed aggregate costs, the policy will be put into place. Yet, as political scientists note, policy enactment depends not necessarily on its aggregate benefits and costs, but also on how these benefits and costs are distributed across different sectors or industries. This is a critical insight in understanding why policies like those for climate change mitigation are stalling in the United States and show varying progress across the world.1
Those hurt by mitigation policies have incentives to organize and protest against them, especially if they believe that they have been unfairly and disproportionately targeted. This includes those who work in fossil fuel industries, like mining. As Cecil Roberts, the President of United Mine Workers of America (UMWA) notes, his union “does not dispute the science regarding climate change. Our dispute is with how our government is going about addressing it, and on whom the administration is placing the greatest burden in dealing with this challenge.”2
So why is the current political approach not working? Perhaps a new climate advocacy strategy is needed that seeks to work on the political bottlenecks and address the concerns of policy opponents. We suggest that an important reason fueling opposition to mitigation is that domestic equity implications have not been appreciated. To address equity issues, we outline a proposal for “embedded environmentalism” that can provide a new direction for the debate over climate change mitigation policies. While this proposal is directed principally at environmental groups as they are both the most visible and vocal in pushing for climate change mitigation, we hope it can inform the policy approaches of all mitigation advocates including regulators, politicians, and scientific bodies.
Along with advocating for emission regulations, mitigation advocates should lobby for the compensation of sectors and stakeholders that might be negatively impacted by such regulations. Our approach coheres with the proposal Hillary Clinton recently outlined to revitalize coal communities in Appalachia.3 The USD$30 billion Clinton Plan focuses on investments in local infrastructure and responds to concerns that federal air emission regulations have contributed to the downturn in the coal industry.
Embedded environmentalism recognizes that policies can differentially impose costs and bestow benefits across sectors and industries.4 These costs and benefits can be economic or financial, but can also include psychological, social, or ideological ones. Some policies might concentrate costs (therefore imposing high per capita costs for those who incur them) or bestow benefits on specific sectors, while others might diffuse them over the whole economy (therefore creating low levels of benefits or costs on a per capita basis). Policies such as those for climate change mitigation, which currently tend to create diffused benefits for many but impose concentrated costs on a few, face intense opposition and sometimes get stalled. This is as a result of those who lose out from the policy having incentives to organize and oppose it, while those who benefit have less compelling incentives to advocate for it.
The climate change debate in the United States seems to pit the predominantly educated, affluent, and urban pro-environment constituencies against relatively less privileged coal miners, manufacturing workers, and others in fossil fuel industries. Techno-determinists, such as Thomas Friedman, invoke Schumpeterian “creative destruction” to explain why the fossil fuel-based industrial order must perish.5 For them, renewables, information technology, and technological breakthroughs will herald a ‘new order.’ For many American coal miners, climate change-mitigation policies are job killers that will force them into poverty, an argument echoed by several Republican presidential hopefuls such as Senators Ron Paul and Marco Rubio. While emerging technologies do create new jobs, these probably will not be filled by comparatively poorly educated miners.
Of course, one might argue that coal miners opposed to mitigation policies are being manipulated by the fossil fuel industry; declines in coal-related jobs are mostly related to mechanization, not environmental regulations. Even if some job losses are caused by regulations, the number of miners in places like West Virginia is quite small; mining constitutes only about three percent of the employed civilian labor force there. Even when incorporating indirect employment, the coal industry only provides jobs to about seven percent of the employed civilian labor force.6
While these arguments have merit, they still ignore the reality that organized and concentrated interests tend to have more political clout than nonorganized ones. Indeed, the UMWA is very actively highlighting the impact of climate change regulation on the mining industry and coal communities. For example, in response to the EPA’s proposed rules for clean power to reduce carbon emissions from power plants, Cecil Roberts also noted:
…it’s not just that these jobs will be lost, it’s that the ability of companies to continue funding pension and retiree health care benefits will be at great risk…And no one – no one – can point to a significant reduction in global greenhouse gas emissions that is guaranteed to come from this rule… And why on earth should we be willing to sacrifice the lives and livelihoods of thousands upon thousands of our fellow citizens on the naive bet that current and emerging economic competitors like China, India, Brazil, Russia and others will follow our lead?…Some point to new so-called ‘green jobs’ that may be created by this rule, and say that there will be a net increase in jobs over time…The jobs that we are told will be created will very likely not be in the coalfields, will not pay particularly well, will not have decent benefits, and will not allow workers to realize what we once called the American Dream.2
Mitigation advocates should recognize that (1) mitigation has domestic equity implications, (2) concerns of policy losers are legitimate, and (3) given the multiple veto points in the American political system, without some level of policy consensus, we are less likely to secure the appropriate type and scale of mitigation regulations. If so, might mitigation advocates consider experimenting with a new, bold, and unconventional strategy to address the concerns of their opponents, such as actively lobbying the federal government for compensating miners and their communities? Such compensation schemes have been used by federal agencies in the past. To protect specific fisheries, the National Oceanic and Atmospheric Administration (NOAA) buys back fishing permits or even fishing vessels and the Department of Agriculture’s Conservation Reserve Program pays farmers to remove environmentally sensitive land from agricultural production. Yet domestic compensation policies have not been seriously examined in the context of climate mitigation.
This is where embedded environmentalism comes in. It recognizes that (1) mitigation regulation imposes concentrated costs on a few sectors while creating benefits for many and (2) those bearing the costs should receive equitable compensation. Its core logic lies in coupling climate change mitigation with political and social realities.
In making this proposal, we draw on trade politics literature, specifically the ’embedded liberalism’ compromise of 1945–1970. This informal compact between labor and capital created domestic support for the expansion of multilateral trade, alongside state interventions in the domestic economy, to ensure full employment and the expansion of the welfare state.
Similar to mitigation, free trade creates diffused benefits across the economy but imposes concentrated costs on the import-competing sectors. By introducing a new source of competition, it allows all consumers to enjoy lower prices and access higher quality products (therefore, diffused benefits). For example, think of a country that is contemplating removing import tariffs on steel. This policy action can create potential benefits across the economy by lowering costs for industries that use steel or steel products, including construction, pipelines, automobile, and white appliances. However, removal of tariffs would place domestic steel industries under price pressures. This cuts into revenue, translating into lower profits and wages. In some cases, firms may lay off their work force or even close down their operation. Not surprisingly, domestic steel interests are likely to mobilize to oppose the removal of tariffs. This sort of push back against free trade by import competing industry was evidenced in the NAFTA debate and more recently in the Trans-Pacific Partnership trade deal.
Not surprisingly, free trade policies— reductions in tariff and nontariff barriers—have faced intense political opposition from import-competing industries. In order to transfer the successful policy approach from trade policy to climate mitigation policy, we need to understand the causal logic: how did western democracies manage to establish a “liberal” trade order in the aftermath of the Second World War?
Political scientist John Ruggie suggested that they accomplished this by embedding free trade in an interventionist state order that sought to provide full employment, regulate capital flows, and provide a safety cushion to trade losers.7 There is a substantial body of empirical literature that reports strong positive association between the size of a welfare state and levels of trade openness.8
Mitigation proponents often suggest a carbon tax to reduce fossil fuel use, and therefore greenhouse gas emissions, leading to debates about the appropriate tax level required to reduce fossil fuel consumption to the desired levels. Others suggest that to enhance support for carbon taxes, policy makers should explain how these might be used: for example, to fund research into cleaner technologies or renewables. Disappointingly, there is less discussion on how to use carbon taxes to compensate policy losers such as coal miners—although the Clinton proposal is an important step in addressing economic concerns of mining regions.
Embedded environmentalism can also reduce political opposition from anticlimate mitigation sectors. For example, a portion of environmental taxes could be earmarked to compensate policy losers beyond the token ‘worker retraining’ programs already in place. These compensation policies can be designed to assure some level of financial security to these workers, such as generous displacement allowances and pension schemes. Carbon taxes can also be deployed for tangible investments in mining communities. These could include youth educational investments, so that the children of miners can avail themselves of new opportunities, instead of just following in their parents’ footsteps.
As noted previously, the federal government already has compensation policies for other environmental issues. If NOAA can buy back the boats of fisherman whose fishes are put on the endangered list, why not “buy back the boats” of the coal miners? More broadly, the compensation system can be modeled along the federal fuel tax (18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel) that is used for highway and bridge construction. Thus, while the fuel tax is imposing a burden on specific industries such as petroleum and automobile, it also creates benefits for them by improving the quality of transportation infrastructure. A portion of the carbon tax can be specifically earmarked to compensate the sectors hurt by this tax. There are several issues that will need to be debated and carefully examined such as the criteria for eligibility, what sorts of projects will receive financial support, how much would coal miners, whose mines will be shut down, be compensated, and whether the federal or the state government will administer this program.
There are other objections to our proposal as well. One might ask why the United States should privilege climate change losers for policy support—does this not pertain to the larger problem of ‘takings’ via environmental regulations?9 If most regulations create policy losers, should the government compensate policy losers in all circumstances? If so, will this create a moral hazard problem, for example with the miners who rely on government checks, instead of retooling and re-inventing their skills?
These are important and complex issues that need to be debated but still do not contradict our core point: environmentalists should appreciate the domestic distributional consequences of climate change mitigation, and the sources of opposition to climate regulation. The coal miners have valid concerns pertaining to their livelihoods in the wake of mitigation policies. It is time for mitigation advocates to start a dialogue with coal miners (and other sectors bearing the consequences of such regulation) on how carbon taxes might be deployed to help them make an economic and social transition to a new post-carbon life.
Will this be considered a sell-out? We don’t think so. After all, some environmental groups have reached out to their “adversaries” in the business and labor sectors, and worked collaboratively towards noncoercive approaches to address environmental problems.13 For example, The Nature Conservancy has helped communities and governments purchase development rights from farmers and ranchers, as opposed to say, lobbying for regulation to achieve the same objective.10 This approach addresses the economic concerns of farmers and ranchers, and also allows their farms and ranches to remain intact and support wildlife and biodiversity. Environmental groups have collaborated with their “adversaries” in other ways as well. About 25 years ago, McDonald’s and the Environmental Defense Fund began working together to phase out food containers made from polystyrene.11 The objective was to reduce solid waste going to landfills. This collaborative partnership has survived and created pathways for others to flourish, including the Marine Stewardship Council ecolabel created by WWF and Unilever to address the issue of sustainable fisheries.12
We hope that subset of environmental groups can initiate this sort of collaborative process in the context of climate change. One idea could be to create a “Citizen Commission” that includes representatives from both pro and anti-mitigation camps. They could carefully and collectively examine different policy proposals on how America can lead the world in emission reductions while also addressing the concerns of sectors and communities that will bear the economic costs of such. This type of Citizen Commission would then serve as a best-practice example, and could tour to share their experiences, talk with different groups, and seek testimonies from citizens in the affected coal communities. While this sort of initiative can be undertaken by governments via commissions or industry groups, we believe the policy of reaching out to firms and labor groups in sectors affected by new regulations will have the greatest impact if initiated by environmental groups. Sponsorship matters because it signals that the sponsoring actors are willing to take on political risks to try a new approach. Given the perceived animosity between environmental groups and miners, this sort of reaching out has the potential to break policy deadlocks.
In sum, climate change environmentalism needs to be embedded in a new domestic order that addresses the concerns of the policy losers. The COP 21 in Paris and other international meetings are important for climate policy, but insufficient to build a domestic American consensus on a highly contentious issue that has important equity and distributional implications. Embedded environmentalism, even with all its imperfections, can serve as a solid starting point to approach the mitigation issue from a different perspective. After all, public policy is about working towards better solutions, not perfect ones.