Innovation Policy Persuasive Essay

Before concluding, we pause to consider whether our recommendation of refocusing some of the political effort to reduce greenhouse gas emissions on innovation aligns with political economy considerations. Political economy factors largely reinforce the value of making innovation policy an integral part of climate policy. First, unlike carbon taxes, innovation commits future governments to long-term reductions in emissions that cannot easily be revoked: while a tax can be rolled back, it is difficult to “unlearn” innovation. Second, cleantech innovation policies can boost the chances that a carbon tax will be adopted, both because innovation lowers the costs of complying with a carbon tax and because innovation policies foster the growth of cleantech constituencies who will lobby for a carbon tax. Indeed, empirical research shows that subsidies for cleantech generally precede the adoption of carbon taxes. In addition to these …show more content…
Australia, for example, reversed the nation’s carbon tax following a change in political parties, thereby upending an earlier promise to price carbon until at least 2050. Likewise, several countries have reduced their gasoline taxes in response to rising energy costs, suggesting that carbon taxes might also be vulnerable to fluctuations in electricity prices. Case in point: British Columbia’s carbon tax became a lightning rod for political opponents following a sudden spike in gasoline prices. The surprise election of President Donald Trump further highlights the perils of relying on government pricing schemes. Firms that began preparing for the rollout of President Obama’s Clean Power Plan—a regulation that would have required the power sector to reduce carbon emissions by about 32 percent below 2005 levels—may now find themselves at a competitive disadvantage, as President Trump has promised to dismantle the