Mankiw reckons he knows what Larry
Summers’s Big Idea is: a carbon tax. The two of them are old Harvard buddies,
so I daresay Mankiw is right. I am a bit puzzled, though, given this, from Summers’s
The most serious problem with the Kyoto framework is that it is unlikely
to generate substantial changes in developing country policies. As my Indian
hosts explained on a recent visit, developing country policymakers are not
likely to accept binding targets on their energy use or greenhouse gas emissions
that fall way short on a per-capita basis of emissions levels in the industrial
Nor is it reasonable to expect them on the basis of dubious projections of
economic trends and future technological developments to commit to energy
use goals that fall short of patterns observed in the rich countries.
The truth about climate change policy is that developing countries are where
most of the future action has to be. They will account for 75 per cent of
the increase in emissions over the next quarter century and are now making
the infrastructure investments that will shape their future economies.
A carbon tax is a hard enough sell when it’s one country implementing it; an
international carbon tax would be a political non-starter. So how does Summers
reckon that a carbon tax would "generate substantial changes in developing
country policies"? I guess we’ll just have to wait and see.