Regulatory Carrots and Sticks in Climate Policy

Abstract

This Article sets out an informal political economic theory which explains the relative permanence of regulatory carrots—legislative subsidies and mandates for product use—versus the transience of regulatory sticks—traditional costly regulatory requirements. After setting out the elements of this theory, I illustrate it with the dramatic rise in the Obama Administration and abrupt cessation in the Trump Administration of attempts to use conventional U.S. environmental regulatory sticks to end the U.S. coal industry. The Article turns then to describe a concrete example of a regulatory carrot—the U.S. corn ethanol mandate—that has survived despite overwhelming evidence that its environmental benefits, if any, are far outweighed by its environmental and economic costs. This Article concludes by discussing subsidies for solar energy.