Innovation Power: How Technology Will Reshape Geopolitics by Eric Schmidt & Lant Pritchett & Dan Wang

Author:Eric Schmidt & Lant Pritchett & Dan Wang [Eric Schmidt & Lant Pritchett & Dan Wang]
Language: eng
Format: epub, mobi
Publisher: Council on Foreign Relations
Published: 2023-02-09T00:00:00+00:00

GORDON H. HANSON is Peter Wertheim Professor in Urban Policy at the Harvard Kennedy School.

MATTHEW J. SLAUGHTER is Paul Danos Dean and Earl C. Daum 1924 Professor of International Business at the Tuck School of Business at Dartmouth College. He served as a member of the White House Council of Economic Advisers from 2005 to 2007.

Humanity must change its habits of consumption to limit greenhouse gas emissions. Replacing carbon-intensive goods and services with green counterparts (that is, products made with dramatically reduced or no carbon emissions) will help curb overall global emissions. Indeed, some of the world’s leading climate voices are more openly acknowledging the necessity of such a transition. Last year, in an unusual move, the annual climate-assessment report of the UN’S Intergovernmental Panel on Climate Change included chapters on efforts to create new environmental goods and services. And promising discoveries have sparked hope for future progress. In December 2022, U.S. scientists announced the breakthrough, after decades of trying, of the first-ever controlled nuclear fusion reaction. Nuclear fusion technology, however, will not be commercially viable anytime soon.

The world cannot wait any longer to forestall the coming climate crisis. Countries must accelerate the invention and deployment of low-cost green products in key areas, including energy generation, distribution, and transportation. Chief among the needed policies is the implementation of a meaningful world carbon price, in the form of a charge on greenhouse gas emissions. Such a price would make new green products cheaper than existing carbon-intensive ones. Without it, the pace of any energy transition would continue to be alarmingly slow: inventors will not have sufficient financial incentive to make bold bets in their research and development, and companies will drag their feet in adopting existing green technologies.

But the prospect of a high and harmonized world price on carbon is not on the horizon. In the United States, for instance, imposing an economically meaningful carbon price is unfeasible, at least in the medium term. The political right derides carbon prices as an intrusive new form of taxation, whereas the political left sees them as tacitly condoning the continued use of fossil fuels.

A more immediate and practical solution would be a free trade agreement for green technology. Under the auspices of the World Trade Organization, countries should expedite necessary inventions and lower the cost of green products by establishing an accord that liberalizes trade in green-tech products, investment in environmental industries, and the immigration necessary to foster entrepreneurship and build skilled workforces. Think of this as a green technology version of the Information Technology Agreement (ITA), a WTO deal initially signed by 29 countries in 1996 that eliminated tariffs on hundreds of information technology (IT) goods. Governments have struggled to muster the necessary political will and capacity to address the climate crisis. It is time to allow the global market to speed the transition to a green economy.

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