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Universities Can Do Better Than Symbolism: A Revenue-Neutral Carbon Tax

Oct 2014
Policy Brief
By  Frank Wolak
The Stanford Board of Trustees recently announced that the university will not make direct investments in coal-mining companies. This action was taken in response to broader efforts at Stanford and other universities to rid their endowments of investments in fossil fuels. Such efforts have not been confined to universities. In fact, a number of non-profit foundations have made similar announcements. Because other universities and non-profits are likely to follow Stanford’s lead, it is important to evaluate the consequences of this action and consider whether a more productive approach is available to address the climate challenge. Here’s part of the problem: even the most avid proponents of divestiture acknowledge that it constitutes a symbolic gesture, a gesture that will not in and of itself reduce global greenhouse (GHG) emissions. Presumably, these same advocates believe it might, however, lead to substantial change in United States (US) climate policy through a kind of chain reaction. Will it? I have serious doubts for the reasons discussed below. Moreover, I believe there is a far more productive way for Stanford and other universities to address the climate challenge that is completely consistent with their teaching and research missions that will positively contribute to the US and other countries taking meaningful action to address the global climate challenge.