First, the good news. President Barack Obama’s proposed rules on coal-fired power plants aren’t a last-ditch, desperate measure. They’re designed to keep a good trend going ― the U.S. is already decreasing its carbon emissions, thanks to cheap natural gas and to the fact that Americans are driving less.

The drop in emissions has stalled in the last couple of years, due to the economic recovery and a recent spike in the price of natural gas. So the idea of Obama’s new rules is to resume the shift toward gas, and also to force the dirtiest coal plants to clean up. Fortunately, cutting emissions at dirty old coal plants is proving to be a lot cheaper than the industry’s defenders told us. So don’t worry ― Obama’s new rules aren’t going to crash the U.S. economy.

That’s the good news. Now here’s the much bigger bad news: No matter what the U.S. does, global emissions will keep skyrocketing in the near future. This is because most of the rise in emissions is being driven by China. Check out this chart from Vox. China’s carbon pollution has soared in the last 15 years, and is now about double the U.S. level. The rest of the increase has come from oil-producing countries and from other, more slowly developing Asian nations. But China overshadows all of the other sources.

American per capita emissions, of course, are still more than twice as large as China’s. But global warming doesn’t care about per capita emissions ― it cares about global total emissions. Tiny Qatar, whose per capita emissions are more than twice those of the U.S., has essentially zero power to affect the progress of global warming.

So if we’re going to prevent the more severe effects of climate change from occurring, we’re going to need to do something to decrease Chinese emissions. What can we do?

History suggests that simply asking China to clean up is unlikely to work. We already tried it, back in 2010, offering to make carbon cuts if China did. Sadly, they didn’t go for it. Economic growth is just a much bigger concern for China than global warming. Some people claim that if we take the lead and unilaterally cut our emissions, China will be more willing to follow. Cynics point out that our self-restraint would just push down the price of high-carbon energy sources, allowing China to burn more for less.

So what’s Plan B? Simple: We need to help China shift away from coal. Since China’s overwhelming priority is economic growth, this means we need to help it get rapid access to energy sources that A) produce less carbon than coal, and B) are cheaper than coal.

In the short term, there is only one such source: Natural gas. China has a lot of shale gas, though it’s harder to frack than the deposits in the U.S. And in a few years, solar power probably will start to be cheaper than building new coal plants.

So what we need to do in order to save the planet is to get China to adopt these technologies quickly. I suggest a mix of five policies.

Policy No.1: Transfer technology to China. Usually we think of it as a bad thing when China reaps the fruit of U.S. research on the cheap. In this case, it’s an unambiguous good thing. We should establish an office for cheaply transferring the benefits of U.S. government-funded fracking and solar research to Chinese companies and to the Chinese government.

Policy No. 2: Pay China to implement these technologies. This will help salve Chinese resentment over the historical unfairness of carbon cuts (i.e., that the West burned all the coal it felt like back when it was developing, yet now it expects China to take a different path). It might also help overcome the political power of the Chinese coal industry. The amount of the payment can be modest, but it would be an important gesture.

Policy No. 3: Tax carbon-intensive imports. This is the stick to match the carrots. The U.S. is still China’s most important export market, so a U.S. carbon-import tax will provide a huge incentive for Chinese companies to reduce emissions.

Policy No. 4: Increase research funding for solar technology in the U.S. To make solar decisively cheaper than coal, we need to make sure the trend of exponentially falling solar costs continues. That means keeping new solar technologies in the pipeline.

Policy No. 5: Implement a carbon tax or equivalent here in the U.S. No, this won’t cut worldwide emissions enough to make a dent in global warming. But what it will do is spur research and development into things like gas, solar, cleaner coal and energy efficiency. We should think of carbon taxes mainly as incentives for the private sector to discover all the carbon-cutting technologies and tricks that government research will never find.

If we do these five things, then the U.S. can still save the world from global warming, even though we’re no longer the main cause of the problem. And the short-run cost to our economy will be very moderate. Saving the world on the cheap sounds like a good idea to me.

By Noah Smith

Noah Smith is an assistant professor of finance at Stony Brook University and a freelance writer for a number of finance and business publications. ― Ed.

(Bloomberg)