David Roberts, the likable-if-somewhat-excessively-envirothusiastic staff writer for Grist, has written a post on achieving a consensus between greens and libertarians.
If nothing else, greens and conservatives ought to be able to agree on rationalizing existing regulations. Some regulatory incentives degrade environmental and economic performance. You could point to fossil-fuel subsidies, antediluvian utility regulations, unpriced carbon emissions, any number of tax breaks and incentives that favor industry incumbents, even parts of the Clean Air Act. These are market distortions that incentivize inefficiency (i.e., stupidity) and therefore waste (i.e., pollution). Removing or rationalizing them — making a more perfect market, with more competition, better information, and lower barriers to entry — would improve environmental performance.
There is, or ought to be, a win-win space in climate politics: reforming or removing government policies that do violence to both market and ecological principles. Libertarians and greens could go a decent distance together just on that basis, maybe building a little trust along the way.
This flows from an essentially semantic disagreement that Ryan Avent had with Jim Manzi over what constitutes incremental innovation. I wrote a post — eaten by Internet goblins and my own incompetence — on the subject yesterday. Basically, Avent believes that high gasoline prices in Europe have led to innovative policy responses in domains ranging from mass transit to land-use regulations that have managed to improve the quality of life while reducing gasoline consumption. My sense is that this was not quite germane to Jim’s original observation, but we’ll leave that to the side.
I will say, however, that Roberts makes a valuable point, and Brad Plumer wrote a brilliant article on a related theme last fall.
Right now, Congress is crafting legislation to curb U.S. greenhouse gases in order to avert a climate catastrophe. The centerpiece of that bill is a cap-and-trade system that would place an economy-wide limit on carbon-dioxide emissions and let companies trade permits among themselves–in essence, letting the free market decide how best to make cuts. But the electricity sector, which is responsible for roughly 40 percent of the country’s emissions, is anything but free or flexible. Instead, it’s governed by a bewildering patchwork of regulations that depress innovation, thwart efficiency improvements, and hinder the adoption of cleaner forms of energy. That means our best efforts to solve the climate crisis could fall short, unless we revamp the rules that shape the way we get electricity. If health care reform seems nightmarish, just wait for the fight over the grid.
Cap-and-trade is dead, at least for now. But one wonders if there is room to streamline the bewildering patchwork of regulations Plumer describes. In the article, Plumer offered a number of ideas, ranging from “decoupling” — guaranteeing fixed revenues to utilities for a year, so that firms can increase profits by creating efficiencies rather than by simply selling more power — and facilitating local generation, i.e., the construction of smaller power plants located closer to consumers.
Plumer saw a carbon cap as a “necessary start” to a broader program reform, but I’m not sure he’s right about that. As Roberts and Plumer have observed, cap-and-trade legislation was arguably a lifeline for the coal industry.
For a long time, coal was the cheapest energy source because the industry was allowed to offload so many of its hidden costs onto the public—asthma-causing air pollution, shoddy safety regulations, coal debris dumped in Appalachian streams… But as the government starts regulating these side effects more closely, it will become clear that coal isn’t actually all that cheap. Meanwhile, natural gas prices are falling and prices for renewables are tumbling. Fewer and fewer utilities want to keep plunking money down on coal.
Then there’s global warming. Again, the industry is clinging to the hope that carbon capture and sequestration (CCS) will become viable someday, and low-carbon coal can become America’s energy source of choice. Right now, though, CCS is very much unproven, and it’s hugely expensive. A recent GAO report found that CCS simply won’t take off unless there’s a price on carbon or some sort of restriction on greenhouse gases. The coal industry could fight for a cap-and-trade system that a) allowed utilities to continue operating (some) coal-fired plants, and b) provided financial incentives for carbon capture. But, instead, the industry is just digging in its heels—and, in the end, that may prove to be a huge blunder.
Given that I have no desire to fund CCS, which seems, from my cursory reading, to be a dead-end technology, I tend to think the death of coal is not a bad thing.
Tim Carney offers more thoughts on Roberts’s call for consensus:
However creative our policymakers and think-tankers are, they’ll never be able to conceive of as many ways to enhance efficiency as can millions of people acting independently. So, the best way to address the overconsumption of fuel is to make sure government isn’t obscuring prices in this area: stop subsidizing roads, stop subsidizing drilling, stop subsidizing sprawl, stop bailing out automakers and thus subsidizing them. At the same time, let’s liberalize zoning laws and repeal some policies that prevent people from operating their own businesses.
Not surprisingly, I’m very sympathetic to Tim’s take.