From this week's The Economist magazine: Saving the world will not be cheap.
THE best way to curb global warming would be a carbon tax. The money raised could be divided up among citizens or used to repay the national debt. A tax on carbon dioxide (CO2) would give everyone an incentive to emit less of it. It would be simple, direct and transparent. For these reasons, it will never happen in America.
Frank talk about energy policy is rare. Politicians hate to admit that anything they plan to do will cause pain to any voter. During the election campaign, both Barack Obama and John McCain proposed a cap-and-trade system for curbing CO2 emissions, not because it would work better than a carbon tax but because it did not have the word “tax” in its name. Both candidates also gave the impression that their green policies would yield huge benefits while imposing no costs.
A shift to alternative energy, they agreed, would not only check global warming but also create millions of green jobs and help break America’s dependence on foreign oil.Neither dwelt on the fact that cap-and-trade will raise energy prices, that subsidies for renewable energy will have to be paid for, or that both policies will destroy jobs as well as creating them, while probably cutting growth. The Congressional Budget Office estimates that a 15% cut in CO2 emissions will cost the average American household $1,600 a year. If politicians pretend they can save the planet at no cost, they risk a backlash when people realise they were fibbing.
If a price is imposed on CO2 the next big obstacle to renewable energy will be the electricity grid, which is antiquated and sclerotic. Regulations vary from state to state, making it hard to transmit energy across state borders. There are not enough lines to send power from, for example, windy states to populous ones. New construction is stymied by an attitude among regulators and environmentalists colloquially known as BANANA (Build Absolutely Nothing Anywhere Near Anyone).
There is much more, but the magazine hit the nail on the head.
Don C. Brunell, President (DonB@awb.org)
