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Bipartisan economists: Legislation Beats Regulation

By Joe Romm  

"Bipartisan economists: Legislation Beats Regulation"

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The president has called for bold legislative action to create a clean energy economy. It would be a tragic mistake if this legislation did not include the broadest possible carbon pricing signal….

It would indeed be regrettable if Members of Congress, who universally prefer carbon markets over command-and-control regulation, could not enact a bill that spares us such regulation and begins to solve the climate problem.

Those are the opening and closing sentences of a Roll Call op-ed coauthored by economist Richard Schmalensee, director of MIT’s Center for Energy and Environmental Policy Research, who served on President George H.W. Bush’s Council of Economic Advisers.

The other co-author is my long time friend and colleague from the Clinton DOE,Peter Fox-Penner, author of the must-read new book on electric utilities, Smart Power: Climate Change, the Smart Grid, and the Future of Electric Utilities.”

Here’s are key excerpts that compare the Kerry-Lieberman climate bill with EPA regulations:

These two paths clearly illustrate the greenhouse gas choices before us. Under the legislative approach, we can create markets that send a carbon price signal “” ideally, throughout the economy “” which would stimulate innovations and reduce the cost of making emissions reductions. Under the EPA approach, we can try to get the job done by imposing one-size-fits-all control standards on new or expanded power plants and industrial facilities.

While EPA regulation may be better than doing nothing at all, we have experience with the disadvantages of this command and control approach. For starters, new, efficient plants are disadvantaged relative to old, inefficient plants, and the latter are thus encouraged to stay in operation as long as possible, continuing to emit greenhouse gases for free while new sources must pay to clean them up.

Once the standard for “best available control technology” is set, there will be no incentive for continued research and development or investments in technologies to beat the standard. This would only put us farther behind other countries, which are working hard to accelerate low emissions generators. Finally, the EPA rule does almost nothing to reduce emissions from existing plants, which will continue to operate for a long time, or to reward increases in energy efficiency, which also reduce carbon emissions.

To delay addressing climate change would raise the long-run costs of dealing with the climate problem. The real damage stems from the total concentration of greenhouse gasses in the atmosphere. Greenhouse gases, particularly carbon dioxide, can linger in the atmosphere for decades after they have been emitted. The higher the greenhouse gas concentration, the more climate disruption we will lock in now and for future generations.

The Earth has already warmed more than 1 degree Fahrenheit. Failing to make low-cost emissions cuts today would force us either to make more expensive cuts in the future or to see greenhouse gas concentrations rise to the point where severe damage to human and natural systems would become unavoidable. It is wiser and more economical to begin reducing emissions now.

The climate bills under development are inevitably imperfect. Conceptually, however, they represent an enormous improvement over a scenario in which the EPA regulates greenhouse gas emissions from a few plants using a few technologies, without the use of markets to seek out the cheapest solutions, stimulate innovation, and reward efficiency. These bills may be smaller steps than many people would like, but they are steps in the right direction. It would indeed be regrettable if Members of Congress, who universally prefer carbon markets over command-and-control regulation, could not enact a bill that spares us such regulation and begins to solve the climate problem.

Precisely.

Legislation Beats Regulation

‹ U.S. taxpayers paid BP to lease Deepwater Horizon rig — which was incorporated in a foreign country for the purpose of avoiding the U.S. corporate tax

Dutch assessment of IPCC: “Overall the summary conclusions are considered well founded and none were found to contain any significant errors.” ›

4 Responses to Bipartisan economists: Legislation Beats Regulation

  1. Wit's End says:

    Of course I agree with this comparison – as it stands. However, I think the use of electricity and gasoline should be rationed. Everybody, rich or poor, gets allotted the same amount, and non-essential use should be banned (driving around aimlessly to look at the trees that your emissions are killing would be high on the list of no-noes, and so would be lawn mowing, and leaving the doors of air-conditioned shops open, etc.) until there is an excess of clean energy, while the energy that pollutes has become obsolete.

    Because…this statement in the op-ed:

    “Failing to make low-cost emissions cuts today would force us either to make more expensive cuts in the future or to see greenhouse gas concentrations rise to the point where severe damage to human and natural systems would become unavoidable.”

    is pure rubbish! Concentrations have ALREADY risen to the point where severe damage to human and natural systems IS unavoidable and in fact, is already well underway. Acidifying oceans anyone?

    Who are we kidding? We need to treat this as the emergency it is and prepare people to willingly make sacrifices and adjustments in their lifestyle, because if we don’t, it’s going to happen anyway, in a significantly more unpleasant manner than voluntary.

  2. fj2 says:

    http://nyti.ms/avMEQB

    “China Fears Consumer Class Impact on Global Warming,” Keith Bradsher, NY Times July 4, 2010

    “Already, in the last three years, China has shut down more than a thousand older coal-fired power plants that used technology of the sort still common in the United States. China has also surpassed the rest of the world as the biggest investor in wind turbines and other clean energy technology. And it has dictated tough new energy standards for lighting and gas mileage for cars.”

  3. mike roddy says:

    EPA may end up filling this role because there has of yet been no Congressional legislation up to the task, and there’s no reason yet to think there will be.

    The objection that EPA doesn’t regulate old and dirty plants has nothing to do with the charge or policy of EPA per se. Old plant exemptions are a product of the coal lobby, as in the “Clear Skies” initiative, and New Source Review prior to that. Since old coal plants are the most polluting and least efficient, EPA should be allowed to address them, preferably through scheduling their retirement.

  4. Colorado Bob says:

    …WARMEST AND 2ND DRIEST JUNE ON RECORD AT RICHMOND…
    …WARMEST JUNE ON RECORD AT NORFOLK…

    http://www.erh.noaa.gov/akq/wx_events/summer/20100701/PNS1July2010.txt