You don’t need a weatherman to know which way the wind blows, and the wind is blowing hard in favor of action on climate change. The Bush administration now agrees that human activities are warming the planet, the Supreme Court says the Environmental Protection Agency has violated the law by not regulating auto emissions, and Democrats in Congress are demanding new measures to cut greenhouse gases.
How will we address this new challenge? The most plausible answer is: with a lot of command-and-control programs that micromanage various industries on the assumption that the government knows best. In a word, badly.
Reducing the output of carbon dioxide and other substances that trap the Earth’s heat is not cheap. But there are expensive solutions, and there are astronomical ones. Any new policy should aim at getting the greatest reductions for the least money.
That may sound like a hugely complex task for the government, but it’s not. The free market is the best system ever created for providing what we want at the lowest possible cost. The way to get affordable amelioration of climate change is to put the market to work finding solutions. To achieve that, we merely need to make energy prices reflect the potential harm done by greenhouse gases.
How? With a carbon tax that assesses fuels according to how much they pollute. Coal, having the highest carbon content, would be taxed the most, followed by oil and natural gas. The higher prices for the most damaging fuels would encourage people and companies to use less of them and more of other types of energy, including nuclear, solar, wind and biofuels. This approach would also affect all sources — not just cars, which account for only one-fifth of all U.S. carbon dioxide emissions.
A carbon tax, however, has one huge drawback: It’s a tax, and neither Republicans nor Democrats want to impose a new tax. They would rather address fossil fuel consumption by boosting auto fuel economy standards, pouring money into alternative fuel research and requiring greater use of ethanol.
Did I say Republicans and Democrats don’t want to impose a tax? I lied. The truth is they don’t want to impose a visible tax. All the subsidies, rules and mandates you hear about don’t come free, but you pay for them without realizing it — and without realizing whom to blame.
Government programs to reduce greenhouse gases are a recipe for waste and abuse. Federal "investment" in alternative fuels? That idea got a full tryout during the energy crisis of the 1970s, with meager results. Tax breaks for ethanol? Largely self-defeating, since they encourage farmers to burn fossil fuels to expand production of corn.
The government’s fuel economy standards also haven’t done much to promote conservation. On average, new vehicles get lower mileage today than they did 20 years ago, thanks to the proliferation of large trucks and SUVs.
The Supreme Court decision precipitated a clamor for stricter mileage rules, which happen to a supremely clumsy answer. The only people immediately affected by higher fuel economy standards are those who buy new vehicles. Other motorists will keep driving their gas-guzzling cars and trucks for years to come, blissfully spared any incentive to conserve. A carbon tax, by contrast, would spur faster progress by raising the cost of driving to everyone.
It also has the advantage of keeping the government role as small as possible. When the government gets directly involved in controlling energy use — by fiddling with mileage rules, handing out grants and tax incentives, and underwriting particular energy sources — it invites boondoggles and special-interest gimmicks that benefit politicians without doing much to temper climate change. We’ll all be better off if Washington merely levies a tax and gets out of the way, leaving producers and consumers to search out the cheapest means of minimizing emissions.
Of course, no one wants to pay more in taxes. Here’s the good news: We don’t have to. Some economists propose that carbon tax revenues be used to finance equal cuts in income and payroll taxes. That way, we’d get environmental improvements and a lighter load on companies and workers. Meanwhile, the total tax burden on the economy would be unchanged.
The campaign against global warming promises to be costly and uncomfortable under the best of policies. But if we let it become an excuse for bureaucrats and busybodies to meddle needlessly in our lives, it promises to be even worse, for us and the planet.