Why a green-pork blowout would do more harm than good.
Can something good come from a U.S. splurge of climate pork that, in itself, would have no discernible effect on global climate or atmospheric carbon dioxide?
A probable answer is no. It would actually end up making our putative carbon challenge worse.
But Paul Krugman and others say a carbon tax is politically impossible, and that we should settle for President Obama’s “second-best” approach. The problem with subsidies and mandates is that they create vested interests in inefficient renewable energy. Warren Buffett already is collecting millions for what he admits is hopelessly cost-ineffective solar energy in California. State mandates for renewables favor in-state providers, discouraging competition that would lower costs.
Lobbies that form around such favors are quietly unfriendly to interstate power lines that would force expensive local energy to compete with cheaper renewables elsewhere. In Germany, where vast subsidies flow to wind and solar, coal has become the fuel of choice for utilities struggling to provide backup power. Result: German carbon-dioxide output is growing not shrinking.
Most glaring is the renewable lobby’s opposition to fracking—never mind that fracking, by displacing coal, has done more to reduce carbon output than renewables have. As for cap-and-trade, check out the Senate testimony two weeks ago by Joseph Mason, of LSU and the Wharton School, on how easily such schemes have succumbed to fraud and corruption.
A straight-up, revenue-neutral carbon tax clearly is our first-best policy, rewarding an infinite and unpredictable variety of innovations by which humans would satisfy their energy needs while releasing less carbon into the atmosphere.
Failing that, our second-best policy might well be to do nothing, skip the green pork bonanza, and hope that new energy technologies emerge out of the already-ample natural incentives to do so. Why? One thing that can be safely predicted is that renewable energy that becomes addicted to subsidies in order to survive will not meaningfully replace fossil energy that remains cheaper in real terms.