While my environmental economist friends have spent years trying to convince me of the importance of a carbon tax and the absolute necessity of pricing externalities, I have long resisted taxing fossil fuels. Since my degree is in political science, I tend to pay a great deal of attention to political feasibility. The politics of energy tells me that a strategy that raises the price of energy is a loser. Energy is too important to the economy and our daily lives to do anything that raises its price for anyone.
Instead of taxing fossil fuels we should subsidize and invest in renewable energy. Our goal is to lower the price of energy and make our energy system more efficient, equitable and less damaging to the environment. Let technology and the market get rid of fossil fuels. Use politics and public policy to accelerate the development and adoption of renewable energy technology and to modernize our decaying electrical grid.
Last week was a very good week for America’s effort to decarbonize its economy. General Motors announced that over the next decade and a half they would phase out the internal combustion engine and go all-electric. President Biden issued a series of executive orders to address the climate crisis. According to the White House:
“Today’s Executive Order takes bold steps to combat the climate crisis both at home and throughout the world. In signing this Executive Order, President Biden has directed his Administration to:
- Center the Climate Crisis in U.S. Foreign Policy and National Security Considerations…
- Take a Whole-of-Government Approach to the Climate Crisis…
- Leverage the Federal Government’s Footprint and Buying Power to Lead by Example…
- Rebuild Our Infrastructure for a Sustainable Economy…
- Advance Conservation, Agriculture, and Reforestation…
- Revitalize Energy Communities [attract new jobs to communities dependent on fossil fuels]
- Secure Environmental Justice and Spur Economic Opportunity”
The Biden administration will use the federal government’s huge purchasing power to build a market for electric vehicles, energy efficiency and renewable energy. Today’s electric vehicles are more expensive than conventional vehicles, but history tells us that as the market expands, economies of scale, new technologies and a variety of other factors will drive prices down. Taxing the internal combustion engine and/or its fuel is a less effective method of displacing a technology than building a better and cheaper vehicle. At one time, the horse was at the center of urban transport. Even though the horse produced tons of polluting manure, we didn’t tax the horse — consumers decided that newly invented motor vehicles were a better form of transportation.
As Veronica Penney recently reported in the New York Times, even at today’s prices, electric vehicles are cost-effective:
“For electric cars, lower maintenance costs and the lower costs of charging compared with gasoline prices tend to offset the higher upfront price over time. (Battery-electric engines have fewer moving parts that can break compared with gas-powered engines and they don’t require oil changes. Electric vehicles also use regenerative braking, which reduces wear and tear.) The cars are greener over time, too, despite the more emissions-intensive battery manufacturing process. Dr. Trancik [of MIT] estimates that an electric vehicle’s production emissions would be offset in anywhere from six to 18 months, depending on how clean the energy grid is where the car is charging.”
Of course, for the electric vehicle to contribute to decarbonization, the energy used to charge it must be renewable. That is a profound infrastructure challenge that will require federal policy and massive infusions of national capital. The electric grid must be modernized. Microgrids powered by windfarms and widely distributed sources of solar energy must be knitted together in a resilient, computer-controlled, decentralized system of energy generation and distribution. Research and development of household solar energy and battery storage technology must become a national priority. The goal should be to modernize the grid and develop renewable energy technology that effectively drives fossil fuels from the marketplace. At the same time, we should work to make energy less expensive and more reliable.
The “energy community” element of the Biden plan is particularly critical and needs to be emphasized. The history of economic development based on extractive industries is littered with abandoned towns and bitter workers. At some point, the well runs dry and the mine is not productive enough to maintain. If the community hasn’t used the wealth generated by the mine to invest in a more diverse economy, then at some point the town goes into decline. Since most of the owners of extractive industries do not live in the communities they have invested in, they tend to take their profits and invest them somewhere else. We have also seen this phenomenon in towns dependent on a single manufacturer. It is critical that investment in the businesses needed to decarbonize the economy be encouraged to locate in these places. Funding to cap methane leaks from abandoned fracking wells should require that local workers be hired to do this work. Both tax incentives and federal grants should be used to mitigate the human impact of decarbonizing our economy. The failure to succeed in the jobs part of Biden’s effort would doom American climate policy.
Given their slim majority in the Senate, states with large fossil fuel business interests must benefit directly from efforts to build the renewable energy industry. A direct attack on fossil fuels should be replaced by a policy promoting renewable energy. West Virginia is of particular importance here. As Coral Davenport and Lisa Friedman recently observed about Biden’s climate plans in the New York Times:
“…what may well stand in the president’s way is political intransigence from senators from fossil-fuel states in both parties. An evenly divided Senate has given enormous power to any single senator, and one in particular, Joe Manchin III of West Virginia, who will lead the Senate Energy Committee and who came to the Senate as a defender of his state’s coal industry.”
The battle against global warming should not be a battle against the people who work in the fossil fuel industry. The efforts at divestment have some symbolic value, but the fact is we need current fossil fuel companies to redefine themselves as energy companies and devote their financial, organizational and technological expertise to advancing renewable sources of energy. Just as GM and most auto companies are pivoting on the technological base of their vehicles, these companies need to read the handwriting on the wall and recognize that the fossil fuel era is coming to an end. Like the tobacco companies, they have spent decades using their economic power to tilt the regulatory environment in their direction. There will continue to be short-term gains that might be realized by that strategy, but the limits to denying the reality of climate change are becoming obvious. The fossil fuel companies that fail to change will decline and be replaced by 21st-century renewable energy companies.
Advocates of climate policy also need to pivot away from their fixation on fossil fuels and toward efforts to promote renewable energy along with energy efficiency, reliability and modernization. I know that for organizing purposes it’s often helpful to have an enemy, but it’s a self-defeating political strategy. We all need and depend on energy. I’ve always found it a little strange when people fill up their cars with gasoline in order to drive to a demonstration protesting an institution’s investments in fossil fuel companies. When I recharge the computer I am writing this on, I understand that it’s Con-Edison and its fossil fuel electric generators that bring electricity into my home. I have no plans to stop using that energy, but I want New York State’s Public Service Commission and the Biden administration to do everything they can to power Con-Ed’s generators with renewable energy.
It is thrilling to see an American president prioritizing a critical issue of environmental policy and building a world-class team to act on that priority. COVID-19 and climate change are both problems created by the technology of our global economy. To address these crises, decision-makers must understand the science of the problem and both rely on and understand the science of proposed solutions. It is clear to me that our new president understands this and the contrast to his predecessor couldn’t be starker.
This article was originally published in State of the Planet.
The views expressed are those of the author and do not necessarily represent the views of any other person or entity.
