The Senate is currently debating the Lieberman-Warner Act, which puts a cap-and-trade system on carbon emissions. I know this goes against the grain, but with certain conditions I think Republicans should vote for it.
First of all, if done right, cap-and-trade or a carbon tax (which a lot of economists prefer) should not be a burden on the economy. After all, this is the way Milton Friedman said we should deal with pollution -- by putting a price on it. People don't seem to remember but we imposed cap-and-trade on sulfur dioxide during the 1990s and the results were spectacular. "Acid rain" emissions were reduced 50 percent at only one-tenth the cost the EPA originally estimated. Cap-and-trade is a market mechanism. It allows the players to discover the best solutions at the lowest possible price.
That being said, let us admit that global warming is obviously not the world crisis that Al Gore thinks it is. We're not all going to die of heat prostration. Florida isn't going underwater. The polar ice caps aren't melting. The warming trend actually stopped in 1998 and last winter was one of the coldest in decades in North America.
But there is a rationale for being concerned about long-range carbon emissions. You can't go on dumping exhausts in the atmosphere forever. The EPA already estimates that 30,000 people a year die from coal pollution. Look at how bad things have gotten in China. There are good reasons for limiting coal emissions that have nothing to do with global warming.
Then there's the matter of oil supplies. Optimists are dismissing the current price run-up as a bubble -- as if the "magic of the market" can produce cheap oil whenever it wants. Economic theory only says that high prices may encourage substitution. That's why we import 60 percent of our oil. American production peaked in 1970 and now only provides 40 percent of our needs. But what happens when world oil peaks -- which could be happening right now. At some point we're going to have to start making the transition to other modes of transportation. Putting a price on carbon emissions is a good way to start the process. Meanwhile, we're spending $1 billion a day on foreign oil and ruining the dollar as a result. We're going to have to start a transition to other modes of transportation. Putting a price on carbon emissions is a good way to kick off the process.
THE REASON WE CAN feel confident that pricing carbon emissions will lead us in the right direction is that the alternative -- nuclear power -- is waiting in the wings. There are a dozen proposals for new reactors before the Nuclear Regulatory Commission and two-dozen more ready to file. In two decades we could be where France is now, with more than 50 percent of our electricity coming from nuclear. Electric cars would mesh perfectly with reinforced electrical grid, since hybrids will recharge overnight, when the nuclear base load generates lots of spare capacity. An expanded nuclear fleet will be the first step in solving our transportation problems as well.
So what's holding this back? Two things: 1) the uncertainties as to whether nuclear can compete against cheap coal; and 2) the uncertainties as to whether environmental groups will rev up the fright machine and put nuclear back in storage for another thirty years. Both of these problems can be solved right now by crafting a compromise on an emissions tax.
First, a carbon tax brings out nuclear's strength -- no carbon content. Coal enthusiasts talk confidently about stuffing huge quantities of carbon dioxide into the earth, but this is never going to happen. Projects in Illinois, Florida, Ohio, West Virginia, Minnesota and Washington have been canceled just within the past few months because of technical and cost problems. Dealing with coal waste will make the problem of so-called "nuclear waste" look like child's play. As long as coal plants can use the atmosphere as an open sewer, however, nuclear power will appear too expensive.
Second, putting a cost on emissions offers the opportunity to call environmentalists' bluff on nuclear. Anti-nuclear groups are confident that wind, solar, geothermal and other "alternate" energies will replace coal, making nuclear superfluous. That's never going to happen either. All these technologies are severely restricted by the enormous -- almost unthinkable -- amounts of land they will require. It will take 125 square miles of windmills to replace one nuclear reactor (which occupies one square mile). Solar collectors will demand even greater amounts of land. The recent biofuels meltdown -- where it emerged that burning 25 percent of our corn crop is replacing only 3 percent of our oil consumption -- was only the first of many. Geothermal energy, on the other hand, means boring down five miles into the earth's core to access the heat that natural uranium generates in the earth. Why not just bring small quantities of uranium to the surface and put them in something called a "nuclear reactor"?
OF COURSE SOME anti-nuclear groups will lie down in front of the bulldozers before this happens. (When Italy announced last week it will build new reactors to deal with its chronic electricity shortage, Greenpeace International called it a "declaration of war.") But others can be called on right now to moderate their views.
The United States Climate Action Partnership, formed 18 months ago, unites two dozen major corporations -- Ford, GM, DuPont, Dow, Shell Oil -- with the Nature Conservancy, the National Wildlife Federation, Natural Resources Defense Council and Environmental Defense. The partnership endorsed carbon caps but has not taken a stand on Lieberman-Warner because its corporate members are worried a carbon tax will wreck the economy.
Instead of standing on the sidelines, why not use the opportunity right now to extract a promise from major environmental groups that they will not oppose new reactor construction. This is no small matter. Natural Resources Defense Council and Environmental Defense have never openly endorsed nuclear (they will only call it "one option") and are armed to the teeth with lawyers. The Nader groups and Greenpeace (or is it "Greenwar"?) will oppose nuclear whatever happens, but a declaration of support from mainstream environmental groups would isolate them on the fringe.
So will cap-and-trade be a dead weight on the economy in the meantime? Not if the money is returned to consumers. Republicans should insist that no more than 10 percent of the tax or permit revenues go for hare-brained schemes for "alternate energy" (nuclear doesn't need any more help). The other 90 percent should go to reducing other taxes -- the business or capital gains tax, for example.
Such a messy piece of sausage may not be in the cards this year but definitely next, when either Barack Obama or John McCain -- both of whom have supported carbon caps -- will be President. More than putting the whole global warming debate behind us, it would at last put us on the right track to solving our energy problems.
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