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Unmasking the Latest Bipartisan (and Dangerous) Climate Bill

  • CO2

Tags World History

It is summer in the United States, which means temperatures are hot and western forests and grasslands are burning—as has been the case as long as people have lived here. In our current age, however, in which there is alleged to be a political “solution” to nearly every problem, politicians believe they can use governmental policies to give us better weather and change the nature of wildfires.

So far, Congress, state legislators, and the Biden administration have launched a blizzard of new programs and initiatives that sponsors claim will reverse what they call the “climate crisis” and return our country, and even the whole world, to “normal” weather patterns. There are the Green New Deal, state mandates for utilities to purchase electricity from “renewable” sources such as solar panels and wind power, and the Biden “Build Back Better” campaign, in which the president has promised “millions of new jobs that help us recover from the pandemic and tackle climate change.”

Advocates of these initiatives claim that because current methods of producing energy ostensibly release gases that change the earth’s climate for the worse, governmental authorities should be redirecting resources to ensure results that will guide worldwide temperatures downward. Elites in government, the media, and academe have accepted these utopian notions as being self-explanatory and believe that once a progressive politician has announced certain “goals” commensurate with progressive thinking, the goals always are worthy and within reach—if governments allocate and spend enough money.

One of the conservative criticisms of climate change policies is that they follow the historically failed patterns of central economic planning, with resources directed politically without regard to their relative scarcity and paying no attention to the negative secondary effects that always follow. To counter the command-and-control measures environmentalists and their political allies impose, many conservatives have urged that the government, instead, pursue “market-based” solutions.

For example, to reduce automobile air pollution, the US government in 1975 required automakers to install catalytic converters on cars made in the USA, as well as on imported vehicles. While these devices are effective, a market-based mechanism would permit automakers to find their own solutions and likely would result in lower emissions (and lower pollution abatement costs) than what we see.

The idea behind market-based pollution abatement programs is that regulated parties use market mechanisms like prices and property rights to reduce toxic emissions or some other form of environmental harm. Such initiatives set pollution reduction goals and then provide incentives for regulated entities to best determine the overall strategies of abatement. The Clean Air Act Amendments of 1990 permitted and organized market-based policies that were relatively successful.

Now four US senators, Mike Braun (R-IN), Debbie Stabenow (D-MI), Lindsey Graham (R-SC), and Sheldon Whitehouse (D-RI) have reintroduced the bipartisan Growing Climate Solutions Act, which has won praise from conservative groups, because it allows for some market-based activity in reducing “greenhouse” gases blamed for climate change. The conservative-leaning advocacy group Citizens for Responsible Energy Solutions has praised the proposed law, declaring:

When our farmers, ranchers, and foresters go the extra mile to help reduce America’s carbon footprint, they should be rewarded, not penalized. The Growing Climate Solutions Act is exciting because it would allow valuable carbon credits to be harvested along with any crops farmed using climate-friendly practices. By normalizing how those credits can be sold on voluntary carbon credit markets, the GCSA also makes it easy for farms of all shapes and sizes to connect with and sell these credits to the scores of American companies and utilities that have committed to going carbon neutral but can’t do it alone.

The GCSA is a free-market win for agriculture producers, businesses, and the climate; it is a solution that helps restore the environment without heavy-handed government mandates or driving up the cost of food and energy production.

But intentions are one thing. Reality is quite another.

First, while there is no doubt that using a market price system to move resources will be more economically efficient than a command-and-control system, nonetheless government still is determining the direction resources move. There is little doubt that a carbon-credit trading system will result in less release of carbon dioxide and methane gases than would be the case with a typical government regulatory regime.

But that farmers will be using some free market devices does not mean that the entire system suddenly has turned into free enterprise. While farmers may be able to be more cost efficient in carrying out government emissions mandates, nonetheless their actions will still be mandated and there is no reason to believe government regulators and their green allies who are imposing the mandates know what the optimum levels of emissions should be. For all of the talk about science, the only thing we truly know is that whatever the emissions reductions might be from the farm belt, they will have zero effect on the world’s climate.

The second problem is that while the Growing Climate Solutions Act of 2021 might try to arrange market-based abatement systems, what actually happens ultimately is up to the regulators, who always are given wide berths to set policy. No matter what the original legislation might declare, regulators are going to govern in a way that reduces their own costs while enhancing their own authority. Perhaps the best analogy is that of Lucy, the character from the cartoon strip Peanuts, who is famous for pulling up the football after inviting Charlie Brown to kick it.

One more point to remember is that while market-based emissions reduction programs will be more effective than traditional bureaucratic command and control, these still are contrived markets in which the value of tradable permits and other mechanisms is set by government agents. Thus, that value in trade will always be arbitrary, as opposed to the value being set by the interaction of real consumers and producers.

There is a larger issue at work that we should not forget. The notion that government programs somehow are going to result in better weather should give anyone pause. As H. Sterling Burnett recently wrote, government regulators in pursuit of abating climate change are slowly destroying the capacity of US electric power production by requiring so-called renewable production such as wind power and solar panels while forcibly phasing out production using coal, oil, natural gas, and zero-emissions nuclear power.

No doubt, environmental advocates will claim that the deterioration of the American electric grid is temporary and that whatever up-front costs electricity users incur using “renewables” are still less than the “real” costs that accompany conventional fuels. Don’t count on it. If we know anything about economic central planning from American political authorities, it is that there always are huge hidden costs that come with policy initiatives. That they put a free market happy face on the latest policy prescription does not change the fact that the original policies regarding climate change are terribly flawed.

Author:

Contact William L. Anderson

William L. Anderson is a professor of economics at Frostburg State University in Frostburg, Maryland.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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