Wednesday, October 1, 2008

can we please have a balanced playing field?

Technology-specific subsidies (like the loan guarantees for nuke plants and wind energy tax credits) are extremely effective at preventing innovation and encouraging permanent industrial reliance on government funding.

Subsidies are necessary to bring new tech concepts to commercialization and that is where they should stop. Subsidizing mature commercial products of any variety - coal, nuke, wind, or solar - is socialist and inefficient.

CO2 is a problem, coal plants themselves are neutral. Reducing CO2 production is a good thing, wind farms themselves are neutral. The incentive process should reflect this. Instead, the current incentives encourage coal plants and encourage wind farms more.

If we want to reduce CO2 in the atmosphere, all we have to do is remove all subsidies of mature technologies and establish a carbon market that makes CO2 production expensive and CO2 removal from the atmosphere profitable. This must be done in as simple and transparent a way as possible and must be a worldwide effort.

Since a worldwide effort is obviously impossible today, a CO2 tax/subsidy could be established for any product entering or leaving the country. This tax/subsidy would tax any imported product based on the estimated CO2 emissions of production and would refund the CO2 taxes charged against any product exported. This would prevent companies from moving production overseas to avoid CO2 costs.

#1 problem with this idea: it combines the Republican love of markets with the Democratic insistence that CO2 emissions matter.

#2 problem with this idea: all mature industries that are currently subsidized for shortsighted historical reasons would oppose a balanced playing field. Unfortunately, this list includes wind energy, so neither Coal-State Republicans nor Renewable-Mandate Democrats could support it.

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