Is cap and trade a crock?Maverick environmentalists Michael Shellenberger and Ted Nordhaus make that claim in a piece that appears at the invaluable NewGeography.com. They point out that CO2 emissions in the US have been in decline since 2005, and that while the recession has ‘helped’, emissions are now projected to decline through the rest of the decade.That is without a carbon tax, without a cap and trade system, and without mandatory, Kyoto style limits and a global carbon treaty. In Europe, they note, emissions are not falling — and Germany is even moving back to coal.What made the difference?The revolution in natural gas. Natural gas is a cleaner burning fuel than, for example, coal and the natural gas bonanza in the US is making cleaner energy sources cheaper than their rivals.That progress, the environmentalists remind us, came in part as the payoff for years of government supported research in oil and gas technology. They argue that the best way to move to cleaner energy is to support scientific research in promising fields. That works much better than artificially raising carbon prices or subsidizing inefficient green energy production.They conclude with an observation that I wish more greens understood:
For one thing should now be clear: The key to decarbonizing our economy will be developing cheap alternatives that can cost-effectively replace fossil fuels. There simply is no substitute for making clean energy cheap.
While the purest of libertarians disagree, it seems to me that government support for basic research is a legitimate use of public funds. True, there will be a certain amount of inefficiency and friction that flow from the nature of the political process. But it is also true that governments, with a different time horizon and a different cost-benefit calculation, can usefully supplement the research that the private sector undertakes on its own.Government funded research aiming to make energy cheap, clean and abundant is surely a better approach to our energy issues than government regulation aimed at making energy more expensive.