Not seeing the forest for the greens

Not seeing the forest for the greens

Here we go again – another politician again touting a government-created “free market” (don’t let the oxymoron escape you) in the name of combating “climate change.”

For what kind of rubes does Gov. Tom Wolf take Pennsylvanians? Very large ones, it appears, and having just fallen off the turnip truck, to boot.

As The Associated Press reports it:

Wolf “is asking Pennsylvania’s Republican-controlled Legislature to take the first steps to authorize the state to join a regional consortium of states that sets a price and caps on greenhouse gas emissions from fossil fuel-fired power plants.”

“The Democratic governor’s move is part of his effort to fight climate change in the nation’s No. 3 electric power state, while the price paid by power plant owners to emit carbon dioxide would net hundreds of millions of dollars each year for state government,” the AP reports.

The consortium, formally called the Regional Greenhouse Gas Initiative, is a cap-and-trade program among Northeastern and mid-Atlantic states.

Simply put, Wolf is looking for legislative cover to blunt any legal challenges claiming his administration lacks sole authority to enact an emissions cap.

“Winning legislative backing could give the Wolf administration additional legal protection to write regulations under its existing air pollution control authority to require power plants to buy credits for carbon dioxide emissions and to allow the credits to be traded in the consortium’s market,” the wire service reports.

But the base premise of cap and trade is, in a word, fallacious.

As noted economist Wayne Winegarden reminded a decade ago in succinct Townhall.com post, there are four primary fallacies with one of the ecocratic establishment’s favorite social re-engineering schemes.

The first is that cap and trade regulations are not a free market solution but just the opposite. Cap and trade gives government the right to determine the total amount of greenhouse gasses (GHGs) emitted by the economy.

“Giving the government the power to set total GHG emissions is giving the government the power to determine the economy’s use of energy,” Winegarden warns. “Since energy use is central to our entire free market economy, cap and trade takes a central aspect of our free market economy and brings it under direct control of the government.”

Then there’s the fallacy that cap and trade produces “incentives” to develop alternative energy technologies. Winegarden reminds that such incentives exist with or without cap and trade regulation.

“These incentives vary from the economic (profit) to the non-economic (values).  Cap and trade does not change the incentives.  But, it can distort the process, and due to the law of unintended consequences, may even make the situation worse.”

The economist cites ethanol as one example. Not only are ethanol’s supposed environmental benefits now seriously questioned, it has exacerbated an international food crisis.

A third fallacy of cap and trade is the very act of government intervention.

“In order to implement a cap and trade regulation, the rights to emit GHGs must be distributed,” Winegarden reminds. “These rights can be given away for free by the government, in which the beneficiaries receive a very valuable gift from the government.  Or, the rights can be sold to the GHG emitters, typically through auction.”

Never mind that, as the professor stressed, “Hobbling the private sector by transferring a substantial amount of resources to the public sector will not foster technological innovation.  Instead, it empowers the government to choose which prospective alternative energy technologies should be supported.”

Thus, our energy future is bet on the wisdom and knowledge of the “energy scientists” in government.

“The most assured means to obtain effective alternative energy technologies is to allow the private sector to continually experiment (and often fail) with different ideas,” Winegarden says.

Then there’s perhaps the worst fallacy of cap and trade – that it will generate economic growth.

Again, from Winegarden’s decade-ago post:

“Proponents claim, due to fallacies 1 through 3, that cap and trade will instantaneously create thousands of new green jobs.  Our economy will flourish as we invent ourselves out of the current energy dilemma.

“The belief that we can impose a mandate on our economy to use less energy and, somehow, that economic growth will accelerate as a result is a fantasy, pure and simple.”

Adds Winegarden:

“Capitalism is a process of creative destruction – Henry Ford put some small automobile manufacturers out of business while he was revolutionizing the automobile industry and creating millions of new jobs on net.  Unlike Henry Ford, cap and trade does not create anything.  The incentives to create the alternative technologies already exist – as do investors who will willingly risk their money if they believe the project is viable.

“What cap and trade adds is a prohibition to use our current energy resources while these new technologies are being tested.  Such a restriction is not growth enhancing.”

The bottom line is that cap and trade is bad public policy.

More’s certainly the pity that Gov. Wolf and his acolytes can’t see the forest for the greens.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).