PAUL KRUGMAN N.Y. TIMES
Republicans realize this, and they’re stamping
their feet in frustration. All they can do, it seems, is fulminate (and
perhaps scare the administration into backing down). Interestingly, however,
right now they don’t seem eager to attack climate science, maybe because that
would make them sound unreasonable (which they are). Instead, they’re going for
the economic angle, denouncing the Obama administration for waging a “war on
coal” that will destroy jobs.
And you know what? They’re half-right. The
new Obama plan is, to some extent, a war on coal — because reducing our use
of coal is, necessarily, going to be part of any serious effort to reduce
greenhouse gas emissions. But making war on coal won’t destroy jobs. In fact,
serious new regulation of greenhouse emissions could be just what our economy
needs.
So, what
is the plan? Mainly, Mr. Obama announced his intention to use the powers of
the Environmental Protection Agency to impose limits on carbon emissions from
power plants. Such plants aren’t the only source of greenhouse gases, but they
do account for about 40 percent of
emissions. Furthermore, regulating power-plant emissions is standard
practice; we already have policies limiting these plants’ emissions of
pollutants such as sulfur dioxide and mercury, so adding carbon to the list
isn’t that much of a departure, at least in principle.
But wouldn’t imposing carbon limits raise the cost of
electricity? And wouldn’t that destroy jobs? The answer is, yes and no.
Yes, new rules on carbon emissions would increase the
costs of electricity generation. Power companies would probably close some old
coal-fired plants, turning to more expensive lower-emission alternatives — to
some extent renewables like wind, but mainly natural gas. Furthermore, they
would be forced to invest in new capacity to replace the old sources.
All of this would, indeed, lead to somewhat higher
electricity bills — although not nearly as high as the usual suspects claim.
It’s kind of funny, actually: right-wingers love to praise the power of free
markets and declare that the private sector can deal with any problem, but then
turn around and insist that the private sector will just throw up its hands in
despair and collapse in the face of new environmental rules. The actual lesson
of history — for example, from efforts to protect the ozone layer and reduce
acid rain — is that business can generally reduce emissions much more cheaply
than you think, as long as regulation is flexible to allow innovative solutions.
Still, there will be some cost. Won’t this destroy
jobs? Actually, no.
It’s always important to remember that what ails the
U.S. economy right now isn’t lack of productive capacity, but lack of demand.
The housing bust, the overhang of household debt and ill-timed cuts in public
spending have created a situation in which nobody wants to spend; and because
your spending is my income and my spending is your income, this leads to a
depressed economy over all.
How would forcing the power industry to clean up its
act worsen this situation? It wouldn’t, because neither costs nor lack of
capacity are constraining the economy right now.
And, as I’ve already suggested, environmental action
could actually have a positive effect. Suppose that electric utilities, in order
to meet the new rules, decide to close some existing power plants and invest in
new, lower-emission capacity. Well, that’s an increase in spending, and more
spending is exactly what our economy needs.
O.K., it’s still not clear whether any of this will
happen. Some of the people I talk to are cynical about the new climate
initiative, believing that the president won’t actually follow through. All I
can say is, I hope they’re wrong.
Near the end of his speech, the president urged his
audience to: “Invest. Divest. Remind folks there’s no contradiction between a
sound environment and strong economic growth.” Normally, one would be tempted to
dismiss this as the sound of someone waving away the need for hard choices. But,
in this case, it was simple good sense: We really can invest in new energy
sources, divest from old sources, and actually make the economy stronger. So
let’s do it.