Conservatives should trust market incentives

Mark Perry of the American Enterprise Institute (Dec. 26 column) correctly identifies costly inefficiencies in the pending regulation of carbon emissions by the Environmental Protection Agency and the politically skewed subsidies as Congress picks favored industries. Perry is right that in the control of any pollutant “private industry needs the freedom to innovate and discover new technologies.”

But he fails to mention that avoiding such regulations and subsidies is precisely the case environmental economists make for cap-and-trade. The “cap” would motivate a price on carbon emissions to then leave marketplace incentives free to perform their innovative efficiency. This policy would raise the cost primarily of our most carbon-laden polluting fuel: coal. The change in relative prices would boost not only renewable sources of energy but also natural gas, which is much cleaner than coal, and not least nuclear power. Coal would have to get cleaner to compete.

Does anyone remember that it was conservative market-oriented Republicans who launched the successful 1990 sulfur dioxide cap-and-trade program that achieved its objective at far less cost than most had expected? Conservatives were then praising cap and trade as the best way to stifle old-line “command-and-control” regulations. They sometimes seem to forget that conservatives are supposed to trust market incentives.

How ironic it is for a new generation of conservatives to be promoting, if unintentionally, costly intrusive regulations by turning against price incentives in environmental protection. Now that Democrats have finally swung over to cap-and-trade, where is the bipartisanship when we most need it?

Don Cell

Mount Vernon