Andrew Sullivan approvingly cites this piece from Steve Rayner, a letter to the next president about what to do on climate change. It seems Wired has made it company policy to publish only stuff that drives me up the wall.
First, it says "cap and trade won’t work" on the basis of the fact that cap-and-trade won’t work alone — that it won’t drive carbon prices high enough, fast enough, to induce the development of clean technology on the scale we need (the assumption, as always, that prices will be high because of the struggle to meet demand rather than low because so many actors rush to meet it). The alternative, he says, its to directly drive technology development via "goals for installed technology, beginning with the most energy-intensive sectors, like electricity generation, ground transportation, and cement manufacturing." That sounds like he wants governments to establish targets for installing particular technologies, but no, he says politicians must not be allowed to "pick the winners," we need "silver buckshot," and we must "ensure that money flows to a variety of options from which the market can select."
In short, this is conventional wisdom, with all its cliches and contradictions intact.
First, cap-and-trade is not an alternative to other investments or policies. It is a background condition against which they play out.
Second, mandating particular technologies or installation targets just is picking winners. It’s exactly what governments tend to do ineffectively. In energy particularly, the inclination is to mandate new forms of supply in ways that foreclose or obscure opportunities for meeting new supply via efficiency. Vastly preferable is to establish performance standards for industrial sectors, services, or products — let the market figure out how to meet them. (Properly designed, cap-and-trade is a species of performance standard, but it need not be the only one.)
Third, Rayner says "R&D funding should be directed toward technologies that otherwise might not come online for up to 20 years," but that’s a mighty peculiar way of driving technology markets. There are plenty of clean technologies that need only a boost in deployment, to scale up and drive costs down — that can be done via tax incentives, gov’t procurement policy, and (broadly defined) clean energy mandates. That’s where the big difference could be made. Long-term R&D is no substitute for that kind of investment (though of course it is also necessary).
And finally, Rayner’s brief discussion leaves out all those policies between R&D and cap-and-trade, the ones that could help ease the transition to clean energy in the short-term: RPS, tax credits, efficiency standards, new financing tools, etc. In my humble opinion, the biggest impact in the short-term will come from policies designed to ease and accelerate investments in efficiency — removing market barriers, unclogging information flow, and aligning incentives.
It’s no surprise that the conventional thinking on climate isn’t keeping up with the times, since the whole policy area is evolving at such insane speed. But I thought Wired wanted to be out on the cutting edge, not passing along counterintuitivisms that stopped being thought-provoking in Bush’s first term.
