Best Way to Effect Change in Energy Markets: Markets or Government?

by | Feb 12, 2016

wind farmDuring last night’s Democratic presidential debate, Senator Bernie Sanders remarked that the reason climate change has not become an issue at least among many Republican candidates is that they are recipients of large fossil fuel donations. Is there a correlation? What separates the candidates’ positions?

While it has become a more partisan issue in recent years, the oil, gas and coal lobbies have given the preponderance of their political donations to Republicans and the green lobby has given much of their monies to Democrats. But there are plenty of Republicans at both the state and national levels who support renewable energy and whose local economies depend on such development. Ditto for Democrats and fossil fuels. At its most essential level, though, it is a question of whether markets or governments are best equipped to address the matter.

The issue has only become more divisive as the voices on each side of the climate change debate have become more strident: One side is saying that the planet is doomed unless there is immediate action to wean ourselves off of fossil fuels while some are denying that global warming is even a human-induced event. Others, meanwhile, are saying that the matter is not as dire as some would predict while cautioning against trillion-dollar initiatives to fix it.

Given that context, both former Secretary of State Hillary Clinton and Senator Sanders, D-Vt., have embraced the scientific findings saying that global warming is real and a threat to the globe’s well-being. But each has a different way to arrive at a solution:

Clinton would continue with the current regiment of providing tax breaks to wind and solar, which have each received an extension to 2019 and 2012, respectively, that is expected to promote their expansion. To this end, the solar industry employs nearly 174,000 in this country — people who are provided a living wage, says the The Solar Foundation. The American Wind Energy Association puts the number of wind-related jobs here at 73,000, and growing.

Sanders, on the other hand, is more in favor of a carbon tax whereby government would tax utilities according to their carbon footprints. It is something that can be easily measured and it is something that would have an immediate effect on carbon releases. Interestingly, many conservative thinkers support this methodology as well, including former Secretary of State of George Schulz during the Reagan administration.

“The producers don’t bear that cost, society does. There has to be a way to level the playing field and cause those forms of energy to bear their true costs. That means putting a price on carbon …That is, you distribute all the revenue from the carbon tax in some fashion back to taxpayers, so there is no fiscal drag on the economy,” Shultz concludes, during an earlier public forum.

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