Our View: U.S. energy, environment needs are intertwined

The decision by the U.S. Environmental Protection Agency to classify greenhouse gases as “pollutants” subject to the Clean Air Act effectively ends the government’s resistance to putting a price on heat-trapping emissions that exacerbate global warming. This time, the nation must take this seriously, because the EPA now has the authority to act if Congress does not. This means the nation needs a comprehensive strategy that melds energy and environmental concerns.

Previous efforts have suffered from quick power outages. Propelled by the OPEC-led oil shocks of the 1970s, President Jimmy Carter took to the airwaves and implored the nation to conserve energy and explore alternative fuel sources. But the cardigan sweater and dour message were extinguished by ridicule. Then oil prices dropped, and the nation shifted back into no-problem mode. In 1993, President Bill Clinton introduced the idea of a BTU tax on energy sources based on the amount of heat they generated (as measured by British thermal units). This was the first instance of acknowledging the environmental price of our traditional energy sources. But the idea couldn’t generate enough backing.

Now, the nation has no choice, but it does have better options than turning this over to EPA regulators. The Clean Air Act was not written with greenhouse gases in mind. The nation needs a regulatory regime that takes the best ideas from wide-ranging interests based on today’s realities. The EPA is not known for its cost-benefit analyses, but that’s exactly what we need. Killing emissions is easy. Killing them while maintaining a healthy economy is not.

The most popular bill in Congress proposes a complicated “cap-and-trade” system, which would set a limit on emissions for smokestack industries and then allocate permits to pollute that would be bought and sold. Another bill, by U.S. Rep. John Larson, a moderate Democrat from Connecticut, would impose a carbon tax. It states up front what the cost will be. This definitive price signal would be the basis of subsequent business decisions and consumer choices. This bill is the underdog, because of truth in labeling: It is a tax.

But so is cap-and-trade, because the costs will be passed along to consumers. In hiding that fact, cap-and-trade would be a more complicated system that could be gamed by insiders and contorted by powerful interests. A growing number of lawmakers are beginning to see this, including U.S. Sen. Maria Cantwell, D-Wash., chairwoman of the Senate Energy and Natural Resources Committee’s energy subcommittee. She prefers a cap-and-dividend system, whereby industry is charged for pollution credits and dividends are distributed to consumers to help offset increased energy costs.

The best system would probably be a straight carbon tax, which would quickly give rise to investment in energy alternatives. It would be important to take the proceeds and pour them into alternative energy research, development and production, which includes wind, solar, nuclear, a high-tech grid and energy storage. As new technology kicks in, the tax could be lowered.

Whatever the course, we cannot laugh off or ignore the problem any longer. The nation needs a plan.