The Green New Deal? Cap-and-Trade Should Go Hand-in-Hand with Subsidies

Barack Obama held the first news conference for his transition team (featured live on CNN, 11/7/2008). His priorities are to be fixing the economy and creating jobs. During stump speeches and debates he emphasized creating new “green collar” jobs to help combat the failing economy and environmental crises simultaneously. The Economist echoes his proposals– Obama plans to spend $150 billion over ten years in the hope to create 5 million jobs.

As fantastic as that could be, the article’s author cautions against the heavy use of subsidies to fund green initiatives. Citing the corn ethanol disaster as one example, the Economist offers the visionary wisdom that politicians may not always choose the most market friendly innovations. Additionally, the state of the economy should force some prudence onto the budget structure.

Spending willy-nilly on whatever innovation comes along does not make the budget work better nor the Earth healthier. Employing a good cap-and-trade system would help to balance the money for subsidies, and “it’s the efficient way to discourage pollution, because it shifts the costs onto those who should bear them,” namely the companies polluting.

Investing in green technology is clearly the right thing to do. However, the way investments are made determines how far the technology advances. The government should not invest in any one technology just yet. Instead they should fund basic research to help spawn a wide variety of innovations. Then, the government could help companies buy the green technology specific to their industry.

Kermit had it right when he said, “It’s not easy being green.” But, with smart policy and smart investment, it could be a lot easier.

November 9, 2008  Tags: , , , , ,   Posted in: Politics

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