Market-Based Approach to Climate Change Can Achieve Energy, Environmental Goals

While Congress and the Obama administration consider how to reduce greenhouse emissions and stimulate clean energy innovation, COMPETE urges all stakeholders involved in climate legislation talks to remember the power of a market-based approach.
 
Established results tell the tale – competitive markets offer the best path forward to achieve America’s energy needs and environmental objectives. In the Northeast, the Regional Greenhouse Gas Initiative (RGGI), which spans parts of two organized competitive electricity markets, is the first mandatory, market-based CO2 emissions reduction program in the U.S. – and it has been working successfully for several years.
 
By phasing in an approach to emissions reductions, set against an established cap, RGGI has provided predictable market signals, regulatory certainty businesses can operate against, and much-needed revenue for participating states. Best of all, the system is supported by the consumers it serves.

COMPETE and the Environmental Defense Fund issued a joint statement urging Congress to support a market-based approach to climate change in tandem with markets for electricity. Organized markets encourage energy prices that reflect the true market cost and empower consumers to make smart energy usage decisions. In comparison, states that don’t allow competition mask the cost of carbon with averaged government-determined rates. When consumers are captive to a monopoly-protected utility without competition from alternative power suppliers, there is little incentive for them to alter their energy consumption habits and innovative entrepreneurs face significant barriers to market entry.
 
Competitive markets are encouraging innovative energy solutions like smart meters and dynamic pricing to help consumers save money while reducing their carbon footprint, while stimulating clean energy investments. A market-based approach to capping emissions will provide similar benefits for the nation’s consumers.         
 
Influential think tanks and independent analysts alike have explained the power of markets to drive change toward a clean energy future, and recent polling shows an overwhelming majority of American consumers are ready to change their energy habits. Congress must eliminate the barriers to letting them do so.
 
Price carbon successfully and consumers will use less energy, clean energy generation will not need subsidies to compete, and market forces will unleash “a flood” of innovation that creates green jobs and a sustainable energy future.

Joel Malina | June 29, 2010