Climate Legislation Will Empower Markets to Reduce Emissions and Stimulate the Economy

In an op-ed this week, leading economists with MIT and Harvard urged policymakers not to “demonize” market-based policies to achieve national environmental and energy goals. The economists underscore the benefits of using market forces to bring about good policy outcomes in a least-cost manner, echoing COMPETE’s support for markets and market-based climate-change policies in a joint position paper with the Environmental Defense Fund.
 
Market-based policies to address environmental concerns have been embraced by conservatives and liberals alike, with great success, the op-ed notes. Prominent examples cited are the U.S. Environmental Protection Agency’s use of a cap-and-trade system to remove leaded gasoline from the market, and a much-lauded cap-and-trade system to reduce acid rain-causing sulfur dioxide emissions under the 1990 Clean Air Act. 
 
Failure to adopt a market-based program to address climate change concerns would negatively impact consumers and our country’s economy. Without a market-based approach, emissions standards are left to states and result in uneven reduction goals. The resulting regulatory uncertainty prevents the electricity sector from making needed investments in clean energy technologies.
 
A phased-in, market-based approach will reduce emissions, provide regulatory certainty and stimulate innovation and new technologies. Independent analysts agree markets can drive change and consumers are ready to change their habits. Policies that place a price on carbon emission will empower markets and consumers to lead us into a low-carbon future.
 

Joel Malina | July 29, 2010