Nobody Cares About Biden’s Energy Policy. Great!
The plunging costs of solar and wind power have greatly simplified the problem of getting to a low-emission economy. At this point it no longer appears that drastic reductions in emissions will require major changes in the way we live, which would be hard to achieve without something like a carbon tax. Instead, it’s mainly a matter of electrifying everything we can and generating that electricity from renewables, which means that green energy subsidies, as opposed to taxes, can do the job.
In fact, a carbon tax by itself would be the wrong policy even on purely economic grounds. While pollution is a negative externality, green energy appears to be characterized by positive externalities: an individual’s choice to drive an electric car or a power company’s decision to invest in renewables conveys benefits to others.
Partly, this reflects what appear to be steep learning curves for new energy technologies: The more people make use of these technologies, the better we get at them and the easier they will be to adopt.
And partly it reflects the fact that these technologies become more usable when many people use them: Electric cars become more attractive when there are many charging stations, which will materialize if many people drive electric cars.
There’s still a case for carbon taxes as part of a climate strategy, but there’s also a case to be made that we can achieve what we need to achieve without such taxes, simply by subsidizing green energy. In other words, by using carrots rather than sticks.
And that’s a good thing, because the politics of carbon taxes are poisonous. It’s not just an American thing, although we may be exceptional in the way energy policy gets caught up in the culture war — yes, right-wingers denounce concerns about the climate as “wokeness.” Even in France, energy taxes had to be canceled after violent protests from the “yellow vest” movement.
The politics of subsidies for green energy, however, are arguably much more positive. Instead of making it more expensive for people to do what they were doing before, the government is making it cheaper for them to do different things. And it doesn’t hurt that the administration can then boast about the jobs its strategy is creating in everything from battery manufacturing to solar-panel installation.