The Dispatch Queue - An Alternative Means of Accounting for External Costs? [28Sep11] - 0 views
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Without much going on recently that hasn’t been covered by other blog posts, I’d like to explore a topic not specifically tied to nuclear power or to activities currently going on in Washington, D.C. It involves an idea I have about a possible alternative means of having the electricity market account for the public health and environmental costs of various energy sources, and encouraging the development and use of cleaner sources (including nuclear) without requiring legislation. Given the failure of Congress to take action on global warming, as well as environmental issues in general, non-legislative approaches to accomplishing environmental goals may be necessary. The Problem
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One may say that the best response would be to significantly tighten pollution regulations, perhaps to the point where no sources have significant external costs. There are problems with this approach, however, above and beyond the fact that the energy industry has (and will?) successfully blocked the legislation that would be required. Significant tightening of regulations raises issues such as how expensive compliance will be, and whether or not viable alternative (cleaner) sources would be available. The beauty of simply placing a cost (or tax) on pollution that reflects its costs to public health and the environment is that those issues need not be addressed. The market just decides between sources based on the true, overall cost of each, resulting in the minimum overall (economic + environmental) cost-generation portfolio
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The above reasoning is what led to policies like cap-and-trade or a CO2 emissions tax being proposed as a solution for the global warming problem. This has not flown politically, however. Policies that attempt to have external costs included in the market cost of energy have been labeled a “tax increase.” This is particularly true given that the associated pollution taxes (or emissions credit costs) would have largely gone to the government.
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