Bob Murphy asks whether I have changed my mind. I say no, although I have gone from discussing it in the abstract to commenting on the particular policy developments of the day. Let me restate a few of my views:
1. We do have an acceptable means forward and it is called oil at $145 a barrel, combined with restrictions on dirty coal as a substitute and a more favorable regulatory treatment of nuclear power and other energy alternatives. We had one plank of that platform as recently as last year, and while it was painful it was not the end of the world.
2. It is worth debating how to get to higher energy prices but the bigger question is how much we are willing to go there at all. "Cheaper energy" is the one issue that had traction for the Republicans last fall at the polls.
3. Regulatory changes are an essential part of the way forward and that is often underemphasized by environmentalists, who are allergic to the word "deregulation." Yet if we had to build today's energy infrastructure under the 2009 regulatory regime, it would not be possible. NIMBY is a huge obstacle to future progress in this area.
4. I view Waxman-Markey as like a failed dieter pledging to go out and buy lots of diet books. It's easy enough to defend the diet books as a "first step," or a "framework." I would feel better if the book purchases were accompanied by a credible promise — or even a "cheap talk" lie — to lose weight. How many politicians in favor of the bill have stepped forward and promised to deliver higher energy prices?
I predict and fear that Waxman-Markey, if it passes, will deliver a more politicized energy sector without real progress on #1. I know all about the apparently impressive quotas for the out years. I also know how easy it will be for Congress to hand out more permits, perhaps in return for phony yet rent-seeking laden carbon offsets. That's what the political equilibrium looks like.
5. Here is a very good blog post on carbon offsets.
6. It is easy enough for someone to complain: "But he doesn't even favor buying the diet books!" but that is missing the point. The problem with Waxman-Markey is not the mechanics per se but rather how few politicians will emphasize or even admit that it will, in its working versions, significantly raise energy prices.
7. You can argue: "If we buy the diet books today, we will be ready to diet [raise energy prices] in a few years' time." I don't dismiss this argument, but I doubt it and I don't think that enough W-M proponents admit that their case largely rests upon it.
8. Energy prices have been rising with economic recovery. I am waiting for the first person to have the stones to argue that rapid and permanent economic growth is the only way (by raising the price of oil at a disproportionate pace) to limit greenhouse gases. You won't find those stones in my pocket (I don't think the argument succeeds), but sooner or later they will turn up. There is a more modest version of the argument which simply notes that in equilibrium politicians are likely trying to lower rather than to raise the price of fossil fuel-based energy.
9. I'm not going to restate my views on international cooperation but in general the quality of discussion on this issue is low, from both sides. That doesn't augur well. It is easy to see what won't work. It is much harder to see what might work. Very few of us actually expected Mr. Gorbachev to tear down that wall.