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William O'Keefe
CEO, George C. Marshall Institute

William O'Keefe

William O'Keefe is CEO at the George C. Marshall Institute, a think tank that promotes better use of science in public policy. He is a former COO at the American Petroleum Institute. ALL POSTS

Establish decision-making foundation

Q: If the Senate moves away from a climate bill that includes cap-and-trade -- a strategy, which allows companies and organizations to buy and sell pollution credits to meet a national limit on greenhouse gas emissions -- what alternatives should be included in the bill instead?

The discussion of alternatives should begin with a new paradigm. For the past 20 years, the foundation for climate legislation has been projections of an impending catastrophe. What we have seen over that period of time is a climate which has not been a lot different than that existed over comparable periods since the end of the Little Ice Age. So, instead of fashioning legislation designed to avoid or slow the apocalypse, Congress should establish a legislative foundation that reflects decision making under uncertainty and the fact that we have the time to take action that is based on our state of knowledge and then assess what additional actions might be necessary.

Instead of imposing mandates that will seriously suppress energy use, drive up energy prices, and further weaken a struggling economy, Congress should focus on actions that make sense in their own right and which will also slow the growth in greenhouse gas emissions.

The Transportation Department has already promulgated new CAFE rules which will result in lower CO2 tailpipe emissions as miles per gallon increase. Congress could next focus on incentives to accelerate the turnover of the capital stock, especially older electric power generating facilities. Replacing older coal fired power generation with new gas fired units would use an abundant energy source and also reduce emissions. The Congress and Executive Branch should explore actions that would increase the deployment of the newest energy efficiency technologies in homes and commercial buildings. Finally, only government can make R&D investments that would represent "home runs" if they proved practical and commercially viable -- e.g. space solar power or nuclear fusion.

In reconsidering, the assumptions that have driven climate policy so far, Congress and the Executive Branch should give more attention to unintended consequences. For example, there is a new study from the UK showing that the biofuels mandate has had bad environmental outcomes, concluding that greenhouse gases and the climate impact would have been less by staying with conventional, non-reformulated fuels.

Although there can be a legitimate debate over the extent to which human activities are influencing climate, we know that is not zero. Land use changes along with the burning of fossil fuels impact our climate. The federal government should provide states with information to help them make better land use decisions and it should put a price on carbon to provide a clear signal that carbon is to become more scarce in the future. Price signals do work.

Since the Kyoto Protocol, the federal government's preferred approach to pricing carbon has been mandated scarcity through cap and trade. Now that that approach is off the table, Congress and the Administration should give serious and honest consideration to a carbon tax combined with a reduction in the federal payroll tax. That would be more efficient, easier to administer, and would provide workers with an immediate increase in their take home pay.

By William O'Keefe  |  March 5, 2010; 9:37 AM ET Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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Better yet, don't just reduce the federal payroll tax, reduce the federal payroll. As in, RIF about 250,000 of them per month until the government reaches a size that the people can actually afford.

Posted by: rhahn1 | March 7, 2010 9:20 AM
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Posted by: randomsample | March 6, 2010 6:41 PM
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