Pass ACESA III: A Skeptic's Question -- Market Solving Already?

[Part 3 of a series based on my conversation with the gents from Repower South Dakota and the Environmental Law & Policy Center.]

Don't think I had nothing but softballs for Matt McGovern and his Repower SD crew. It occurred to me that we're already seeing movement toward one of the major goals of the American Clean Energy and Security Act, the scaling-back of heavy-carbon coal power. The Big Stone II project is dead, Warren Buffet is getting out of coal, industry leaders like Otter Tail are recognizing that they can build wind more quickly for less cost ($2.3 million per megawatt of installed wind power versus the projected $2.8 million per megawatt projected for Big Stone II).

Pass ACESA
a Madville Times series

1. Cap and Trade Works
2. The New China Syndrome
3. Market Solving Already?
4. Techno-Hope
5. Perfect vs. Good
6. Smart Grid
7. The Big Picture

Read H.R. 2454, The American Clean Energy and Security Act

So my question: are we already seeing enough movement toward clean energy? Do we need ACESA or any other federal mandates to make a low-carbon future happen?

Now let me note, the folks backing ACESA, Matt McGovern included, are fans of the market, just like most of us. ACESA is a market-based solution. Its cap-and-trade components ask companies to pay a fair price, determined on the open market, for the carbon they emit. The incentives create opportunities for lots of entrepreneurs to invent, innnovate, and make a profit. The alternative to market-based ACESA is top-down regulation. The Supreme Court ruled in 2007 that the EPA can consider regulating carbon dioxide under the Clean Air Act. The EPA could lay down hard CO₂ rules tomorrow and start levying fines. But the EPA has chosen thus far to defer to Congress (what ever happened to all that Obama-power-grab malarkey, anyway?).

Markets are great, but they aren't perfect. Markets can produce some rotten results, like strip mining, SUVs, and Lady Gaga. We've heard good arguments for getting off foreign oil since the 1960s, but market forces—e.g., usually cheap oil—have kept us from investing in energy independence. Sometimes we need to intervene with the right incentives to steer the market toward more sustainable goals, like energy sources that won't heat up the planet and run out a century from now.

Just as we shouldn't take this cool summer as a refutation of global warming, we shouldn't take the current economic downturn as refutation of the need for serious action on carbon emissions. Sure, energy use is down and utilities are scaling back their plans to expand their coal-power capacity. But long-term, energy demand will almost surely rise, as it has historically, almost without exception. We thus need to get more momentum behind clean energy sources now, while we have some wiggle room.

McGovern also argues that ACESA is a good response to the current high unemployment. Remember, even that optimist Ben Bernanke says recovery of jobs will lag behind recovery of the economy "for some time." People need work, and ACESA can help.

Now wait a minute, say my astute readers, even if passed, ACESA doesn't kick in until 2012. We've got to wait three years for those green jobs?

Ah, but consider: if we pass ACESA now, the utilities will know it's coming. Any coal plant like Big Stone II started now wouldn't be operational until after 2012, so the utilities would already be building in compliant technology. Utilities would start hiring now to build the technology they need to comply in 2012. Inventors and investors would see 2012 coming and start looking for ways to invest their brain power and capital to take advantage of the new energy market. Even enacted in 2012, ACESA can serve as a jobs booster and overall economic stimulus right now, right when we need it. And dollar-for-dollar, investment in clean energy will produce lots more jobs—like two to three times more jobs—than investment in fossil fuels.

And as Matt McGovern emphasizes every chance he gets, ACESA would create 5000 clean-energy jobs in South Dakota alone, jobs that would be darned hard to outsource (try hauling wind turbines across the ocean). 5000 new jobs: according to current South Dakota Department of Labor stats, that would put to work every unemployed person in 48 of South Dakota's 66 counties. Given that we've nearly drained our state unemployment fund, I don't think we'd mind a speedier solution than just sitting back and waiting for the market to work.

This economic lull is the perfect time to pass ACESA. We can lock in some alternative energy gains before the economy recovers and we slide into our lazy cheap-fossil-fuel habits again. We can get Americans back to work in good jobs that will last. We won't see those benefits if we wait for the market to solve on its own.