An Economist’s Rx for Balancing Cheap, Clean, and Secure Energy
by James M. Griffin
As
Congress prepares to debate the Waxman-Markey energy bill that will
fundamentally change the energy landscape of the U.S. economy, Yale University
Press just released A Smart Energy Policy: An Economist’s Rx for Balancing
Cheap, Clean, and Secure Energy by James M. Griffin. The author is an
internationally renowned energy economist with almost 40 years of writings and
research in the energy sector. Besides serving on the editorial board of three
prominent energy journals, he co-authored the leading textbook in the field and
has published numerous other books and peer-reviewed journal articles. At Texas
A & M’s George Bush School of Government, he holds the Bob Bullock Chair in
Economics and Public Policy.
This book is particularly timely as the nation comes to grips with climate
change and peak oil security for several reasons. First, it is written in a
lively, non-technical manner, understandable manner for the broader public.
Second, it provides the reader with a historical perspective within which to
judge the current policy debate. For example, as background information,
chapter 2 explains the factors leading to the meteoric rise in oil prices
preceding the current financial crisis and whether these conditions will
re-emerge in the future. Likewise, the reader is provided with a clear
description and critique of past policy efforts to promote oil security and to
tame carbon through the Kyoto Protocol.
But the book’s primary contribution is its prescient implications for the
current policy debate that will shape America’s energy future for the next 50
years. Before rushing to judgment and adoption of the 940 page Waxman-Markey
bill, it is important to pause and carefully weigh the trade-offs between
cheap, clean, and secure energy. Griffin’s book provides a policy framework for
weighing these trade-offs and some surprisingly simple policy prescriptions
that can be articulated to the American people. Griffin’s policy prescriptions
call for “getting the prices right” for energy via taxes on carbon and on oil
for security purposes which will serve the dual purposes of resulting in a new
playing field on which alternative energy forms can compete and at the same
time providing a reasonable balance between cheap, clean, and secure energy. A
modest initial carbon tax that gradually rises over time will provide a
predictable world in which firm’s can plan new energy infrastructure
investments and phase-out high CO2 emitting facilities. By making the tax
revenues “revenue neutral” by matching reductions in payroll and income taxes,
we can avoid further macroeconomic destabilization.
Jim provides a sophisticated analysis of the issues around Carbon, security and
energy and some simple suggestions for a workable balanced policy. He suggests
that the current 900+ page cap and trade for special interests bill might not
get us anywhere we want to go. After a discussion with him at an energy forum,
I've concluded if the next energy bill is more than 9 pages it's a preordained
failure.
For
Jim’s recent work, see http://bush.tamu.edu/mosbacher/takeaway.