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 a recent energy forum, I've concluded if the next energy bill is more than 9 pages it's a preordained failure.