Praise for a Climate Policy in Regression?
The praise keeps pouring in for the Administration’s recent first steps toward withdrawing EPA’s objections to California's effort to implement tough emission standards for automobiles. I wrote about this earlier, pointing out that Congress needs to act quickly or get left behind.
Today’s editorial page of the Washington Post suggests that the most effective action might not be regulation at all, or at least not regulation alone -- state or federal. The editorial writers at the Post say the best way to proceed would be to “change the incentives so that people want to buy fuel-efficient vehicles; then companies will make such cars, even without commands from Washington.”
The Post is right, and here’s why: we can impose emissions restrictions on the cars Detroit produces or we can shape the demand for Detroit’s products. Emission regulations like the ones California will pursue will do the former, but a consistent and high gasoline price signal will do the latter. If it were adopted, it would likely produce real emissions reductions more quickly and efficiently. There are many ways to do this, and Congress knows all of them. But the important thing is to support gas prices at consistent and high enough levels to allow market incentives to go to work. Cap-and-trade? Perhaps. Or a gas tax? Perhaps. And rebates to the public, as the Post says, are entirely consistent with this strategy.
It’s only been six months since John McCain and Hillary Clinton called for gas tax holidays during the Presidential race. President Obama wisely refused to support those efforts. Is he willing to go even further and work for a “a gradual rise in fuel prices that would not shock the system,” as the Post put it? Is Congress willing to do the same? That would be leadership.
It would also be leadership if the auto manufacturers took the initiative, as I suggested yesterday, and softened the path for the Administration and Congress by convening key interest groups and agencies to join with them in fashioning a single omnibus vehicle performance standard. Who knows? Out of such a group might come consensus on a gradual rise to a sustained gas price level that would incentivize people to buy fuel-efficient low-GHG emissions cars.
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