Ousted Republican Presses Free-Enterprise Fix for Climate Change

Believing in climate change cost Bob Inglis his seat in Congress, as he tells it, but the South Carolina Republican still believes his fellow conservatives can stop global warming.
Inglis will soon launch his "Energy & Enterprise Initiative"—a campaign to promote free-enterprise solutions to anthropogenic climate change, he told me in an interview Monday.
"We have not yet begun to fight with free enterprise," he said in a phone call from South Carolina. "We have not yet begun to put free enterprise solutions to work."
Already, Inglis has visited two college campuses, the start of a campaign to capture the interest of Young Republicans and solicit the aid of academics. He is hiring staff and developing a website for the Energy & Enterprise Initiative, which will have two basic tenets:
Eliminate government subsidies for all fuels, not just for the oil companies but also for renewable sources like wind and solar.
Tax fuels so that their price reflects their ultimate cost.
Fossil-fuels look cheap at the meter, Inglis said, but their full costs arise elsewhere, such as in health-insurance premiums that anticipate illnesses and premature deaths from air pollution.
"If I knew how expensive this coal-fired power is, if I were paying through the meter, I'd be flipping through the Yellow Pages looking for a solar water heater," Inglis said.
"Our goal is not to be punitive," he said, but to price fossil fuels at their actual cost. Inglis, who lost his seat in the U.S. House of Representatives in 2010, acknowledges that may be a hard sell.
Hard Sells
His first tenet, eliminating subsidies, won't sit well with wind and solar advocates, he said, and his second, taxing fuels according to true costs, may alienate fossil fuel companies and anti-tax conservatives. "This is against the current orthodoxy," he said. "I very well know it."
But Inglis believes Americans will support his plan if they understand the full cost of fossil fuels and if they address those costs through a "revenue-neutral tax swap."
Such a swap might, for example, reduce payroll taxes and recover the lost revenue through a carbon tax on greenhouse gas emissions.
"I'm hoping for some kind of coalescing around the idea that we can do something to get the economics right to watch free enterprise deliver a solution," Inglis said last week in an appearance at the University of Chicago Booth School of Business. "That's my faith and my belief in the free enterprise system."
"Getting the economics right" means adjusting the free in the enterprise. At the University of Chicago Inglis moderated a panel of experts from the university's Energy Policy Institute—including economists, physicists, lawyers and policy wonks—who discussed how such a scheme work.
Market Distortions
Economist James Sallee explained why it's necessary to fix market distortions to allow free enterprise to solve some problems:
Markets are a very powerful tool in many settings for aligning incentives correctly and for getting efficient outcomes where people who are able to do things at the lowest cost are the ones who do them.
When we let markets organize activity in many settings, costs and benefits get aligned on the margins and that generates efficient outcomes and efficient allocation of resources. But there are a variety of conditions under which markets fail.
Markets may fail, Sallee said, when they fail to account for "negative externalities":
In the case of energy there are a number of costs that are not actually borne by the market participants—social costs borne by all of us in society. The costs that are mostly going to be borne by future generations across the world are not being recognized in the actions taken today.
This is a setting where we wouldn’t expect the markets to produce the best possible outcome without doing something to recognize these costs.
Inglis hopes to teach Americans this economics lesson—"We're basically preparing the country for free enterprise solutions"—and he believes conservatives will overcome the "rage" that fuels opposition to climate change initiatives.
"I think that's a temporary aberration," he said. "We conservatives do care about the air. We truly are conservative. We do care about resources."
Hard Falls
Several of the experts on the panel, however, suggested initiatives to prevent anthropogenic climate change may be naive or tardy.
Physicist Robert Rosner, a former director of Argonne National Laboratory, said the chances are slim that Americans will accept a carbon tax or other scheme to limit carbon emissions in the next decade. The chances are small, he added, that the world will come to an agreement at the next UN climate change conference in Rio:
The question is what conversation should we be having. One of them, unfortunately, is a conversation about accommodation and adaptation. It's a very painful conversation because it concedes that we have not really been able to come to an agreeement about whether we are going to be able to control greenhouse gas emissions.
We've been unbelievably bad at it. I believe climate change is very real and that it's anthropogenic. And it means that we have a big problem.
The question is what conversation should we be having, and I don't think it's about a carbon tax any more.
Economist Robert Topel agreed, noting that the Department of Energy already devotes a significant portion of its research budget to preparing for climate change. "They see it coming," he said.
Inglis believes Republicans can come up with "honest-to-goodness workable economic answers" to climate change, but he said he doesn't expect those answers to vault him back into office.
"I had a rather spectacular faceplant," he said. Inglis's opponent, Troy Gowdy, took about 70 percent of the vote in the Republican Primary, leading Mother Jones to eulogize Inglis as a victim of the Tea Party. "It's hard to see a path back to politics."
Harder than seeing a free-enterprise path to a cooler planet.

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