cy (cychan) wrote,
cy
cychan

Deval Patrick and Energy Policy

I went to see Gov. Deval Patrick speak at MIT on Tuesday. He made an inspirational speech, and from what I can tell his environmental policies are more progressive than most governors in the US. The primary regulatory tools he supports appear to be subsidies in the form of favorable utility rates for renewable power and economic incentives for green companies to operate in Massachusetts. These initiatives are definitely steps in the right direction, but at the same time, I can't help but wonder if we'd be better off with a strict carbon cap or tax.

I get it: "tax" is a dirty word in US politics. But the money for subsidies has to come from somewhere, and we end up increasing the burden on distortionary taxes like sales or income taxes. If we tax carbon emissions and other pollutants, we can both reduce the distortions caused by the pollution externality as well as use the revenue to offset distortionary taxes. Would such a policy increase energy prices? Yes, but since the policy is revenue neutral, those who conserve energy and make cleaner choices end up with more money than before the tax, while those who guzzle gas and leave the air conditioning on while out of the house will have more incentive to correct their inefficient behavior.
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