Time to reframe the alternative energy debate

If we want wind power, and hydrogen, and geothermal plants, and better solar panels, the way to get them is through market incentives resulting in more investment, combined with tax laws that discourage what we don't want.

I spent most of yesterday bicycling and considering the alternative energy debate.

Washington is all a-flutter, saying India's refusal to sign-on to U.S. carbon targets dooms the President's cap-and-trade legislation.

There is a way to turn India's refusal into good news, by reframing the debate.

Don't care about global warming? Don't care about energy security? Fine.

Want a job? (Picture from Eideard.)

Every major American advance in transportation has been marked by market incentives meant to make it happen.

The U.S. government has been picking winners-and-losers in transportation practically since its founding. Some of those bets were bad. Most have paid off big.

This is the context with which I look at cap and trade legislation. February's stimulus may stop the economic bleeding. But what else is going to get us the economic growth we experienced in the 1990s with the Internet or the last decade with housing?

Only alternative energy can do that. The opportunity is enormous, starting with the low-hanging fruit of conservation, expanding rail traffic, insulating buildings, retrofitting suburbs so you can walk or ride a bike in them.

The Congressional Budget Office estimates the current cap-and-trade legislation would cost about $20 billion per year. Did you know the oil and gas industry is still getting $14 billion in tax breaks each year?

There are some things in the current bill I find appalling. Why should ethanol get enormous subsidies? The source product may be renewable, but the cost of converting it for use is enormous, and the damage done to agriculture markets equally enormous.

But that can be fixed.

If you want your economy to work in a certain way, you create market incentives geared to making that happen. That's the American way. Always has been. That's why, even if you don't own your own home, you want to. It's the tax breaks, stupid.

If we want wind power, and hydrogen, and geothermal plants, and better solar panels, the way to get them is through market incentives resulting in more investment, combined with tax laws that discourage what we don't want.

Let India and China ignore the opportunity if they choose. The only logical result is that they will buying from us. If we create the market incentives necessary to win the energy race.

This post was originally published on Smartplanet.com

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