By Robinson Meyer
If the United States is going to have even a chance of meeting its climate-change goals under the Paris Agreement, there are few actions more pressing than taking coal plants offline. Coal-burning power plants emit more heat-trapping carbon dioxide into the atmosphere than any other part of the electricity sector.
It’s been widely reported that coal is inexorably on its way out—that cheap natural gas, made available by fracking, is eroding coal’s dominance in the U.S. grid. But the speed of that transition matters immensely to the planet, as the United States is currently not on track to slow its emissions fast enough to avert catastrophic climate change…
…Economic experts from both the right and the left have also opposed the plan. Josiah Neeley, the director of energy policy at the conservative R Street Institute, said he found Perry’s remarks at the hearing “a little strange.”
“Secretary Perry didn’t sound very much like Governor Perry that I remember back here in Texas, because Governor Perry, of course, was a big fan of free markets in electricity,” he told me.
The R Street Institute has been “very critical” of the proposal, he said, which he said was also “pretty vague.”
“There’s certainly not a reliability crisis. And even if there was, the proposed rule doesn’t address any of the issues with reliability that are out there,” he said. “To the extent that there is an issue here with reliability, the principled way to deal with it is to create some sort of market product … and not have the Department of Energy pick winners and losers.”
Those thoughts were echoed by Michael Greenstone, a professor of economics at the University of Chicago and a former chief economist to the White House Council of Advisers under President Barack Obama.
“The first question you always want to ask yourself is, is there some imperfection in the market that needs solving?” he said.
The biggest market failure in energy markets is climate change, he told me: Power plants can emit carbon dioxide for free, even though it’s a greenhouse gas that worsens climate change and imposes high indirect costs on people today. Therefore, it should be more expensive to release greenhouse gases into the atmosphere, he said, not cheaper. “Doing nothing is already not merited by economics,” he said. “This is like doubling down.”
Greenstone agreed with Neeley that insofar as there is a potential failure to plan for grid reliability, it should be solved with market mechanisms. He didn’t think it constituted a crisis either, though…
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