Pushing for energetic change

Federal courts last year affirmed the U.S. Environmental Protection Agency's right to regulate greenhouse gas emissions from coal-fired power plants and other sources under the decades-old Clean Air Act. The Obama administration argued that the EPA was obligated to do its job to protect public health and welfare.

Rolf Nordstrom is executive director of the Great Plains Institute, a public policy nonprofit that works with diverse interests to drive what it says are economically and environmentally sustainable energy-practice changes through research, consensus policy development and new technology.

QPresident Obama's EPA seems to be making progress putting the lid on some of the older, dirtier coal plants and the electrical industry has moved toward cleaner natural gas and wind for additional generation. Why do you advocate putting a tax on greenhouse gas/carbon emissions?

AEconomics 101 says that the price of any good or service should reflect its full economic, environmental and social costs. In the case of burning coal to make electricity, or oil-derived fuels for transportation, the prices we pay today don't reflect the costs of dumping the carbon into the atmosphere in the form of carbon dioxide (CO₂). It traps more of the sun's heat and is causing dramatic climate change. In 2012 we experienced the hottest year on record in the lower 48 states; drought across two-thirds of the U.S.; the record for most billion-dollar disasters; the lowest level of Arctic sea ice ever recorded. Then there was superstorm Sandy at a cost of $70 billion plus.

QIsn't moving away from coal and oil anti-business? After all, there have been recent reports that America could be oil self-sufficient within several years thanks to new drilling techniques.

AOur move away from coal is driven by a host of factors including cheap natural gas, new regulations on pollution and flat demand for electricity. It's true that the U.S. is on a path to be nearly self-sufficient in energy ... by 2035. But ... we use almost 19 million barrels of oil per day in the U.S., and would need to produce another 8.5 million barrels per day if we were to fully replace our imports. Lots of businesses already "get" that the current energy system is not sustainable.

QFor example?

Last year, 214 of the biggest public firms in the United States told the Carbon Disclosure Project that they had set greenhouse gas emission targets, a nearly 30 percent rise from the previous year.

An alliance of institutional investors, responsible for managing $22.5 trillion in assets, has said that rapidly growing greenhouse gas emissions and more extreme weather were increasing investment risks globally.

QChina and India are using coal. Why should we make homegrown coal more expensive?

AEven the conservative, market-oriented Energy and Enterprise Initiative argues for putting a price on carbon so that prices reflect the real cost of using coal and other high-carbon fuels.

Indeed, U.S. coal producers may well continue to increase exports to China and other markets if the U.S. market declines further. But if the U.S. demonstrated leadership in placing a price on carbon and entered mutually beneficial bilateral agreements with China and India around clean technology transfer and development, we could ensure that U.S. industries benefit from helping those two countries shift to carbon-neutral energy systems.

QDo you see any related federal legislation being offered in 2013?

AI wouldn't bet on it. The one-year extension of the production tax credit for wind and geothermal energy is ... emblematic of our short-term approach. There has been some bipartisan talk about a carbon tax as part of an eventual "grand bargain" to address the country's $16 trillion debt.

Such a policy could, if offset by reductions in payroll or other taxes ... avoid worsening the national debt while sending a price signal that better reflects the true costs of emitting more CO₂ into the atmosphere.

Most businesses can figure out how to make money within almost any policy framework; they just need it to be predictable and fair.