Comments on: C’mon, Bill G, you’re smarter than this! http://www.standupeconomist.com/blog/climate/cmon-bill-g-youre-smarter-than-this/ What is (and isn't) funny about economics Sat, 31 Jul 2010 00:18:58 -0700 http://wordpress.org/?v=2.8.6 hourly 1 By: Chuck Cain http://www.standupeconomist.com/blog/climate/cmon-bill-g-youre-smarter-than-this/comment-page-1/#comment-2029 Chuck Cain Sat, 06 Feb 2010 18:23:54 +0000 http://www.standupeconomist.com/?p=1019#comment-2029 It is true that the market will assign the same benefit to dirty energy as to clean energy because what the end user is buying is the energy. The demand for cheap clean energy will come because the clean energy is also the cheapest. Let us set carbon aside for a minute and look at the example of sulfur. The federal government did not create a cap and trade system for sulfur-dioxide. A BTU generated by high sulfur coal has the same utility as a BTU generated from low sulfur coal, so use the cheapest coal. But they converted the public cost of sulfur (noxious air) to a private cost (stack emissions scrubbers). The installation, operation and maintenance cost of the emissions control equipment made the clean coal the cheap coal and replaced the dirty Illinois coal in the market with cleaner Powder River coal. Hurray for free markets. Footnote: the Illinois legislature, worried about jobs in the coal mines of southern Illinois, passed a law making it illegal for government owned buildings in Illinois to burn out-of-state coal. Rather than pay for scrubbers, every public school building in Chicago promptly converted to even cleaner natural gas. Hurray for free markets. It is true that the market will assign the same benefit to dirty energy as to clean energy because what the end user is buying is the energy. The demand for cheap clean energy will come because the clean energy is also the cheapest. Let us set carbon aside for a minute and look at the example of sulfur. The federal government did not create a cap and trade system for sulfur-dioxide. A BTU generated by high sulfur coal has the same utility as a BTU generated from low sulfur coal, so use the cheapest coal. But they converted the public cost of sulfur (noxious air) to a private cost (stack emissions scrubbers). The installation, operation and maintenance cost of the emissions control equipment made the clean coal the cheap coal and replaced the dirty Illinois coal in the market with cleaner Powder River coal. Hurray for free markets.

Footnote: the Illinois legislature, worried about jobs in the coal mines of southern Illinois, passed a law making it illegal for government owned buildings in Illinois to burn out-of-state coal. Rather than pay for scrubbers, every public school building in Chicago promptly converted to even cleaner natural gas. Hurray for free markets.

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