Eviscerating Our Environmental Regulations Removes Incentive for Clean Energy

Frequent commenter John Sullivan asks:

How can you cite “eviscerating environmental regulations” as a factor in our lack of competitiveness, when China has a horrible record and is arguably using their “green” investments as a shield for now?

It’s probably true that the reason for China’s investment in renewables has little or nothing to do with environmentalism. But I’m not sure I see the relevance to what we’re trying to in the West. There is no doubt in my mind that environmental regulations in a market economy spur innovation in cleantech, and that their removal provides additional incentive to pursue the status quo. (In the meanwhile, such regulations protect our health and safety, and there’s something to be said for that as well.)

I sat next to an extremely senior Australian scientist/businessman during lunch at the energy storage show last week. My jaw almost fell into my arugula salad when he told me about the firm but simple carbon tax his country is deploying. It’s not 1500 pages of pork-barrel back-room deals; it doesn’t have cap and trade, loopholes, wormholes, or buttonholes. It’s extremely plain and direct, phasing in over a few years, giving everyone plenty of time to understand its impacts and make whatever adjustments to their businesses they see fit.

Australia has a well-deserved reputation for being straightforward in its approach, and this strikes me as the perfect example. Here, they perceived that they faced a serious problem with a social ill (like cigarette smoking), and simply put a tax on it. Instantly, they created incentive for innovation in clean energy; in fact, they’re using the revenue to provide further incentives for the development of green solutions.

Miraculously, it didn’t take years of political posturing and grandstanding; they just did it. Try to imagine that in the US.