by Nathan Paine | June 25, 2009 • Predictions of economic disaster in Minnesota and across the United States brought on by emissions reduction programs are the product of bad economics. Let us acknowledge that addressing climate change does have its costs. It is true that a cap and trade system or a pollution tax would raise the costs of any economic activity that emits greenhouse gases.
|Hindsight is the official blog of Minnesota 2020. Hindsight gives the run down on the news that jumps out at us on the issues that matter. Often times these stories show us how much further we need to go to have the progressive policy realized in Minnesota.|
In Minnesota, about 60 percent of our electricity is produced from coal, and so an emissions reduction program would undeniably push up the price of electricity in Minnesota. It is also true that Minnesotans will still feel some pain from a cap and trade program even if 100 percent of the permits are auctioned and there is full rebating of the auction revenue to the consumer.
However, the pain in Minnesota would hardly be equivalent to the economic armageddon predicted by charlatans on the conservative side. An interdisciplinary group of professors at MIT estimates that total welfare loss would be less than 2 percent in 2050. This amounts to less than a 0.0005 percent reduction in annual economic growth and is a small price to pay in Minnesota for addressing global climate change.
There are many other positives and negatives in the cleaner emmisions debate, such as cap and trade versus a direct carbon tax or creation of jobs in one sector over another. However, we need to start a deeper more well-informed debate soon, without letting conservative’s overblown claims of economic disaster scare off intelligent conversation.
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