Just in case you didn't think Washington was hot enough in the summer, debate over climate change legislation (a.k.a., Waxman-Markey) is starting to increase in volume. As a taste of things to come, Harvard Prof Greg Mankiw's recent blog post provides a virtual point-counterpoint exchange between two of his Harvard colleagues.
In the left corner, wearing blue trunks, is Robert Stavins. His column "The Wonderful Politics of Cap-and-Trade" appeared recently on the Harvard Belfer Center blog. His enthusiasm for the proposed cap-and-trade system — a highly complex form of industrial policy that only an economist could love — is perhaps proof in and of itself that these provisions have their problems.
In the right corner, wearing red trunks (of course), is Martin Feldstein, former chair of the Council of Economic Advisors. His column "Cap and Trade: All Cost, No Benefit" showed up in the Washington Post yesterday. He raises the specter of Congress rushing to pass costly legislation that does little to actually resolve a greenhouse gas problem. For example, CBO says that the bill would reduce American CO2 output by 15% and cost $1600 per year in additional electricity charges for the typical American household — and yet, a 15 percent fall in U.S. CO2 output would lower global CO2 output by less than 4 percent.
Fortunately, the bill isn't just about cap-and-trade — there are also some useful energy-efficiency related provisions within the bill, such as building retrofit incentives and the establishment of State Energy and Environmental Development (SEED) accounts that encourage investments. So, while debate over the cap-and-trade provisions increases the amount of hot air in Washington in the coming months, NEMA will do its part to aggressively support provisions that will improve energy efficiency opportunities for Americans.