The Blog

The Economics of Carbon

9:44 AM, Jun 27, 2013 • By GEOFFREY NORMAN
Widget tooltip
Single Page Print Larger Text Smaller Text Alerts

The government's new commitment to reducing what President Obama calls "carbon pollution" will, it seems, make us all more prosperous through the miracle of regulation.  As Roger Meiners explains on “The Percolator,” the Department of Energy claims that a new regulation covering microwaves will yield:

... over its 30-year life, 2016 to 2045, benefits of $3.38 billion (using a 3% discount rate) in contrast to a cost to the microwave industry of only $96.6 million. That is, the regulation supposedly produces 35 times more economic benefits than cost. 

The losers will be the producers, sellers, and consumers of microwaves.  And there will be some small savings in aggregate consumption of electricity.  But these are insignificant considerations.  The real money is in reduced carbon dioxide emissions, as determined by something called the "Social Cost of Carbon," which:

was developed by an “interagency process” that determined that the value of a ton of CO2 should, as of 2013, be somewhere between $12.6 and $119.1 per ton, up substantially from the old 2010 SCC values of only $6.2 to $78.4 per ton.

And the more CO2 that we don't produce, the richer we will be.  Especially if we keep jacking up the price of that carbon, even though:

the “value” of CO2 non-emissions is not based on anything other than the imagination of bureaucrats. 

And:

there is no market for such emissions, no price exists except in the minds of the central planners who have divined a “price” from speculation. 

So:

The real and measurable cost will be higher-priced microwaves (which will primarily impact lower-income people) and the attendant higher costs and lower sales incurred by industry. 

Recent Blog Posts