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Bankrupt Energy Football

Having criticized politicians who ignore the option of letting failing industries go bankrupt, I was no happier to discover that Obama is willing to go to the opposite extreme: bankrupting businesses he finds harmful.  Although it only recently gained wide attention, back in January he said in an interview with the San Francisco Chronicle that he would like to see certain coal-burning power plants go out of business.  Here’s the full context:

Let me sort of describe my overall policy. What I’ve said is that we would put a cap and trade policy in place that is as aggressive if not more aggressive than anyone out there. I was the first call for 100 percent auction on the cap and trade system. Which means that every unit of carbon or greenhouse gases that was emitted would be charged to the polluter. That will create a market in which whatever technologies are out there that are being presented, whatever power plants are being built, they would have to meet the rigors of that market and the ratcheted-down caps that are imposed every year.

So if somebody wants to build a coal-powered plant, they can. It’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted. That will also generate billions of dollars that we can invest in solar, wind, biodiesel, and other alternative energy approaches. The only thing that I’ve said with respect to coal – I haven’t been some coal booster. What I have said is that for us to take coal off the table as an ideological matter, as opposed to saying if technology allows us to use coal in a clean way, we should pursue it, that I think is the right approach.

As Chief Justice John Marshall noted in 1819, the power to tax is the power to destroy.

Note how Obama repeatedly speaks not of existing power plants, but only those that are not yet built.  Presumably this is because he supports an emissions trading program with a grandfather clause—i.e., rights to pollute would be granted in proportion to historical emissions. Needless to say, such grandfathering enormously benefits existing power producers and puts potential competitors at a severe disadvantage.

Notice also that the alternative energy sources Obama mentions do not include nuclear power, even though it is unarguably the best alternative to coal, at least in the foreseeable future. (Even the publisher of the Whole Earth Catalogue now extols the environmental benefits of nuclear power.) There are all sorts of reasons why Obama never advocates this option, but one that deserves to be stressed is the irrational fear of everything nuclear among Americans—a pathology Stephen Weart helpfully diagnoses in his book Nuclear Fear. (If you’re feeling mischievous, and want to cause undue worry, merely tell your friends that their granite kitchen counter tops are radioactive.) French people, by contrast, are barely perturbed by nuclear power, in part because it has been so successful for them: it provides 77% of their electricity and they have never had a Three Mile Island-like scare. By comparison, only 19% of American electricity is nuclear-generated.

Another important point that Obama’s political advisors are probably well aware of is that women disproportionately fear nuclear power.  While studies find that women fear technological, medical, and environmental hazards more than men do, the divergence is greatest for nuclear technology. The reasons for this are unclear, though men’s lesser general fearfulness might be due to the fear-inhibiting effects of testosterone. In any case, given that Obama was elected thanks to getting the majority of the female vote, he was probably wise not to trumpet the benefits of nuclear power, as McCain did.


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