To Improve the Environment, Look to the Free Market

COMMENTARY Environment

To Improve the Environment, Look to the Free Market

Mar 6, 2018 4 min read

Commentary By

Nicolas Loris @NiconomistLoris

Former Deputy Director, Thomas A. Roe Institute

Elliott Raia

Spring 2018 member of the Young Leaders Program at The Heritage Foundation

The U.S. has significantly lowered emissions since the 1980s due to a combination of domestic regulation and market innovation. serts/Getty Images

Over the past three years, China had become the new poster child for economists and environmentalists alike. The country seemed to attain the impossible by maintaining high growth in gross domestic product, while at the same time reducing reported carbon emissions.

However, the admiration went up in smoke after news that China returned to its old ways in 2017. With many economists thinking that the Chinese government had undersold the depth of the nation’s economic slowdown in 2015 and 2016, the reinvigoration of growth in 2017 predictably increased the use of energy and, as a result, increased carbon dioxide emissions to record highs.

It’s no surprise China remains a fervent supporter of the Paris climate accord because it can increase carbon dioxide emissions for the next 22 years, despite the fact that it already emits more than the U.S. and European Union combined.

Yet, China’s propensity to skew emissions data, as well as its past transgressions of underreporting the number of emissions-intensive energy plants online, highlights the feebleness of the Paris accord.

Environmental activist groups champion Beijing’s massive government-funded solar power spending while looking the other way when it comes to China’s coal use.

Such behavior also reinforces the wise move by the U.S. to remove itself from an agreement that looked to finance government-mandated emissions reductions through American pocketbooks.

The Trump administration rejected an agreement that might have reduced the rate of warming by 0.2 of 1 degree Celsius by the year 2100. Even that projection is generous, as it assumes accuracy in the climate models and that every country will meet its intended emissions-reduction targets, a highly unlikely scenario.

Instead, the U.S. turned its sights on improving individuals’ access to energy rather than limiting it. Instead of agreeing to drastically stunt economic growth among its citizens while other countries would be afforded the opportunity to reduce their emissions slowly—or in some instances, increase emissions exponentially—the U.S. boldly asserted that it would continue along the path of affordable, reliable, and increasingly cleaner energy.

In fact, such a rejection paints a picture of confidence in the American people. Instead of mandating which sources of energy are sufficient for the country to consume, leaving the Paris accord behind allows individuals to control their own energy choices.

Much work at the domestic and state level needs to be done to empower energy consumers to control preferences for price, reliability, and source. But leaving the Paris accord and rolling back burdensome regulations that are devoid of any climate benefit are important steps in the right direction.

While some may say America’s energy dominance is coming at significant environmental cost, consider the progress already made.

Since 1980, the United States has drastically reduced harmful pollutants in the air. Nitrogen dioxide, which can inflame the lungs and weaken immunity, is down 57 percent. The equally harmful sulfur dioxide is down 80 percent. Lead, which has adverse neurological and cardiovascular effects, is down 98 percent.

While some of these decreases are undoubtedly a result of government standards that rightly recognized the detriments to health of those pollutants, much of the progress should be attributed to the market, which drives investment in new, cleaner technologies.

When harsh standards, such as those of the Paris accord, are applied, China exhibits a likely outcome: Countries are incentivized to cheat on their reporting, not innovate, and not progress.

By contrast, when governments reduce the market manipulation caused by subsidies and excessive regulations, all sources must compete on an even playing field and are incentivized to maintain economic viability. The byproduct is competitive energy prices, improved efficiencies, and reduced emissions.

For example, in 2015, during the early years of the shale revolution, the Environmental Protection Agency reported that the U.S. saw a 2.2 percent decrease in greenhouse gas emissions from the previous year. That was attributed primarily to energy production switching from coal to natural gas.

During the same period, the European Union experienced a slight 0.5 percent increase in greenhouse gas emissions, owing to a marginally colder winter.

Of course, many differences exist among the climates, markets, and energy portfolios of the U.S. and Europe. However, the notion that countries must litter their energy sectors with mandates, regulations, and politically preferred energy sources, such as those dictated by the Paris accord and touted by European countries, rejects more beneficial market solutions.

Importantly, Paris elevates the distant, uncertain risk of global warming over the immediate, known risk of energy poverty for much of the developing world.

By empowering the energy industry to innovate through competition, the U.S. will avoid the economic pitfalls of costly agreements. At the same time, as consumers continue to demand energy that is both affordable and clean, allowing market responses to such demands independent of government coercion, they will enable the industry to continue its reduction of emissions.

Both developed and developing countries would be wise to follow suit.

This piece originally appeared in The Daily Signal