Cato Institute on Energy & Oil



Carbon tax instead of Green New Deal

The Green New Deal promises to address climate change and inequality by providing universal health care and creating millions of jobs. While reasonable people can disagree on some aspects of these proposals, one fact is uncontroversial: the US cannot afford them.

The Green New Deal would likely cost upwards of $6.6 trillion per year. The federal government should look for cheaper ways to address problems like climate change. Instead of the Green New Deal, the federal government could adopt a revenue-?neutral carbon tax to decrease emissions without exacerbating the fiscal imbalance. Economists from across the political spectrum support carbon taxation as the most cost-?effective way to address climate change. And a carbon tax would be most effective if uniformly adopted by other countries, too.

Source: Cato Institute, "S.Res.59," voting recommendation , Feb 24, 2019

Opportunity cost and risk cost of nuclear overwhelm savings

Many free-market advocates support nuclear because it costs less to generate nuclear power than it does to generate electricity from any other source (save, perhaps, hydroelectric power), thanks to nuclear's low operation and maintenance costs. However, someone has to first pay for--and build--these plants and the rub is that nuclear has very high, upfront construction costs ranging from $6-9 billion. By contrast, gas plants cost only a few hundred million dollars to build and coal a couple of billion depending upon the capacity and type of plant.

This raises the opportunity and risk costs of nuclear, making it unattractive to investors. Capital-intensive power facilities take longer to build, which means that investors have to defer returns for longer than if they had invested elsewhere.

But the final nail in the coffin for the industry would be if the federal cap on the liability that nuclear power plant owners face in case of accidents (the Price-Anderson Act) were to be lifted.

Source: Cato Institute 2016 voting recommendation on nuclear energy , Jan 28, 2016

Internalizing greenhouse gas cost means $2/ton carbon tax

How do France, India, China, and Russia build cost-effective nuclear power plants? They don't. Government officials in those countries, not private investors, decide what is built. These governments build expensive plants and shove them down the market's throat.

Conservatives project nuclear power as the solution to greenhouse gas emissions. But they should resist that argument. If we slapped a carbon tax on the economy to "internalize" the costs associated with greenhouse gas emissions- the ideal way to address emissions if we find such policies necessary--then the "right" carbon tax would likely be about $2 per ton of emissions. That's not enough to make nuclear energy competitive against coal or natural gas according to calculations performed by the Electric Power Research Institute. In any case, if nuclear offers a cost-effective way to reduce greenhouse gas emissions, it should have to prove it by competing against alternatives in some future carbon-constrained market.

Source: Cato Institute 2016 voting recommendation on nuclear energy , Jan 28, 2016

Oil and gas production isn't damaging, even OCS and ANWR

The real case for increasing domestic production is that some undeveloped energy fields in the United States might be competitive with imports. The one good thing about this energy plan is its call to open up some of those fields for development.

The evidence is overwhelming that oil and gas production is one of the least environmentally damaging ways to get energy. The hysterical attacks against drilling in the Arctic National Wildlife Refuge are little but recycled attacks launched three decades ago against development at nearby Prudhoe Bay. However, environmental impacts there have been minimal. For instance, there were about 5,000 caribou on the North Slope of Alaska when drilling began there. Today, there are 23,000. Offshore oil development and drilling in the lower 48 states--including, as The New York Times recently reported, in wildlife refuges--involves even fewer problems.

Source: Cato Institute 2015-16 voting recommendation on OCS Drilling , Jun 5, 2001

Close Dept. of Transportation; repeal federal gas tax

In transportation policy, the federal government has become not just a costly and unnecessary, but also a meddlesome middleman.

The original rational for the DOT was to build an interstate highway system. That was a legitimate federal function, since all citizens benefit from a coordinated network of highways. The interstate was completed 10 years ago. The vast majority is spent on local roads and urban mass transit systems [should be done on local level].

Source: Cato Handbook for the 105th Congress , Jan 1, 1997

Cato Institute on Energy

Wind power is not competitive; stop funding it

Wind power has proven itself to be in a perpetual “infant industry”, with its competitive viability always somewhere on the horizon. Wind power is noisy, land intensive, materials intensive (concrete and steel), a visual blight, and a hazard to birds. Peak demand for electricity and peak winds do not always coincide.

It is erroneous to conclude that if wind is not competitive now, it soon will be. Wind is competing against improving technologies and the increasing abundance of natural resources.

Source: Policy Analysis No. 280, “Renewable Energy” by R. Bradley , Aug 27, 1997

Eliminate federal energy R&D expenditures

Despite the occasional R&D successes, DOE energy research expenditures fail to pay for themselves. Given the dramatic sums invested in energy R&D over the past decades, the government has little to show for its effort save for light water nuclear reactor technology, and even that breakthrough has yet to show significant commercial gains. The commercial returns on the $80 billion spent don’t even come close to matching the sums allocated. Federal energy R&D expenditures should thus be eliminated.
Source: Congressional testimony by Jerry Taylor, “Restructuring DOE” , May 16, 1995

Energy production by market forces not government planners

Energy is no different from any other commodity in the marketplace. Energy production and distribution is better directed by market forces than by government planners. There is no more reason for a Department of Energy than there is for a Department of Automobiles. The more important an industry, the more important it is to keep it in the hands of the free market. [We shouldn’t] believe that government is better able to manage markets than is the marketplace.
Source: Congressional testimony by Jerry Taylor, “Restructuring DOE” , May 16, 1995

Cato Institute on Global Warming

Predictions of imminent doom don’t come true

Fifteen years ago, we were warned to prepare for the next Ice Age. Today, we worry about our ever shrinking ozone layer and the looming threat of global warming; ever since the atomic bomb, the public and policymakers have been barraged by predictions of imminent environmental doom--none which have come true, and none of which probably ever will come true [according to author Ronald Bailey in ECO-SCAM: The False Prophets of Ecological Apocalypse].
Source: Book review, ECO-SCAM, on Cato web site , Jul 2, 2000

Measured warming is recovery from previous cooling

The small amount of warming during the past century occurred mainly before 1940 and is most likely a natural recovery from previous cooling, not a manifestation of human-induced warming.
Source: Jerry Taylor, “Heated Rhetoric”, Cate web site , Jul 2, 2000

Cato Institute on Pollution

Nuclear cleanup standards are unachievable and costly

Nuclear Weapons facilities such as Rocky Flats, Colorado, and Hartford, Washington, are among the most contaminated environmental sites in America and are expected to take 30 years or more to remediate. Current cleanup standards negotiated by DOE with state and local communities establish rigorous protocols based on the federal Superfund statue that are aimed at returning sites to near pristine conditions. The U.S. General Accounting office believes that the effort to clean up federal hazardous waste sites is likely to be among the costliest public works projects attempted by the government.

Nuclear weapons cleanup programs assumed by the NNWA should be renegotiated to reflect prioritization of containment and neutralization of risk rather than removal and return sites to pristine conditions. In fact, most of the cost associated with DOE cleanups stems from the fact that an attempt is being made to ensure that future residential use would pose no risk whatsoever.

Source: Congressional testimony by Jerry Taylor, “Restructuring DOE” , May 16, 1995

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