thats_wild (2007-11)

Clouds pile up like garbage

Socialism in the Sky

by Rikki Hall

Air pollution is a major political problem. Locally, air too dirty to meet EPA standards threatens access to federal funds. Nationally, air pollution causes increases in asthma and respiratory ailments, and our forests and lakes suffer from acid rain. Globally, our combined emissions are comparable to what a volcano could spew out. Major volcanic eruptions have disrupted Earth's climate and caused extinctions in the past, and scientists now fear man-made pollution is altering climate.

Proposals for reducing emissions meet political resistance because people fear solutions will be economically crippling, and solutions get branded "socialist" because they are viewed as tax increases. This criticism is backwards. Air pollution is crippling our economy with health costs, human and ecological, and socialism is part of the problem, not the solution.

TVA is a socialist agency. Flood control serves the public good and must be centrally operated to be effective; it is an inherently socialist undertaking. Congress thought power generation at flood-control dams would pay for the system, but the agency carries a $30 billion debt load, mostly a legacy of nuclear investments.

Electricity generation in the TVA region is government-run. Power is distributed by local monopolies. Whoever owns the poles and wires sets the price. Outside the TVA region, utilities have some ability to negotiate with producers over price, so market forces can have some impact, but in TVA land little negotiation goes on.

This is not the socialism in the sky, just a lesser defect in energy markets. Even in regions where producers truly compete, electricity markets fail to reach optimal quality and efficiency because the sky is a free, public dump. Pollution is socialized.

Polluters need permits, and this introduces administrative costs and fees, but in practice, applicants are rarely turned down. Government agencies delay approval and suggest revisions, and companies often compromise, but counties, TDEC and EPA rarely stop operations or impose fines on air polluters.

Federal regulations mostly impact local governments, not private polluters, and regulatory burdens are proportionally bigger for small businesses, so air pollution permits restrict competition and put larger businesses at an advantage. Socialized pollution distorts markets.

Worse still, pollution introduces real costs elsewhere. Demand for health care is exaggerated by polluted air. Haze and acid rain diminish natural beauty and injure forests and trout streams and recreational opportunities. Carbon dioxide is acidifying oceans, pitting sea water against living creatures for the calcium needed to build shells and bones. Air pollution is economically crippling, yet the sky remains a government-run dump.

To reduce our emissions, we need to set market forces loose on the problem. Too many costs are external to air pollution markets. The United States has an emissions trading scheme in place right now. Any major polluter that wants to increase permitted output can buy offsets, either from itself or from competitors who have earned credits. Like the European emissions market, this offsets market is too small to matter. It helps, but it doesn't accurately reflect true pollution costs because it applies only to excess pollution, not the full smokestack spew.

The trick with credit markets is to cap the dollar amount of the market, not pollutant levels. If you do that, you can link revenue from the credit market to income tax relief. The government gets no richer, but an emissions market is born where before was only socialism.

Coal gasification has been in use for decades. It generates electricity more efficiently than pulverization plants, and it allows emissions capture. The invention of a carbon-dioxide sponge would make gasification plants cleaner still.

Gasification plants cost 20 percent more to build, but efficiency gains are lower. Health care and pollution costs are external, so electricity producers still opt for cheap and dirty. Dozens of coal-burning facilities are built each year, but in 2006, not one in 10 was designed for gasification. Health-care savings in the downwind community over the 50-year life span of the plant far exceed additional costs, but those savings are external to the electricity market. Socialized pollution is making us sick.

Permitted polluters could be taxed in proportion to output and revenue capped. If a gasification plant costs $10 million more than a pulverization plant, that works out to $200,000 per year over 50 years of operation. A company that can build coal-fired electricity generators can absorb $200k/yr without collapse. They can pass it along to consumers at nickels per month.

Five hundred coal plants paying $200,000 per year yields $100 million in revenue. Pairing a $100-million reduction in income taxes with an emissions tax capped at $100 million would create a free market that adopts clean technologies faster than socialized power has managed under current rules.

The sky should be a for-profit dump.

Rikki Hall is managing editor and publisher of Hellbender Press , a non-profit environmental education journal.