Memo to CNN.com: You Got It Wrong

It’s great when reporters call you for your opinion. It’s even better when they feature a quote from you in the story. And it’s better yet when it’s from an organization with the reach of CNN. However, it’s not great when they get what you said wrong.

Last week I spoke to Azadeh Ansari, a reporter from CNN.com, about the Obama administration’s efforts to address global warming. I began by praising the president’s announcement last Monday instructing the Department of Transportation to enhance fuel efficiency standards and the Environmental Protection Agency to re-examine California’s request for a waiver to regulate tailpipe emissions of greenhouse gases.

I said that the president should go further by instructing EPA to develop rules to regulate all emissions of greenhouse gases under the authority given it by the Clean Air Act and confirmed by the Supreme Court in Massachusetts v. EPA. The latter is a step I have been urging for quite some time, and I was pleased to see that the New York Times opined similarly on Sunday.

I also endorsed President Obama’s plan to use the economic stimulus to encourage investment of green technologies. In fact, I argued, as I've done here on my blog, that the administration should go even further by requiring that a small percentage of investments made by companies receiving so-called TARP funds (i.e., bailout money formally called ”Troubled Assets Relief Program”) be targeted at renewable energy projects (see here, here, and here).

Why We Are Still Relying On Fossil Fuels

But, I said, there is a problem. The government has been subsidizing and encouraging investments in one form of renewable energy or another or in efficiency since the 1973 gas crisis with little effect. Our dependence on fossil fuels has grown.

I explained why: the price for fossil fuels is artificially low. The true costs of our addiction to oil, to paraphrase the former president, range from environmental and health impacts such as global warming and air pollution to defense dollars to protect our Middle Eastern sources of oil. These costs are significant but not included in the price we pay for fossil fuels. As a result, that price seems to be lower than that of renewable energy.

In fact it is not. The extra, external costs of using fossil fuels are borne by society – in health care expenditures, losses in environmental services (like clean air and drinking water), and in the case of global warming in costs that our children and grandchildren will pay for. As long as the external costs of fossil fuels are not incorporated into the price, fossil fuels will have an artificially competitive advantage, and getting private sector investment in renewable energy will be an uphill battle.

A Solution to the Artificial Advantage of Fossil Fuels

The solution I pointed out to CNN was to put a price on carbon emissions, which would level the playing field and send a signal to the private sector that investments in renewable energy made business sense. (I've written about this quite a bit, too: here, here, and here.) Putting a price on carbon would not actually amount to government regulation, I argued, but would simply be a step to remove the current market distortion caused by a failure to internalize the true costs of fossil fuels in their price to the consumer. A step well within the purview of the government.

How to put a price on carbon? Cap-and-trade is one approach – the one, I pointed out to CNN’s Azadeh Ansari, that I favor. A carbon tax is another possibility. Even placing a floor on the price of gas at the pump could be a step in the right direction. Until such a long term policy is put into place, efforts to wean ourselves off of fossil fuels will always be short-term and ineffective, I opined.

Somehow that conversation with CNN was summarized with a single quotation:

"These technologies are not new. They have been around for 10 to 15 years. ... Government can push new policies, but it [renewable energy technology] has to prove to be economically competitive or else it will not happen."

I actually thought I said new "subsidies,” not new “policies.” In either case, it is a mystery to me how, after my lengthy discussion with CNN on the need for a long-term policy solution to put a price on carbon, I was featured as the guy opposed to policies to address climate and energy security. Oh well, I guess that’s the risk you take when you speak to reporters.