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Climate: Freeing the free market

Katya Gordon

In a recent column I mentioned that Republicans have a golden opportunity to lead the way with climate solutions. Adam Seidel, in the Duluth News Tribune, has written a letter that appears to do just that. In fact, he calls on his fellow Republicans to "grab the spotlight."

Concurring with Rep. Pete Stauber, who advocates for an "all-the-above" approach to energy consumption, Seidel recognizes that "the free market should be the weapon of choice in advancing clean energy."

I appreciate his positive tone and agree with his premise. All we need now are a few facts.

First, climate change needs to be addressed as quickly as possible.

In January, the Minnesota Legislature hosted a series of meetings with scientists from the University of Minnesota (see the Minnesota House website to view; they began Jan. 15.) Their message was clear: Climate change is deeply affecting Minnesotans right now, and impacts could get a lot worse in "business as usual" emissions scenarios.

It is our elected officials' responsibility to make sure that "all of the above" is not the same as "business as usual."

Why is this? An "all of the above" approach — letting markets, not governments, determine what energy is used — depends on a free market. In order for the free market to function properly, "externalities" — or costs and benefits that affect parties who did not choose to incur them — must be recognized and "internalized."

As Friedrich von Hayek famously wrote in "The Road to Serfdom:" ... The price system becomes ... ineffective when the damage caused to others by certain uses of property cannot be effectively charged to the owner of that property. ...Whenever this divergence becomes important some other method other than competition may have to be found to supply the services in question."

The Minnesota Legislature is grappling with the knowledge that the externalities associated with our energy use — in this case, the cost of greenhouse gases not directly felt by the buyer — are not incorporated into its price. Instead, we are paying for the consumption of greenhouse gases indirectly — through the back door.

We pay in many ways that can't be monetized — how does one measure the loss of fishing for lake trout on Lake Superior? — but we also pay monetarily. Disaster relief, mold control, infrastructure costs, low crop yields and insurance premiums are examples.

Our free market — the price we pay for fossil fuels — is not telling us the actual cost of our purchase. How, then, to restore the market to its rightful spot? How to make trade truly "fair?"

Remember the trim tab in a recent column? The trim tab tweaks the rudder of a boat, changing its course. Carbon pricing, as outlined in the Energy Innovation and Carbon Dividend Act, (H.R. 763) acts as a tweak of the trim tab on the rudder of our energy "ship," changing its course ever-so-slightly. Over time, this change marks a dramatic shift in course.

This is not "overreaching legislation," which Sedeil guards against. This is simply allowing the market to flow freely, given Hayek's "divergence" between cost and benefit. The dividend — monthly checks to all households, redistributing the sum of fees collected — transforms this "tweak" into an economic stimulus rather than a damper.

Thank you to Seidel for calling on Republicans to come up with climate solutions, and for reminding us that 68 percent of Republican voters agree that Republicans should present solutions to reduce emissions.

Let's make sure that "all of the above" energy solutions are truly market-based — an elegant way to avoid "business as usual" scenarios that will cost Minnesotans dearly.

Katya Gordon is a volunteer for the Citizens' Climate Lobby and a Two Harbors resident.