The Market Vs. The State

Dave Killion — July 17, 2012

Has The Economist slipped on the banana peel of logic?

“Between 2006 and 2012 gas went from providing 20% of America’s electricity to nearly 25%, mainly at the expense of coal. Cheap gas and environmental legislation under the Clean Air Act, aimed at emissions of sulphur dioxide, nitrous oxide and mercury (but not carbon dioxide) from dirty coal plants, accelerated a trend that is set to continue. For decades coal had provided well over half America’s electricity. In 2011 coal-generated power was down to 42%, its lowest level since at least 1949, when records began. The EIA says the switch will speed up in 2012, with coal falling to just 36% of the total.

Gas has wrought some remarkable changes. Over the past five years America has recorded a decline in greenhouse-gas emissions of 450m tonnes, the biggest anywhere in the world. Ironically, given its far greater effort to tackle climate change, the European Union has seen its emissions rise, partly because its higher gas prices (linked to oil) have led to an increase in coal-fired power generation.”

If you’re looking for me, I’m at the corner of Perplexed Street and Confused Avenue. If the more heavily regulated EU has had rising emissions, why include regulation as one of the reasons emissions have fallen in the US? Is it not more likely that regulation in North America would also have led to higher emissions, had they not been offset by declines brought about by the market forces which have led to lower gas prices? The trend suggests to me that there should be a decrease in government regulation, and a more strict protection of market regulation. Then we might see some real progress.

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