Who is interested in making the market work better to reduce carbon emissions?

Question

The market is already well geared to produce safe products. In the pharmaceutical and other industries, much of the cost may be in just that, ensuring a safe product. One contributer here has said the market will do just that with greener products. But will it do it without incentives and/or penalties and just on customer preferences?

Answer 1

Sure it will.  We don't need gvmt to produce safe medications, as one bad drug will kill a company.  We don't need gvmt to regulate carbon.  The free market is demanding it and the market is responding.

Gvmt regulation will do to carbon as the war on poverty has done for the poor.  Just give us more at a very high cost to us.

Answer 2

Good question.  Keep in mind that the example you used--the pharmaceutica l industry--doesn't provide safe and useful products without incentives AND regulation.  They draw on heavily subsidized research (and direct subsidies)--and we've all seen the recent problems with soe drugs and with FDA oversight. The same can be said of ohter industries.

Now, by way of validating what I'm going to say, my primaary field is as a historian of technology (I'm a doctoral student).  VERY few major industries come into being without strong support from the state.  Railroads needed rights of way--and a financial package that made it possible for them to build transcontinental lines that couldn't be self-sustaining until they alread existed so the markets they needed could develop.  Aircraft research was (and is) heavily subsidized.  Automobiles depended on state action to create the infrastructure (roads, etc.) needed to make them practical on a large scale.  Computers were developed with federal funding--and DARPA created the first networks tha tled to the Internet. And so on.

There is a myth--and that's all it is--that somehow, the "market" takes care of all this without any policy measures or intervention by the state. That's not only not the case--it CAN'T be.  One example to show why: do you really need the state "interfering" in eletric power production and distribution?  Yes--for starters, those power lines had to go somewhere to get the powr to your home. That means laying those lines across miles of territory--meaning issues of land use, property rights, eminent domain, etc.  It HAS to be regulated--or it couldn't exist.

What's needed in the current issue of shifting to "green" enrgy is the kind of public/private approach tha thas worked to create the massive ad incredibly successful economic infrastructure and industries we now have.  That will include subsidies for research--and penalties for noncompiance with regulations.  There are both good and bad ways of doing this, of course. The recent energy bill Congress passed is a good example of both:

>positive: Congress set a higher standard of fuel efficiency for automobiles--but did NOT tell the auto industry how to do it--leaving them free to innovate and find the best ways of meeting the standard

>negative: mandating a six-fold increase in biofuels over the next 1few years. This is a "prescriptive" regulation--and a bad one. First, it is telling the market what technology is favored--instead of leaving innovators free to pursue all possibilities. Second, it ignores "unintended consequences" we already know about that the market must simply accept (e.g. upward pressure on food prices).

>neutral: mandating a full switch to compact flourescents in 5 years.  This really is a no-brainer in that that is clearly the way the technology and the market are going. so its probably not needed.  And unneeded rules are usually a bad idea.  A better approach woud have been to mandate CFL use by tehe government and contractors--thus stimulating the market and accelerating the cchangeover--but otherwise leaving the market alone.

Thee is a final point--and this is NOT a political jibe--both parties are culpable. But we have a situation in the United States where energy  policy is virtually dictated by and for the fossil fuel industry.  That is going to have to change--and it will take strong action on the part of the government to do it.  The problem here is NOT the market--quite the opposite--its that the fossil fuel industry has enough economic power and political influence to control the market so that it cannot operate freely.  Iknow there's a pretense to the contrary--but the facts don't support that; markit control and manipulation by oil,coal, and natural gas ccompanies is too well documented.

BTW--theres another item that's floating around: the notion that it doesn't matter because China and other nations are going to use more coal, etc. anyway.  That is not the case--and this is something the market will take care of with our without government intervention--once we in th eUS get serious.  Why? The answer is simple: alternative enrgy technology is already at the point of being cost-competitive with --or cheaper than--fossil fuels. when the US changes, that will give us a competattive advantage. Other nations will then follow suit forpurely economic reasons--they'll have to to stay competative.  

One area in which you may see some further resistance by established industry and the need for government intervention is solar power. The reason is pretty straightforward: as solar systems become more and more affordable (the start-up costs have halved since 2000 and are going much lower in the next decade, given the technology that's in the pipeline)  this alternative energy system is going to start impacting existing electric utilities--for the first time in a century, individual homes and businesses will be able to "get off the grid."  So we may see attempts by existing utilities to delay or deraill growth in solar powr industry.  Here, the role of the state is pretty straightforward as well--jsut makee sure everyone plays fair.  But that, too, does take a degree f intervention. That's what cops and courts are for, after all--to make sure everyone obeys the rules and punish those who don't.

Answer 3

Most wont do it without public pressure, all they are interested in is profit.

There are those who will do it to be ahead of the game, it's kind of trendy to be 'green' at the moment.

Then there's those who have someone who cares in charge and will push to do what it takes to reduce emissions.

Anyone who does their bit to help is making a difference, even if it doesn't feel like it sometimes!

Answer 4

Crabby_blindguy3 has given a well thought out reply to your question in which he highlights the need for government intervention but I should like to add one thought.

Governments have begun to recognise the need to regulate and incentivise the market to reduce carbon emissions.  But they are proceeding slowly and diffidently because they fear an adverse reaction from electors if they set out honestly what needs doing and why.  Politicians also depend upon backers to fund their election campaigns and fear a loss of such backing if they take too hard a line on environmental protection.  That is the reason they appointed the Intergovernmental Panel on Climate Change - to tell us the bad news and soften us up for the necessary measures.

So what should we do about it?  The answer is to exercise consumer power to get the ball rolling and to demonstrate to politicians and their backers that there are votes to be had in sensible sustainable policies.  

Individually we should act to reduce our carbon footprints.  We should walk and pedal more, use public transport more, buy smaller cars or none at all, practice energy efficiency and saving in the home and workplace, recycle as much as possible and, most importantly, stop buying stuff we don't need.  By doing so, we will not only send a signal to the market but also to the politicians and our own friends and neighbours.  We will also discover that this simpler lifestyle is far healthier and more fun than trying to keep up with the neighbours.

Some will argue that reduced consumption will damage economies but the truth is that the wasteful use of non-renewable resources is about to lead to economic collapse anyway and we need an economic slowdown rather than a full speed crash.

Best wishes for a low carbon and sustainable economic, social and environmental future.

Answer 5

If 'the market' did such a great job in ensuring that all products being sold here were safe, we wouldn't need the FDA.  People could just sell whatever food and drugs they wanted, and let the market's demand for safety control the quality of the products.

In some cases, such as our health, we require higher standards.

In the case of non-consumables like toys, we can basically allow the market to be self-regulating.  If a kid gets lead poisoning from a GI Joe, the company takes a big PR hit, so they try to have stringent quality assurance procedures to prevent this type of scenario.  Nevertheless, we still hear stories about kids choking on plastic parts and toys being recalled for one reason or another.

In the case of the environment on which we all rely, I certainly think we need to err on the government regulation side rather than market regulation.  Sure, some percentage of the people are going to demand green products and be willing to pay a somewhat higher price for them, and this percentage will grow over time, but there will also always be a percentage of people willing to risk damaging the environment in order to purchase a cheaper product.

If we allow the market to regulate itself, those people who are willing to take the risk will be damaging the environment in which the rest of us live in the process.  If we each lived in a bubble with our own self-contained environments, that would be fine.  Since we all share the same planet, we need to decide on environmental guidelines on which we can all agree.  Generally those regulations err on the side of caution in an attempt to avoid the worst case scenario.