Better Energy and Environmental Policy

January 24, 2012

President Obama is expected to argue for new energy policies in his State of the Union address tonight, including calls for green jobs and clean energy. Ted Gayer, co-director of Economic Studies, reviews some of the touchstones in energy and environmental policy debates today and argues that much government policy is misguided and poorly prioritized. Gayer says the focus of environmental policy should not be on job creation and that government is not very good at venture capitalism. Instead he argues that a comprehensive energy policy should focus less on targeted, politically-hidden subsidies, and more on market forces. For example, he argues, it would be better to price pollution—i.e., a carbon tax—which will send signals to the market to conserve more and develop alternative sources.