Energy and the Environment

Energy and the Environment

Description

After a decade during which expenditures for environmental protection enjoyed great popularity, Americans now seem to be increasingly unsure of how to strike the right balance between environmental quality objectives and other social goals. The significant rise in oil prices brought about by the concerted actions of the oil-exporting nations, coupled with a period of near-record inflation and unemployment, has led to a general reexamination of priorities. How much can the United States afford to pay for environmental protection? To what extent do environmental and energy goals conflict? Is the world really running out of resources, and if so should America Develop or conserve its own energy supplies? In this chapter we shall examine some of the critical policy problems and options posed by these questions and raise several more general points about the nature of the choices now confronting the nation. We can view the economy as producing three kinds of outputs: energy, environmental quality, and all other goods and services. In the absence of improvements in efficiency, the more we want of any one of these the less we can have of the others. For example, given the current high price of world oil, we can have more energy at lower fuel costs by switching to coal-burning power plants. But we will pay for that either by increased air pollution or by reducing the production of other goods and services and devoting those resources instead to the production of “scrubbers” to clean power plant smokestack emissions. If, on the other hand, we can find ways to increase the efficiency with which the nation produces energy and environmental quality, we can achieve to some extent all our goals simultaneously. A basic conclusion of this chapter is that there are a number of ways to improve current public policies in both the environmental and energy areas so that we can more nearly reach our goals for both with less adverse impact on other aspects of our living standards than would be possible under current policies. But if we are to achieve such gains the United States must make more carefully considered choices both of standards and goals for domestic energy production and environmental quality and of the policy instruments used to reach those goals. And while we will argue here for the importance of proceeding in ways that minimize costs, in making these basic choices considerations other than economic efficiency must also be taken into account. In particular, energy and environmental policies can have important effects on the distribution of income. Higher energy prices, for example, would conserve energy and reduce air pollution but have a particularly acute impact on the living standards of the poor and near poor. Deregulation of the current controlled prince of natural gas would increase supplies of a particularly clean source of energy but sharply raise costs for those homeowners who years ago chose to buy a gas-heated home. There is also a question of the distribution of income among generations. Some environmental decisions are virtually irreversible, so their potential costs to future generations, whose steward we are, must be of concern. National security and foreign policy objectives are another consideration. Too often uneconomic policies that favor special producer interests are adopted in the name of national security. It is nevertheless a legitimate concern that we not become too dependent on unreliable overseas sources for our energy supplies. It may therefore be necessary to take some steps in the energy area that might not be warranted on economic efficiency grounds alone. Finally, some of the decisions we make about energy and the environment have long-run effects on the nature of technological progress and even on our basic goals and preferences. It is probably true that the more experience people have with a clean environment or an unspoiled wilderness, the more highly they come to value them. And unless the economic system provides substantial rewards for cleaning up pollution, we will not channel inventiveness and scientific effort into finding ways of doing so. This examination of the interaction between energy and environmental problems is divided into two sections. In the first we consider the criteria that should influence policy decisions – economic efficiency, income distribution, personal preferences, technology, and national security—and then discuss the problem of setting national goals and standards and the alternative kinds of policy instruments available to achieve those goals. In the second section we treat specific suggestions for improving current energy and environmental policies in there major areas: more effective and less costly energy conversion techniques; more cost-effective ways of meeting environmental goals; and means of reducing the environmental costs of domestic energy production.

Source Publication

Setting National Priorities: The Next Ten Years

Source Editors/Authors

Henry Owen, Charles L. Schultze

Publication Date

1976

Energy and the Environment

Share

COinS