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Better to Charge for Emissions Than Ban New Coal Plants

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Just because the Waxman-Markey bill is roadkill on the Senate floor doesn't mean the U.S. doesn't already pay a heavy price for its carbon emissions. If you doubt that, try getting your local power utility to build a new coal-fired generating station. Between 2006 and 2009, applications for 83 new coal plants were either turned down or withdrawn in the U.S..

Coal is still abundant across North America, but outside of a few coal states and the province of Alberta, no one dares build new coal-fired generating plants these days. Coal's carbon emissions have made it a pariah fuel, at least in this part of the world. And with good reason: coal emits twice as much carbon per unit of energy as natural gas does.

Of course, when we say no to new coal plants, we're not really saying no to more power generation. Instead, we're saying, "Let's burn natural gas or, even better, use renewables like wind to generate power, often at double or more the cost of coal." (Falling natural gas prices have only recently made it cost-competitive with coal.) And we're passing those costs along to our own steel and auto-assembly plants.

Unfortunately their competitors overseas are run on the cheap coal-fired power North American plants are increasingly denied. China may lead the world in the production of wind turbines, but eighty per cent of that country's power comes from burning coal.

I don't know about you, but it seems to me we've got our carbon policy ass-backwards. We handicap our industries by forcing them to use more expensive, greener power while they have to compete with imports that are created with much cheaper coal-fired power. And all the while we pretend that we are protecting our economy from crippling carbon costs that would diminish our competitiveness.

But ironically we do the economy more harm than good by not charging for emissions at the same time as we force power users to pay that much more for coal alternatives.

You shouldn't make domestic industries pay twice. If they are going to fork out more for using less carbon-emitting power, you shouldn't make them do it again by losing market share to imports that don't have to pay for their own emissions.

Wouldn't it be better to put an actual price on emissions instead of just de facto banning new coal plants? By pricing domestic carbon emissions, we could then apply that same cost to imports through a carbon tariff and thereby achieve a level playing field. Instead, by pretending we don't price carbon when really we do, we saddle our producers with higher energy costs but deny them any commercial benefit from using greener power, which they would get from a carbon tariff.

The status quo is a lose-lose proposition. If we're going to ban new coal plants, we might as well raise the carbon bar for everyone.