This article originally provided by The Charleston Gazette

March 30, 2008

Rick Wilson

What if W.Va. started thinking of climate change policies that would be good for the state?

The conservative poet and thinker Peter Viereck came up with the best working definition of reality that I've found so far. In a poem called "Hex," he defined it thus:

"It's what, when you don't believe in it, won't go away."

It's becoming clearer that global climate change might fall into that category.

The Powers That Be in West Virginia, and I'm not referring to the elected ones, have a vested interest in denying or minimizing the reality of it and limiting or delaying actions taken to counter it. The coal that keeps the lights on produces a lot of CO2.

But as powerful as those interests are here, they don't control the whole world or even the whole country. Sooner or later, we're probably going to be looking at significant national legislation to deal with climate change.

It's the reality thing.

Rather than wishing it away, places like West Virginia would be better served if we started thinking and talking now about policy options that would do the least harm to the state, its people and its economy while also limiting the amount of overall damage caused by climate change.

The damage done to the public and environment by carbon emissions is a classical example of what economists call an externality-i.e. a social cost that doesn't show up on the buyer's or seller's bottom line. At their best, markets "tell the truth" about prices and costs. But when costs get shifted to others or to the world as a whole, this doesn't happen. It's a common form of market failure.

I know the idea that markets can sometimes fail is a shock for true believers in the cult of the market god, but these things happen. It's the reality thing again.

A likely scenario is that at some point, the United States will get serious about dealing with it, either by imposing a carbon tax or by a cap and trade system, which would limit greenhouse gas outputs and allow companies to exchange carbon emission allowances. If these are well designed, they can ease the impact of these changes on ordinary people and the public.

If we go the cap and trade route, it's important that carbon emission allowances be auctioned off by the federal government rather than simply given away as windfall profits to corporations and that the revenues generated by this be used responsibly. The nonpartisan Congressional Budget Office (CBO) estimates that a cap and trade system could generate $50 to $300 billion a year in revenue.

Robert Greenstein and other researchers at the Center on Budget and Policy Priorities have done some groundbreaking research on how these resources could be used to strengthen the economic well-being of the country as a whole.

For starters, they recommend that 15 percent of the revenue from a cap and trade auction should be dedicated to compensating energy companies for losses under the new system. That figure is derived from CBO estimates

The people who will be hit the hardest by rising energy costs, however, are low-income Americans. If Congress eventually adopts a policy to reduce greenhouse gas emissions by 15 percent, energy costs for these families could rise by $750-$950 per year, including home energy, gasoline and other kinds of consumption. But by setting aside as little as 14 percent of the revenues generated by a good climate change policy, these families could receive an energy rebate along the lines of the popular Earned Income Tax Credit.

This would leave around 70 percent of cap and trade revenue for other important purposes, including assisting communities and workers in places like West Virginia affected by these changes. Other potential uses include investing in research and development of alternative energies, providing energy cost assistance to middle-income families and offsetting rising energy costs to federal, state and local budgets.

The old saw that we have to choose between economic well-being and the environment is getting lamer and lamer. As you may have noticed, both are taking a dive right now.

With luck and effort, we can have some of both - or a whole lot of neither.

Wilson is director of the American Friends Service Committee WV Economic Justice Project and publishes The Goat Rope, a daily public affairs blog: