tag:blogger.com,1999:blog-16594468.post4693411969340860827..comments2023-10-24T04:29:23.693-06:00Comments on Atheist Ethicist: Subsidizing Renewable EnergyAlonzo Fyfehttp://www.blogger.com/profile/05687777216426347054noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-16594468.post-77875087698063339312007-07-24T09:04:00.000-06:002007-07-24T09:04:00.000-06:00Alonzo,If we accept the principle that subsidies a...Alonzo,<BR/><BR/>If we accept the principle that subsidies are only justifiable in order to solve free-rider problems, then it seems you are correct that the presence of a positive externality is necessary for subsidies. (It's not sufficient, of course, but it is necessary.) When it comes to issues of climate change, though, there are obvious positive externalities. Reduced emissions, for example, are a positive externality: they are a benefit which can be enjoyed by those who contribute nothing to them. They are a benefit because of the known costs associated with increased emissions -- climate change, air and water pollution, respiratory ailments, and so on. Free-riders are produced, though, because while some members of high-emissions industries may reduce their emissions, thus incurring greater costs, others may not and thus free-ride on the benefits of reduced emissions. <BR/><BR/>(I note in passing that there's a looming prisoner's dilemma here, as the best outcome for everyone is not the rationally best outcome for each individual. This sort of collective action problem could provide a ground for subsidies that differs from the one you're considering here.)<BR/><BR/>One might want to claim reduced emissions are the lack of a negative externality, but given that emissions (and associated penalties) are continuing to rise, reducing emissions clearly generates a benefit relative to other possible outcomes. I don't see any in principle reason, though, for denying that someone can free-ride on a reduced negative externality just as easily as on a positive externality.<BR/><BR/>The problem for your argument is that there are obvious connections between renewable energy sources and reduced emissions (with the possible exception of ethanol). Wind, solar, hydro, geothermal, et al generate fewer emissions than current petroleum, coal and gas technologies. Fewer emissions are a positive externality. By your principle, if there is a positive externality, then subsidies are justified.<BR/><BR/>Personally, I think you're overlooking a third option, in addition to taxes and subsidies, which is to institute a cap on emissions (which could be extended to other social burdens as well) that industries must either meet or trade allowances with each other in order to meet. Then, generally, industries will meet the cap, even though particular companies may be well under the cap while others are well over. This solution will also internalize social costs, and it does so in a way that doesn't bear the administrative burdens of a tax (and, for that matter, a subsidy) and also places the cost directly on the heads of those who create it.ADHRhttps://www.blogger.com/profile/00854569640217600183noreply@blogger.com