Nice questions. Here are my thoughts:
- what does it mean when someone says "sustainable business practice" or "green power"? Does a clear definition exist for these terms? How would you define these terms? What metrics do you need to use to distinguish between "unsustainable" or a fuel that is not green?
- How will consumers know that a company or industry is using sustainable business practice or that the fuel that they are putting in their car is "green"?
- Do you need to worry about induced economic effects? For example, suppose a carbon tax causes an entire industry to move overseas where environmental regulations are lax or non-existent and thus society starts to import goods/services that transfers pollution to another other country. What do you do now? Do you apply the tax still?
- How will equity concerns be addressed?
- what does it mean when someone says "sustainable... To me, it means that they have accounted for all meaningful externalities, i.e., they are paying (and charging) when their business generates pollution that affects the environment. This does not mean zero pollution, but zero meaningful pollution, i.e., pollution that stays around. If, for example, a taco seller throws beans and rice in the gutter, it is not meaningful pollution because it will be eaten, washed away or decay. If he throws a plastic bag there, it is meaningful. (Street cleaning is a solution to pollution, not a human right, so we don't say "it's someone's job to pick up the trash.")
Getting back to pollution, I want to evoke the common law idea that we all have a right to enjoy our private and communal property in the condition we found it. We can modify our private property (chop a tree) without notice to others, but we cannot do that in the commons without causing offense. That's why the commons need to be protected/policed in some way (see Ostrom for lit).
So -- power and energy are green or sustainable if their short-term effects (inhaling smoke) and long-term effects (acid-rain, global warming, wildlife death) doesn't harm us. The bad news is that almost all fossil fuels have bad long-term effects if used faster than the environment can absorb them. (I've always thought of resource economics for telling us the optimal way to use something and environmental economics for telling us the impact of those uses on other things.) And we have been doing that for awhile. Nuclear power has no global warming effects (besides generating heat, but we get that from the sun too) -- its effects are harmful when we die of radiation poisoning. Nasty.
Should we all go back to log fires? No -- or not possible. All we can do is try to minimize pollution from power generation and energy. The economist notes that US gasoline prices are among the lowest in the world -- lower, even, than China's. Cheap energy will be used more than expensive stuff.
I could go on....
- How will consumers know... Tricky. We rely on labels to tell us that food is organic or that a TV is made in Mexico, but who confirms those labels are true? That's an important job but not necessarily a government job (Kosher food has been certified for a long time by
independent contractorsrabbis.) Note the principal-agent and free-rider problem. If the producer pays for certification, we (sometimes) get outcomes like the sub-prime mess (bond issuers pay Moodys, et al. to get AAa ratings, etc.) If consumers need to pay, some will want to let others pay for certification and then use the information without paying (public goods problem). The solution is when middlemen can pay for certification and then charge consumers. It's called branding :)
Unfortunately, there is "greenwash" branding ("hybrid" SUV?) and other forms of deception. My guess is that the market can take care of branding, labeling, etc but that there is some role for a non-profit that will aggregate and distribute information on the quality of branding.
One more thing -- use basic economics to tell the difference. If it costs the same to ship something across the road as it does to go across the country, there's something wrong. Now consider that the USPS charges the same to send a letter but UPS changes the rates based on distance. That's the government at work -- killing the environment. (Yes, I know that one-price stamps are easier, but there are ways to handle that AND the whole idea sends a bad signal to people/gets them in bad habits -- like all-you-can eat restaurants!)
- Do you need to worry about induced economic effects? The old "pollution haven"/exporting pollution effect, eh? In theory, there's definitely a reason for polluting industries to move to places that are more lax. Some trade-protectionists use this reason to require that trade partners reach "our level" of green and clean, but that's often a reason to prevent trade.
Even assuming there is a difference, that difference serves the poor country because it gives them an opportunity to earn money and improve their lives. Pollution will go up for a time, but then fall -- if they have political and property rights (will it happen in China? in time for the Olympics?) This "environmental Kuznets curve" has some empirical support, but its mostly a theoretical response to the pollution haven theory.
Another factor to consider is this: What if we do not trade TVs with country X because they have no EPA? Do they set up an EPA to get trade going with us? No, they probably get into the nuclear waste storage business. If our trade is off the table, they have to find the next-best partner. Allowing them to trade with us gives them better options and that competition means they will move to the most profitable business ASAP. Profits include losses from pollution, so they will go green ASAP as well.
- How will equity concerns be addressed? Equity is my favorite concept these days :) There are several issues. First, can poorer people pay for green fuel? Second, will they be affected more/less than others? The short answer is 100% green fuel (no alternatives) should be sold at the same price to poor as to rich. Compensation should arrive to them via block transfers to their income. That way, the poor will use as little (expensive) fuel as they can. They should be equally well off with the income, which they can put back into fuel or into drugs, cable TV or UC Davis tuition.
Green programs and sustainability can have bad impacts on the poor. The most-obvious example is the requirement that cars have anti-pollution devices. Cars cost more and the poor have less income for other stuff... I don't know what to say about this except that being poor is a bummer sometimes. (That's why social mobility plays an important in social justice.) Do keep in mind that plenty of "green" ideas are yuppie ideas. My least-favorite example of this is the "restore Hetch Hetchy" people. They want $5 billion of tax money to break down a dam (losing hydropower and storage) and "restore the lost valley". For what? So they can drive their green SUVs all over the place? I prefer the option put forward by an opponent to the scheme -- more urban parks. Poor people don't drive to HH-Yosemite -- they use parks in the city. Unfortunately, they do not vote enough. (Fortunately, the HH idea has been killed as too stupid to consider :)