In her first annual “state of the union” address this month, European Commission President Ursula von der Leyen confirmed that the European Union, with its so-called Green Deal, has committed itself to a new and pervasive form of government intervention in the economy. Apparently, the bureaucrats in Brussels think that they — and only they — know which technological pathways are best for building a sustainable future. In adopting this approach, EU politicians are purporting to know things about the costs of avoiding carbon dioxide emissions that they in fact do not know. But because they will be spending other people’s money rather than their own, they have no incentive to seek out potentially less expensive methods of avoiding or reducing emissions. A naive faith in the wisdom and honesty of central planners — a fatal attraction we thought we had overcome in 1989 — is rearing its ugly head in Europe once again. By contrast, almost all economists believe that it would be far better to establish a comprehensive emissions trading system for all sectors in order to bring about a uniform carbon dioxide price. The EU already oversees a formalized trading platform for emission certificates within the energy sector, and it would be a straightforward process to expand this system to encompass all others. In fact, complemented by a border-adjustment regime, it need only tax the fossil fuels (based on their carbon content) that are imported into or produced on EU territory.
Japan Times 27th Sept 2020 read more »