But in this system, you give the money to consumers instead of investing it in research on energy from sources other than fossil fuels.
I'm a retired businessman, and I believe obviously we need huge amounts of investments in new technologies and conservation and energy efficiency. But that's mostly going to happen in the private sector. It's not so much that we need public investments. We need to send a signal to the market to make the right investments. The market makes plenty of investments now, but they're the wrong investments. There's $120 billion in the pipeline now for new coal-burning plants. But if you send the signal that coal is not the thing of the future, that wind and large-scale solar and all that stuff is where the future lies, then private capital will go there. So it's really a question of getting the market to understand what the real cost of carbon is when you include all the externalities. If you do that, I think you'll solve your investment problem that way.
You don't especially like the energy incentives we have now, like wind and solar tax credits.
Right now, we need tax credits for wind and solar because we don't have the true cost of carbon [figured into coal electricity prices]. If you had a higher cost of carbon, you wouldn't need those subsidies. You should have a cap that really works, that doesn't leak, and have a level playing field. We shouldn't do things like throw huge amounts of money at carbon capture and sequestration. Let the market figure out what are the most cost effective alternatives to carbon; the market can do a fine job of figuring that out. The government trying to pick winners and losers—they're going to end up doing it wrong and waste a lot of our money.
The fundamental problem with Lieberman-Warner and bills like this is that, because they don't recycle the revenue, they are a regressive sales tax on everybody. It's necessary to have a higher carbon price but not necessary to take that money out of the pockets of janitors and nurses and reporters. It will kill the whole thing, and that's the last thing we need. The politicians need to come up with a way of raising carbon prices without screwing the poor and the middle class. And this is, I think, the best way to do it.