Next Generation Energy

Consider, for example, the political context in which we're debating the problems posed by soaring health care costs. No one in a position of influence is suggesting that the free market is the source of the problem. At Sunday's rally in Asheville, N.C., Barack Obama devoted most of his 45-minute speech to his plan to ensure most Americans can afford decent health insurance. But as many an expert has noted, his plan is critically flawed: it won't cover all Americans and it doesn't even come close to getting costs under control.

Most other western industrialized countries have figured out that removing the profit incentive is essential to bringing down health care costs. It is also the only way to ensure universal coverage. But Obama doesn't dare propose "socialized" health care.

It's a similar problem with the financial crises we are allegedly enduring at the moment. Few observers in the mainstream will posit that this is exactly the kind of thing the free market is guaranteed to do. The banking industry collapse is not a failure of unfettered capitalism, but a logical consequence; industry captains know governments will bail them out.

In both the health and banking sectors, consumers have an obvious incentive to cut their expenses, and it's the same with energy. But in all three cases, the producers' interests are diametrically opposed. This conflict is the reason why plans like those promoted by Duke Energy to help consumers save on their electric bills don't actually work. Unless we radically rejig the way utilities make their money, there's simply no way to encourage enough conservation to make a difference.

In health care, the solution is make it profitable for medical professionals to keep people healthy. Socialized systems, properly managed, go a fair way toward this goal. The banking industry poses more problems, of course. There, aggressive oversight and heavy penalties are required to limit the damage they can do.

For utilities, we have to make it profitable to sell less of their product. This is tricky in a free market. It is much easier when you remove the profit motive. The logical solution is to turn utilities into non-profit, government-owned operations. If we don't want to do that, then one necessary element of whatever solution we do come up with is a carbon tax of some kind, whether levied as a direct tax or through a cap and trade system, or both. And not a weak tax other. As this discussion on CBC Radio made clear, we're talking about something in the neighborhood of $200 a tonne on carbon dioxide emissions. And with that will have to come heavily regulatory oversight.

Then conservation stands a chance.