Kevin Hassett and Gib Metcalf outline "An Energy Policy for the Twenty-First Century" in a recent AEI short publication. The policy prescription:
- An end to energy supply subsidies
- A green tax swap
- An end to the gas guzzler loophole and possible use of "feebates"
- Conservation incentive programs
I consider #2 to be by far the the most important element. I've got a higher tolerance for the carbon tax than most, I suspect, and don't particularly feel the need to make all of it revenue neutral. In particular, I'd make the carbon tax large enough to not just eliminate the gas guzzler loophole in #3 but the entire program of which it is part. Beyond that, I like #1 for making the government smaller (a hint to you conservatives out there) and, for the same reason, would wait for the first three to take hold to see how much of a need there is for #4.
Read the whole thing.