The CEO of NRG Energy says his company is willing to reduce emissions, but only if all the other power companies do the same, else they’d take a financial risk for doing so – which seems a Capitalist Dilemma indeed – cooperation and altruism are what’s needed, but are not traits that capitalism rewards.
Paul Krugman riffs on this in the NY Times
ItÃ¢â‚¬â„¢s in the interest of most people (and especially their descendants) that somebody do something to reduce emissions of carbon dioxide and other greenhouse gases, but each individual would like that somebody to be somebody else. Leave it up to the free market, and in a few generations Florida will be underwater.
The solution to such conflicts between self-interest and the common good is to provide individuals with an incentive to do the right thing. In this case, people have to be given a reason to cut back on greenhouse gas emissions.
He says taxes on emissions and emission permits have been successfully used to lower sulfur emissions, but that international agreements are needed to stop global warming. True, but we also need to give people a positive reason to change (a reward) rather a punishment (taxes and permits) if they don’t. The carrot always works better than the stick.