Is lax environmental regulation bad for the economy? Very likely, suggests an article in today’s Christian Science Monitor.

American businesses were once world leaders in wind power, solar panel manufacturing, and coal power plant pollution scrubbers. But decades of regulatory laxness has relegated alternative energy and pollution-reduction to the back burner. Now, in order to diversify its energy portfolio or reduce air pollution, the US is forced to play catch-up. And instead of boosting home-grown technology and business, Americans must rely on cutting-edge industries that have flourished in Europe and Japan. As the article explains:

"It’s not that our technologies were inferior, but we didn’t have the public policy or patience to build the industry," says the SEIA’s [Solar Energy Industry Association’s] Colin Murchie. While Europeans subsidized solar and wind production, the US offered tax breaks for fossil fuels and has allowed its wind-production tax credit to lapse repeatedly.

The next crossroads will be in greenhouse gas reductions. And again, US policymakers appear to have chosen poorly by not signing the Kyoto Treaty, a move that is intended to aid American industry, but could end up hurting the economy in the long run. Maintaining our economy’s singular reliance on fossil fuels is not a smart growth strategy for the 21st century. Global supplies of petroleum are waning and combating climate change (principally through reductions in fossil fuel combustion) will become ever-more important. So clean energy alternatives and energy efficiency will be critical in the coming decades.

And not only does the US economy rely too heavily on fossil fuels, it does not use its energy supplies efficiently. According to 2002 data from the US Department of Energy, with the amount of energy needed to produce a dollar of wealth in America, the British can make $1.50, the French can make $1.73, the Germans can make $2.01, and the Japanese can make $2.73. This "energy intensity" disparity puts the American economy at a big competitive disadvantage. The smart thing for long-term growth is not enabling the American economy to continue its wasteful ways, but using smart incentives and regulations to push for greater efficiency and resilience.