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Guns, Butter, or Green?

Utilities will face stark tradeoffs in meeting the next round of emissions controls.

Fortnightly Magazine - April 2005

nuclear power to achieve greenhouse-gas emissions set by the Kyoto Protocol.

If you spent any time in college studying Economics 101, you'll already know all about "Guns or Butter." At the University of Virginia, for example, Economics professor Kenneth Elzinga had another name for this debate—"Beer or Deodorant"—but the concept was the same: produce more of one, and you must give up some of the other.

We're accustomed to using this model to talk about the conflict between consumer goods and military spending. Add in a third dimension, however (environmental investment, creating higher-cost energy), and the policy complications grow exponentially.

As utility executives, regulators, and environmentalists review their energy resource options, let them never forget that when guns and butter both become more costly to produce—it means less of each.