So, the New Republic, in all its wisdom, has published a piece by Nordhaus and Shellenberger explaining why they think Al Gore no longer feels that regulation of CO2 is a priority. Instead, they say, he has come around to the idea that big investments in clean energy must be the first step (and the second, and the third) and only later should we worry about regulation and pricing.

And then, oddly enough, Brad Plumer writes about “a major, major setback for coal,” at TNR’s environmental blog (”the Vine”).  He says:

The EPA’s appeals board sided (pdf) with the Sierra Club and blocked the EPA from issuing a permit for a new coal-fired power plant in Utah. Kate Sheppard has a round-up, but it’s hard to understate the impact of this story. Basically, the board ruled that the EPA’s regional office in Denver needed to reconsider its decision not to require any controls on carbon-dioxide emissions. Environmentalists are, not surprisingly, hailing the decision as a huge step toward limiting greenhouse gases from coal plants…

Needless to say, coal suddenly looks like a much shakier investment, and this is Exhibit A for why a growing number of people in the energy industry are clamoring for Congress to pass clear rules on greenhouse-gas emissions, rather than letting the courts hash this out in piecemeal fashion.

This illustrates some of the difficulties with an N&S approach to climate change. We don’t have the option of waiting until later to do regulatory stuff, because it’s already being done, by courts, by local and state governments, by executive decision, and occasionally by bits of federal legislation. The question, then, isn’t whether to regulate now or later, it’s whether to regulate a comprehensive, national structure now or later, with the understanding that rules will be all over the place if we say later.

And this obviously has significant effects on the targets of energy research dollars. N&S want to spend money on research. To what ends? Where are the profit opportunities going to be? Should we invest in technologies to reduce coal plant emissions, or will new coal plant construction be taboo in ten years? If we don’t have a sense of what we’re aiming for then it’s difficult to know how best to allocate research dollars. And if the future regulatory environment isn’t clear, it’s going to be very tough to get matching private investments in many promising fields.

That’s not the only problem with N&S’ arguments, of course. They argue, incorrectly, that emissions pricing can’t work and that it will generate huge increases in energy costs, neither of which is true. They also cast sensible points–that pricing shouldn’t be adopted during recession, and that pricing revenues shouldn’t be counted on to fund research–as damning indictments of pricing regimes, rather than understood provisos about proper design of a pricing plan.

But it should be clear that pricing and investments ought to go hand in hand. Pricing provides information about where and how to invest and incentives to adopt new technologies, while investments in research ease the transition off fossil fuels as carbon prices slowly ramp up over time. That’s the necessary carbon policy. And it’s hard to see how we get to where we need to be without both.