The related issues of climate change and energy security are now generally accepted as major challenges. U.S. greenhouse gas emissions contribute to climate change while its reliance on oil reduces its economic and national security. To tackle both problems, the United States must substantially reduce its consumption of fossil fuels.
This paper presents a three-part strategy for addressing climate change and promoting energy security. First, the government should price carbon and oil correctly so that the private sector has an incentive to reduce their use. Second, the government should increase and refocus public investments on basic research and on long-run speculative energy technologies. Finally, the United States should lead by example and engage major emitting nations in an international response to climate change.