The Green New Deal would spike inflation and interest rates.

Because the private market has no incentive to reduce carbon emissions, the government intervention is necessary. But not all interventions are created equal, and the Green New Deal’s seem engineered to be as expensive as possible. Consider its goal of massive public investment to achieve 100% renewable energy in as little as 10 years. Kevin Book, head of research at ClearView Energy Partners, a research firm, estimates replacing the 84% of current U.S. generation that is not renewable with solar photovoltaic, wind and biomass would cost $2.9 trillion - nearly a full year’s tax revenue. This excludes a cost for interest, operations, maintenance, new transmission lines or compensation to private investors for writing off natural-gas and coal plants with plenty of useful life left. It assumes cheap batter storage that doesn’t yet exist. Even so, this works out to $83 to avoid one metric ton of carbon dioxide. The Green New Deal’s plan to upgrade every building in the U.S. to “maximum energy efficiency” is even more questionable. A study by Meredith Fowlie, Michael Greenstone and Catherine Wolfram in the Quarterly Journal of Economics found the federal government paid an average of $4,585 each to weatherize homes in Michigan. Extrapolate that to 95 million homes nationwide, and the bill tops $400 billion. The cost of avoided carbon dioxide: up to $285 per ton. To understand how high $84 to $285 per ton of carbon dioxide is, consider that Barack Obama’s economists put the economic harm of a ton of C02 at $50. Or that you can pay a power producer just $6 to reduce emissions by one ton in New England, $15 in California, and $25 in the European Union, based on emissions permit prices in those jurisdictions, notes Mr. Greenstone, an economist at the University of Chicago. Yet in the Green New Deal, trillion-dollar price tags are a feature, not a bug. That is because its mission is to create “millions of good, high-wage jobs” in “front-line and vulnerable communities.” The higher the price tag, the more jobs it creates. How to pay for it? Its Democratic sponsors would raise taxes on the rich and borrow the rest, including from the Federal Reserve, just as the U.S. did during World War II, dramatically boosting output and employment. But in 1941, the U.S. had plenty of unused resources to mobilize: just 28% of prime-aged women had jobs. By 1945, 35% did and today, 74% do. (The data aren’t strictly comparable due to changing definitions). The war effort still spurred intensive inflation pressure, contained only with wage and price controls. The U.S. is now close to full employment and its debts are far higher. Even in today’s world of low inflation and low interest rates, the scale of deficit spending the Green New Deal implies would likely push both higher.