Some politicians and pundits fear that addressing global warming will drain the U.S. economy and hurt the nation’s competitive edge. But going green and clean is the best way to remain an economic powerhouse, argues Thomas L. Friedman in his new book Hot, Flat, and Crowded: Why We Need a Green Revolution—and How It Can Renew America (Farrar, Straus and Giroux, 2008). We asked Friedman, a New York Times op-ed columnist, to explain his thinking.

Click here for an extended version of this inteview

What do you mean by the title Hot, Flat, and Crowded?
It refers to the convergence of three big seismic events. The first is global warming. Second is what I call global flattening: the rise of middle classes all across the world that increasingly have the kind of energy and consumption patterns, demands and aspirations of Americans. Crowded refers to global population growth. These events are like three flames that have converged to create a really big fire, and this fire is boiling a whole set of problems.

You say that going green is a national security imperative and that green is the new red, white and blue. Can you explain that?
Clean power is going to be a source of power generally in the world—every bit as much as tanks, planes and nuclear missiles have been during the cold war. The country that takes the lead in clean power and clean tech is going to be an economic and strategic leader in the 21st century. If we take the lead in that in­dustry, we will be generating the kind of innovation, competitiveness, respect, security and breakthroughs to help the world. In so doing, we will make ourselves more respected, stronger, more secure, entrepreneurial, richer and competitive.

You argue for an overhaul of our energy system. Why is such a drastic measure needed?
If you don’t do things systematically, you end up doing corn ethanol in Iowa and thinking you solved the problem, when all you have done is drive up food prices and encourage more people to plant, say, palm oil in the Amazon. Right now we have a system. It is the dirty-fuel system. One mile from your house, you can probably find a gas station....

One block, actually.
Exactly, so this system works really well, and it gets that dirty fuel from the oil well to the tanker to the refinery to your neighborhood and into your car. Of course, we now know in doing that we are also despoiling the environment, strengthening petro dictatorships, driving biodiversity loss, et cetera. We have to replace that system with a clean-fuel system.

So what will we need to start changing the system?
Innovative breakthroughs that we just do not have right now. What we don’t have in energy today is a real market that would encourage 100,000 Manhattan Projects in 100,000 garages with 100,000 ideas.

How do you get to a market that rewards innovation?
You’ve got to shape it in two ways. One is with the right price signal. We have to have a tax on carbon that is long-term, fixed and durable. So those 100,000 inventors know if they do come up with that breakthrough, that if OPEC lowers the price of oil, it won’t knock them out of the game. And the second thing is to rewrite the rules around our utilities, as people started to do in California and Idaho. Specifically, the utilities have to be paid not for kilowatts sold but for watts saved.

But how could a politician running for election sell a new gas tax?
So let’s imagine you are in a campaign. Let’s imagine the discussion, and your opponent says, “There goes my opponent, Mr. Friedman. Another tax-and-spend liberal; now he’s for an energy tax. He’s never met a tax he didn’t like; now he wants to tax your gasoline more.” What I would say is, “Let’s get one thing straight. My opponent and I, we’re both for a tax. I just prefer my taxes should go to the U.S. Treasury, and he does not mind that his taxes go to the Saudi, Russian or Venezuelan treasuries. Let’s not fool ourselves that we’re not paying a tax here [with our existing energy system].” If you can’t win that debate, you don’t belong in politics.

So what can the average citizen do to help alleviate the problems brought on by a hot,  flat and crowded planet?
My mantra has been, “Change your leaders, not your lightbulbs,” because leaders write the rules. The rules shape the market. The markets give you innovation at a speed, scope and scale that we need.

Note: This article was originally printed with the title, "Green Pay Dirt".