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Len Rosen's picture
Principal Author and Editor 21st Century Tech Blog

Futurist, Writer and Researcher, now retired, former freelance writer for new technology ventures. Former President & CEO of Len Rosen Marketing Inc., a marketing consulting firm focused on...

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  • Oct 13, 2021 3:37 pm GMT
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Putting a price on carbon (primarily carbon dioxide emissions, but also methane) is a market mechanism first tried out through a global agreement in the 1990s aimed at reducing hydrofluorocarbons (HFCs) responsible for the depletion of the ozone layer. A market exchange system involving caps on the amount of HFCs each country could produce ended up establishing a price for these polluting gasses. It proved effective in getting countries and the industry to reduce HFC use and find alternative refrigerant gasses.

So what constitutes a quality carbon pricing or exchange policy? It should be:

  • Revenue neutral – the tax or levy collected from emissions at the source whether a chimney stack or a gas pump is meant to alter industry and consumer behaviour. The revenue collected gets returned in the form of tax rebates or cash payments to households to offset the increase at the point-of-sale that the carbon price creates. This ensures little or no economic impact or consequence that could lead to a recession or depression if properly administered.
  • Replace existing regulation – changing the rules uniformly means that compliance comes with no risks to industry or consumers. The key to carbon pricing rules is to make them flexible to recognize the full range of scenarios that apply to various industrial sectors. This ensures a level playing field both within a nation and with its trading partners.
  • Eliminate subsidies to fossil fuel producers – financial support for fossil fuels has long been a government tradition to ensure adequate energy supply for a country’s citizens. But fossil fuel subsidies perpetuate the behaviours that have led to anthropogenic-caused atmospheric warming. If a political jurisdiction is serious about driving down GHG emissions, then rapid phase-out of existing subsidies is a must.
  • Reduce subsidies to alternative energy producers – although this may seem counterintuitive, renewable energy from sunlight, wind, tide and geothermal heat costs far less to produce and maintain when compared to coal, oil and natural gas. The latter three require constant investment in exploration, infrastructure, chemical processing, and transportation. Renewable sources once built, other than proactive maintenance and occasional replacement, require far less capital. So once government incentives establish renewables as the predominant source of energy, the need for subsidies goes away.
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Matt Chester's picture
Matt Chester on Oct 13, 2021

If a political jurisdiction is serious about driving down GHG emissions, then rapid phase-out of existing subsidies is a must.

What is also necessary is clearly defining those subsidies-- there are explicit ones and implicit/indirect ones that often don't get the attention they deserve

Len Rosen's picture
Len Rosen on Oct 13, 2021

A lot of energy industry subsidies are ones generally available to other sectors. It is the specific ones that support exploration and new resource development that need rapid phaseout. Only then will the fossil fuel industry recognize the nature of the "assets" they continue to hold.

 

Roger Levy's picture
Roger Levy on Oct 15, 2021

“The revenue collected gets returned in the form of tax rebates or cash payments to households to offset the increase at the point-of-sale that the carbon price creates. This ensures little or no economic impact or consequence that could lead to a recession or depression if properly administered.”

This statement fails to address three critical elements of all of the carbon pricing proposals.  (1) collecting tax dollars for the government to redistribute comes with overhead costs that can often consume a significant percentage of all collections and there are no guarantees that the dollars won’t be diverted to a slush fund for other favored pockets; (2) almost all prior proposals favor redistribution schemes that are in fact nothing more than income redistribution or more social welfare, and; (3) if the purpose is to reduce carbon then why not pursue initiative like nuclear and hydro generation that reduce significant carbon emissions and strengthen the grid which are controlled by government rather than marginal pricing initiatives that can adversely impact consumers?

 

 

 

 

Bob Meinetz's picture
Bob Meinetz on Oct 15, 2021

"...there are no guarantees that the dollars won’t be diverted to a slush fund for other favored pockets..."

"redistribution schemes that are in fact nothing more than income redistribution or more social welfare"

Roger, on one hand you seem to be complaining that money might not be distributed; on the other, that it might (?)

A successful revenue-neutral carbon tax makes all accounting publicly available - no slush funds, no diversions to special interests. Dividend checks aren't "income redistribution", but accountability - if you're using more than your fair share of carbon, you pay the price for it. If you don't, you pay nothing. If you use less, you're rewarded.
 

Most citizens of the global community have had enough of the toll profligate carbon emitters are taking on the environment. A revenue-neutral carbon tax holds them accountable, and that's a good thing.

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