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Carbon Tax Economists are the Modern Day Alchemists pursing the Philosopher's stone

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Richard Brooks's picture
Co-Founder and Lead Software Engineer Reliable Energy Analytics LLC

Inventor of patent pending technology: METHODS FOR VERIFICATION OF SOFTWARE OBJECT AUTHENTICITY AND INTEGRITY and the Software Assurance Guardian™ (SAG ™) Point Man™ (SAG-PM™) software and...

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  • Sep 28, 2021 1:58 pm GMT
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A recent article in the Washington Post titled "Senior Democrats’ push for powerful climate tool collides with political realities" quotes some prominent economists supporting the use of carbon taxes to reduce carbon emissions and address climate change. However, they face a big problem, just like the Alchemists in their belief that the magical powder "tincture" could transform lead into gold, there is no empirical evidence supporting their "economic theory" that a carbon tax would be an effective cure for our climate crisis.

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A carbon tax would raise the cost of electricity on everyone, resulting in a disincentive to electrify our homes, businesses and transportation. If we want to address climate change and prevent it's disastrous effects, urgently, we need to look at other "proven" alternatives. We need look for solutions that incentivize electrification AND build an electric system with less reliance on fossil fuels, e.g. nuclear, solar, wind, hydro, tidal AND secures the essential grid services that are needed to ensure grid reliability and resilience, which carbon pricing does not achieve according to this NEPOOL Report. In short, if we want to reduce emissions from the generation of electricity and ensure that we have a reliable, resilient electric grid, then we need to follow the lead of green buyers and invest in zero emissions generators and transmission lines that are able to bring these remote source of power to the load centers.

 

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Matt Chester's picture
Matt Chester on Sep 28, 2021

A carbon tax would raise the cost of electricity on everyone, resulting in a disincentive to electrify our homes, businesses and transportation. If we want to address climate change and prevent it's disastrous effects, urgently, we need to look at other "proven" alternatives.

What are your thoughts, then, on having carbon tax of some kind be paired with a complimentary policy (direct tax on those electricity alternatives, for example) that would ensure we're not just shifting from one dirty source to another? Of course lots of care needed to make sure any policy isn't recessive-- but I guess I'm curious if you think there's a role for carbon tax as a part of a suite solutions or if you think it's a non-starter. 

Richard Brooks's picture
Richard Brooks on Sep 28, 2021

Thanks for the question, Matt. IMO, electrification is the only feasible solution to reducing CO2 emissions across all sectors, electricity, transportation, homes and businesses. We must do everything possible to move implement clean electricity generation so that other sectors can electrify, especially transportation and heating. I believe you reap what you sow; we should be incentivizing more green power generation and transmission infrastructure to support these resources. Maybe there is room to apply a carbon tax on others uses of fossil fuels, i.e. transportation, but don't disincentivize the transition to electrification by increasing electricity costs - that's our only hope to address climate change, IMO.

Nathan Wilson's picture
Nathan Wilson on Sep 28, 2021

Yes, I agree that carbon pricing is a bad way to start an energy transition (but it might be a suitable ending).

As Richard notes, electrification will be the primary emission reduction strategy for most non-electric energy use application.  Therefore decarbonization of electricity must come first.  The old EPA Clean Power Plan (which gave each state a timeline/glide-slope for shifting to low emission electricity) made sense to me (except the absurd rule allowing nuclear plants to be replaced with fossil fuel plants without impacting the compliance as the added emissions would be off-the-books).

The idea that "the market" can find a better approach to  economy-wide decarbonization than starting with electricity decarbonization strikes me as very unlikely.

Once the electric power industry is on-track toward mandated decarbonization, it will make sense to offer taxpayer-funded incentives and infrastructure to encourage electrification of transportation and heating.  The taxpayer-funding insures the pain is shared by everyone, not just the early-adopters; it also avoids/minimizes mandated capital expenses and energy cost increases that can stifle job creation.

After a few years of that, cut-in sales taxes on end-use equipment (like cars, trucks, and heaters) that uses fossil fuel, based on a percentage of the typical projected annual energy cost (e.g. 50-200%).  This intervention has the feature that it is focused on impacting the people/businesses who were buying new equipment anyway, not everyone.  Also, unlike a carbon tax, it is not an intervention into everyday life, attempting to coerce people into draconian conservation.

After many more years, then consider a price on carbon to help complete the transition.  

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Also, who are we kidding?  Any viable energy plan must start with bribes for the folks in coal producing states (i.e. some sort of jobs program).  Oil and gas production will taper off gradually, but coal usage must obviously drop like a brick.  I just heard that one of the tactics that allowed the Apollo program to achieve the necessary public support was the huge number of jobs at the NASA facilities that were built in the Southern states which were struggling economically at the time.

Audra Drazga's picture
Audra Drazga on Sep 30, 2021

It seems like this would hurt the middle and lower classes the most.  I agree we need to focus on other ways - including continued efforts with Energy Efficiency programs and ways we can reduce consumption as well. 

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