Axe the tax if you want to go green

The Australian: Axe the tax if you want to go green

POLITICIANS are trying hard to pretend that the Copenhagen climate summit was not a complete failure. After raising expectations that they would broker a significant, binding treaty on carbon emission reductions, they are now telling us we should view Copenhagen's empty, non-binding agreement as a small but important "first step" on the journey towards solving global warming. We have heard this one before. When politicians from wealthy countries met in Rio de Janeiro in 1992 and promised to cut emissions by 2000, the French diplomat chairing the negotiations declared, "It's just a first step."

When leaders met again in Kyoto in 1997 and promised stricter reductions, president Bill Clinton told us that the treaty was a "huge first step" that "opened the way" to further action. Neither of these "first steps" actually took us anywhere: wealthy countries failed to meet their promises and global carbon emissions have continued to climb.

So what now? After 17 years of wasted effort, we can ill afford to squander more precious time continuing on this pointless road to nowhere. Climate change needs addressing smartly. We can only hope that December's failure will be the jolt we need to once and for all drop the Rio-Kyoto-Copenhagen approach and start tackling this challenge effectively. …

…All the major climate economic models show that using carbon cuts to achieve the widely discussed goal of keeping temperature rises under 2C would require a global tax on carbon emissions starting at $110 a ton (or about 26ca litre of petrol) and increasing to $4300 a ton (or $10 a litre of petrol) by the end of the century. In all, this would cost a phenomenal $43 trillion a year. And this is an optimistic estimate based on the unlikely assumption that politicians everywhere across the globe would make the most effective choices possible (such as choosing more efficient carbon taxes over emissions-trading schemes). The ultimate price tag could actually be 10 or 100 times higher. What we know for certain is that, according to most mainstream calculations, the cost of this solution would be many, many times greater than the climate damage it seeks to prevent. …

… Putting a high price on carbon and hoping that alternative technology will catch up is not a sound policy. Quite the contrary. Until the technology is there, carbon taxes will simply bleed the economy, while providing no real benefit to the climate. So if we are serious about reducing fossil fuel use without crippling the world economy, we need to radically ramp up green technologies.

To get the required technological revolution started, we need to act now. Devoting just 0.2 per cent of global gross domestic product – about $100bn a year in global spending – to green energy research and development would produce the kind of game-changing breakthroughs needed to fuel a carbon-free future for the entire planet. Not only would this be a much less expensive and less politically fraught fix than trying to cut carbon emissions, it would also ultimately reduce global warming much more. …

I get what he is saying, but it still begs the question of how much to invest in which alternatives. Moves toward nuclear power would eliminate some carbon from coal plants, and switching to natural gas would be an intermediate step toward newer technologies. I still think you would want to keep incrementally raising the tax on carbon-producing fuels. The tax would be earmarked for clean fuel research while simultaneously making it progressively more expensive not to move toward cleaner fuels. But as I say, which green technologies do you invest in, and who decides? Market forces need to be brought to play somehow.