Carbon Pricing, a dip too far
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- Posted on June 16, 2018
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Double dipping is the practice of obtaining income from two different sources, typically in an illicit way.
Many economist favor carbon pricing to reduce emissions from fossil fuel burning, which in turn is leading to global-warming.
It is a charge for the right to emit carbon dioxide (CO2) into the atmosphere.
The economic theory is, when market activity generates negative externalities (like carbon emissions) the undesirable effect can be offset by a tax equal to the social cost of the negative externality.
The problem is, the public is already paying too a high price for fossil fuels.
Putting a price on carbon over and above fossil fuel subsidies, the environmental cost of emissions and the cost of the fuel itself, is tantamount to triple dipping.
The IMF working paper, How Large Are Global Energy Subsidies? says fossil fuel subsidies in 2015 were $5.3 trillion or 6.5% of the global GDP.
On top of this a UN study in 2013 said the production sector costs an additional $7.3 trillion a year in environmental damage.
And for 2010, global expenditures on energy were over $6.4 trillion. So, adding it all up about 23% of global GDP is being take up by the production of and the consequences of the consumption of energy.
Instead of granting rights to emit CO2 into the atmosphere, it should be proscribed.
As SkepticalScience has pointed out, CO2 meets the legal definition of an "air pollutant", under the US Clean Air Act, which describes the term “air pollutant” as, any air pollution agent or combination of such agents, including any physical, chemical, biological, radioactive (including source material, special nuclear material, and byproduct material) substance or matter which is emitted into or otherwise enters the ambient air.
The US Environmental Protection Agency lists and regulates air pollutants that are a threat to public health and welfare.
The world needs to do the same.
That said, energy is needed, desperately.
As my hero, the late Richard Smalley, 1996 Noble laureate in Chemistry, pointed out in The Terawatt Challenge, it is the top priority and key to solving the next problems of mankind including, water, food, environment, poverty, terrorism and war, disease, education, democracy and population.
The problem is, the production of energy is a highly lucrative enterprise so we have widespread corporate capture of officials, who exist on political donations and in turn write laws that favor energy incumbents.
The High-level Economic Commission on Carbon Pricing, co-chaired by economists Joseph Stiglitz and Lord Nicholas Stern, concluded that the explicit carbon-price level consistent with achieving the Paris temperature target is at least USD40–80/tCO2 by 2020 and USD50–100/tCO2 by 2030.
As economists shouldn’t the concern of these learned gentlemen actually be, which energy source is the cheapest?
Shouldn’t the first concern of politicians be, how much energy, water, food, sustainable environment, mitigation from poverty, terrorism, war and disease, education, democracy and population control can we get from the public purse?
For the economists I submit the following chart.
The assumptions associated with the chart are shown here.
Two hundred megawatt heat pipe OTEC plants can produce about 25 terawatts of power at an annual cost of $1.7 trillion dollars compared to an all in cost of about $19 trillion for existing sources, which produce only 18 terawatts.
For the politicians, a close to 90% saving on energy allows you to address the other 9 major concerns your citizens have while mitigating sea level rise and ocean acidification to boot.
The bottom line is carbon pricing is a dip into the public’s purse too far, unnecessary and should be illicit.