- Dec 7, 2019 1:15 am GMT
- 1152 views
I must admit, I'm not grasping how carbon pricing of electricity will incentivize and accelerate growth in renewable resources, so I tried to make it personal using an analogy that I can relate to. Here is my understanding of how the carbon tax on electricity would work using a gasoline carbon tax analogy- I welcome all comments/corrections.
Let's go ahead an place a carbon tax on something we all know well and can easily relate to; suppose gasoline for our automobiles were to receive a carbon tax of $1.00 per gallon across the nation. Instead of paying $2.65 like I do today in the Northeast, I would be paying $3.65 per gallon to cover the carbon tax. This additional dollar, I'm told, will incentivize me and my neighbors to replace our gas guzzlers with electric vehicles until all of the gas guzzlers are extinct and there are no more harmful emissions from cars. To make this deal appealing to me the government will offer to pay me back $.20 cents from my $1.00 tax payment to encourage me to buy the electric vehicle and replace my gas guzzler. The other $.80 would go toward incentives to other parties to encourage the addition of more electric vehicles to the roadway, like charging stations and greater production of electric vehicles by manufacturers. So I, as the consumer, will have to pay the carbon tax during my fill-up of $1.00/gallon of which $.20 is returned to me so that I can buy an electric vehicle, even though my gas guzzler may still have another 5 years of useful life remaining. What should I do? Do I replace my car with an EV and lose whatever good years are remaining on the vehicle or do I keep my vehicle and pay the additional $1.00 carbon tax per gallon until it's time to replace the vehicle with an EV. Many factors come into play with this gasoline carbon tax scenario and each one of us would have to make our own decisions based on personal finances and other factors.
Unlike the gasoline carbon tax I describe above, where each individual decides for themselves how to deal with the higher cost of gasoline, a carbon tax on electricity doesn't afford us the opportunity to decide. We all must pay the carbon tax on electricity, until such time that all of the fossil generators go away. That could be a very long time given our dependence on reliable electricity and, as of today, we are totally dependent on fossil generators for 24x365 reliable energy supply. We are required to pay this electricity carbon tax, even if we do all the right things, like buy an electric vehicle and buy only from renewable energy resources - we still pay the electricity carbon tax while fossil generators remain operational and until such time they are all replaced by cleaner generators. Personally, I would prefer a solution that gives me, the consumer more say over how my money will be spent to achieve a greener planet and a carbon tax on electricity prevents me from having the freedom to decide.
[Update 12/23/2019: Here is another insightful look at the problems with carbon pricing from the UC Berkeley Energy Institute: Suggested citation: Fowlie, Meredith. “The Trouble with Carbon Pricing.” Energy Institute Blog, UC Berkeley, April 29, 2019, https://energyathaas.wordpress.com/2019/04/29/the-trouble-with-carbon-pricing/ ]