Discussion about this post

User's avatar
Antihippodamus's avatar

This post, and most american commentary on carbon taxes, largely misses the point of why they are needed. There is too much focus on renewables vs. fossil fuels. There are many sources of emissions that don't compete in any way shape or form with renewables. One good example is production of cement, which counts for more than 6 percent of global emissions. That's more than the total emissions of Japan or Russia. Any technology to remove those emissions will come at a cost, and without a prices on carbon, it will never make sense to invest in and implement those technologies. Regulations won't work either, since you need to have the technology in order to mandate it.

The same thing applies to other industries such as steel (8 % of world emissions), aluminium production (roughly 3 % of world emissions), and many essential chemicals. Emissions from the energy sources of these industries are only a small part of the total emissions, and the easiest part. The difficult stuff is to decarbonise the actual production process. There are many promissing technologies, from hydrogen as a reduction agent in steel, to non-carbon based anodes in aluminiumproduction, to carbon capture from cementproduction. All of these are costly however, and require a carbon price to be economically viable.

Progressives in the US are still fixated on whether a moderate price on carbon helps decarbonise the power sector. Nevermind that the UK has shown that it is extremly effective at removing coal from the grid (combined of course with support for renewables). Nevermind also that a climate policy structured purely around support for renewables risks increasing energy usage, such that part of the renewable energy comes in addition to, instead of replacing fossil fuel use. More importantly it completly misses the point that decarbonising power production is the eazy part. The world needs to get to net zero ASAP, and the hard parts can't wait.

Thankfully Europe takes climate change seriously in a way that US progressives simply do not. Case in point, the price of carbon in the ETS is currently at 57 € and rising, with more ambitious EU legislation just around the corner. That's at a level where some of the "difficult" low-carbon technologies for heavy industry start to become profitable.

Expand full comment
Jeff Rigsby's avatar

I think Noah Smith nailed this a while back. The fact that fossil fuel consumption isn't taxed for climate externalities is actually the lesser distortion. The greater distortion is that we aren't using renewable energy sources that are even cheaper than •untaxed• coal and oil--because we haven't discovered/invented them yet, because there hasn't been enough government-funded research to discover and invent them. Obama was shrewd enough to let the first problem go and focus on the second one, and thanks to the fall in photovoltaic prices on his watch, the coal industry is dying without any new taxes. Spending on scientific research is the real ice cream party.

Expand full comment
108 more comments...

No posts