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Many governments (state and local) are in a position where taxing carbon isn't a possibility but subsidizing low-carbon forms of generation is. They should not

Many governments (state and local) are in a position where taxing carbon isn't a possibility but subsidizing low-carbon forms of generation is. They should not be handicapped.

lmm 10y ago
They shouldn't be subsidizing one form of low-carbon generation but not another. That will distort the market and lead to buying subsidized forms that are more expensive overall.
- crazy2be 10y ago
  I agree in principle, but given the huge proportion of energy which comes from fossil fuels, a carbon tax would have to be huge (and hence unpopular) if it were to match the market competitiveness of subsidies. That is, to subsidize solar 33% (our current subsidy in the US), you would have to make a carbon tax equivalent to 50% of the current price of fossil fuels, or about $1.50/gal. This is obviously politically untenable in the United States. The happy medium is probably to do a bit of both, and work toward the middle. Smart, targeted subsidies for carbon-neutral sources, and small, gradually increasing carbon taxes.
  - DennisP 10y ago
    You can get away with a higher carbon tax if you return the money to the population. In fact, there's a fair amount of popular support for basic income. Meanwhile a leading idea for carbon pricing is a flat fee per ton with the money returned to the population, equal amount per capita, which essentially is a small basic income funded by the carbon tax. British Columbia has a revenue-neutral carbon tax (in their case by reducing payroll taxes accordingly) and reportedly it's popular. The opposition party ran against it and lost.
    - SamPhillips 10y ago
      Washington State rejected one, unfortunately, one significant downside of the state solution is that some demand can just easily shift to another location. I wonder if there's a scheme where on state will pass it but only have it come into affect if neighboring states do as well.
      - DennisP 10y ago
        A few states' actions wouldn't help much anyway. The real benefit of state carbon pricing was that the fossil industry was starting to come around on a national carbon price, because they'd rather deal with that than a bunch of different state systems. Between the WA defeat and Trump win, that's probably pushed back a few years.

Many governments (state and local) are in a position where taxing carbon isn't a possibility but subsidizing low-carbon forms of generation is. They should not be handicapped.

lmm 10y ago

They shouldn't be subsidizing one form of low-carbon generation but not another. That will distort the market and lead to buying subsidized forms that are more expensive overall.

crazy2be 10y ago
I agree in principle, but given the huge proportion of energy which comes from fossil fuels, a carbon tax would have to be huge (and hence unpopular) if it were to match the market competitiveness of subsidies. That is, to subsidize solar 33% (our current subsidy in the US), you would have to make a carbon tax equivalent to 50% of the current price of fossil fuels, or about $1.50/gal. This is obviously politically untenable in the United States. The happy medium is probably to do a bit of both, and work toward the middle. Smart, targeted subsidies for carbon-neutral sources, and small, gradually increasing carbon taxes.
- DennisP 10y ago
  You can get away with a higher carbon tax if you return the money to the population. In fact, there's a fair amount of popular support for basic income. Meanwhile a leading idea for carbon pricing is a flat fee per ton with the money returned to the population, equal amount per capita, which essentially is a small basic income funded by the carbon tax. British Columbia has a revenue-neutral carbon tax (in their case by reducing payroll taxes accordingly) and reportedly it's popular. The opposition party ran against it and lost.
  - SamPhillips 10y ago
    Washington State rejected one, unfortunately, one significant downside of the state solution is that some demand can just easily shift to another location. I wonder if there's a scheme where on state will pass it but only have it come into affect if neighboring states do as well.
    - DennisP 10y ago
      A few states' actions wouldn't help much anyway. The real benefit of state carbon pricing was that the fossil industry was starting to come around on a national carbon price, because they'd rather deal with that than a bunch of different state systems. Between the WA defeat and Trump win, that's probably pushed back a few years.