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An “old energy production source” can be cheaper now because the environmental damage it causes is an unpriced externality. A carbon tax solves that by giving a
by remolacha 5y ago
An “old energy production source” can be cheaper now because the environmental damage it causes is an unpriced externality. A carbon tax solves that by giving a price to that environmental damage. Suddenly, fossil fuels only make sense in the rare cases where renewables cannot be used.
- andy9775 5y agoThat's one way of encouraging investment in green energy sources but may not be perfect. Again, it's a wait and see game. Further, for a firm starting up mining ops your cost isn't just the variable cost of electricity, you also have the fixed cost of the plant. If the cost of a coal plant + cost of electrical production/maintenance + carbon tax < cost of a solar plant + cost of electrical production/maintenance then clearly coal here is the winner.