Elon Musk Joins Calls For Global Carbon Tax

As the climate negotiations continue in Paris, Tesla and SpaceX entrepreneur Elon Musk has joined a chorus of calls for a carbon tax.

Musk is not alone. The climate scientist Jim Hansen also believes that a global carbon tax is the most effective policy driver of a clean energy economy.

The idea is that only a carbon tax will accelerate the move to a clean powered economy. Similar to the tax on cigarettes but not on fruits and vegetables, this would be a revenue-neutral tax; ie, taxes would be lowered elsewhere in the economy so that government treasuries would receive the same as they do now.

Hidden subsidies amounting to about $5.3 trillion annually, currently benefit the burning of fossil fuels.

In order to stave off truly devastating climate change, an additional $1 trillion every year for the next 30 years must be spent on developing clean energy generation, according to the International Energy Agency (IEA).

Considering that the global economy is about $75 trillion, $1 trillion works out to 1.3% of the world’s annual output of goods and services, or about $140 a person per year as a shared cost.

According to the Intergovernmental Panel on Climate Change, earth’s atmosphere is now on track to warm 4 C by the end of the century, triggering a range of mostly irreversible changes, leading to famine, water shortages, disease and wholesale migration away from coasts and expanding deserts.

Reversing this trend is essential. The question now is how? The real issue is just what are the best designed policies that get that money needed to clean energy development, to replace an entire fossil fuel-based global economy currently based on coal, gasoline and natural gas with an entirely new one based on solar power and other clean energy supplies.

While Musk and Hansen believe that only a carbon tax will do it, the evidence is also very strong that simple mandates work faster, cutting through the arguments and false fears raised around carbon taxes.

The problem with taxing carbon is voters can be easily led to delay “jack-booted thugs from the government coming to tax their breathing”.

But while time is wasted trying to overcome the misinformation, in the meantime, a simple mandate can take effect without getting the wider public involved – if state level Public Utility Commissions simply set laws governing electric utilities.

Denmark and Norway similarly mandated their oil companies to invest in clean energy. Gradually Norway’s Statoil and Denmark’s DONG Energy have now developed profitable and world-leading clean energy business divisions.

During the Bush administration, in the clear absence of federal action, many states became involved and set mandates to 20% by 2010 or 2020.

Mandates like the Renewable Energy Standards (RES) in the US have quickly and efficiently changed the electricity supply in California and other states. These simply require that electric utilities must get a certain percent of their electricity from clean energy, and get more every year.

Mandates work because there are penalties on utilities if they don’t. However, they are in need of more ambitious targets going ahead. California shows the way, with a 33% by 2020 (already contracted for with massive solar farms) and a 50% mandate by 2030.

In most states these exclude nuclear and hydro, although they do also cut carbon emissions, if not necessarily renewable – hydro can not be counted on in future draughts, and nuclear does require a small amount of a fuel)

The trick is that state PUCs must now set a longer-term percent rise than we have now.

 

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