Technology is rapidly lowering the cost of renewable clean energy sources, but it also lowers the cost of extracting dirty, carbon intensive fuels. This is exactly why a carbon tax is necessary, and why it would not significantly harm the economy. A small carbon tax, just enough to raise the marginal costs of dirty fuels slightly above those of clean ones, would suffice to shift the balance, ensuring that clean fuels win the race. Its unfortunate that the political environment does not permit this lowest cost solution, resulting instead less efficient mandates on power plants. Rapidly improving technology means that these mandates will also not significantly harm the overall economy (though theyll cause pain locally in coal country), but it is the nature of most govt interventions to be, at best, suboptimal second or third best solutions.
Posted on: Wed, 04 Jun 2014 01:40:27 +0000
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