Let’s start by taking a short walk through history. In 1879, Edison discovered the light bulb and from the 1880s small electric stations began powering a few city blocks. This opened up a whole new world of innovations and inventions. Quality of life dramatically improved. This is when the government decided to intervene and subsidize the production of cheap and abundant fossil energy to promote growth. This was the starting point on how government interference compromised sustainable energy development and does so till date. The first electricity generating wind turbine was invented by Charles Brush in 1888. It was brilliant for its time, being able to power hundreds of streetlights and charge batteries. It did have its flaws. However with coal and gas being made so cheap through subsidies there was no incentive to develop renewable technologies until the oil shortages and environmental concerns in the 1970s. Major health concerns regarding pollution and global warming from burning fossil fuels led to several new renewable energy policies. Sweden was the first country to implement a carbon tax in 1991. These were brought in so as to level the playing field for renewables. This ushered in a new set of problems which we are fighting today.
Putting a price on emissions
Unlike economic growth which is easy to quantify, describing the monetary effects of greenhouse gas emissions is difficult. Everyone is aware of the adverse health and environmental effects but can’t put a price tag on it. Years of deliberation across multiple nations have led to mostly failed pricing. Either prices being set too low to not stimulate growth in renewables or too high which cause businesses to move to countries with low or no carbon taxes who often also have poor environmental standards.
The Fuel Lobby
Sweden started a carbon tax in 1991 at a rate of 23 euro per tonne of carbon dioxide emitted and progressively increased the price of carbon to 110 euros per tonne in 2020. If Sweden’s relative success is to be used as a measure, then it is only right to set a carbon tax similar to other countries to bring parity and make it effective. This will create a major financial impact in many countries. Big oil companies are aware of this disparity and lobby in favour of a low carbon tax, so they are protected from liability on very expensive lawsuits for environmental damage.
Flawed logic and inequality
The major flaw in the logic is absolution by paying tax. It is similar to the old system of indulgences in the church, which is a proven flawed philosophy.
One of the major pitfalls of carbon taxing is that it is not evenly applied across all sectors. Energy producers usually pay a larger tax compared to the agricultural industry. The biggest loophole is the carbon leaking by moving businesses to countries with lower environmental standards. The imports are not carbon taxed and it also makes it difficult for local businesses to compete.
Poor Management
The money raised through the carbon taxes often gets pooled back into the politics of carbon taxation laws and the bureaucracy involved with carbon markets thereby taking away from where the money is required.
The Economics
Despite all the setbacks sustainable energy technologies such as solar PV and wind are already competitive against coal and gas today. Several subsidy free solar and wind projects have already been commissioned. Future predictions show further decline in cost and increase in efficiency of these technologies. The renewables industry does not require any ‘special’ treatment, only fair treatment.
What do I mean by “fair treatment”? It’s the hundreds of billions of dollars in subsidies handed out to fossil fuel companies every year and the frightening lack of plans to phase them out. Fear politics played by the fossil fuel industry by spinning up myths on loss of jobs, high costs of electricity and security of supply have distorted renewable energy’s outlook. This has been debunked by the astounding success Chile has had through market economy. Chile did not offer subsidies nor incentives for clean energy. It allowed solar and wind to compete in auctions for electricity capacity. This brought to light the inability for coal and gas to compete and thus began the transition. The renewables boom saved Chile from an energy crisis, created more jobs and dramatically decreased costs.
A significant portion of climate change activism revolves around fighting the free market. History has shown time and time again the major failings of government intervention. The idea that the free market is what caused climate change must be eliminated. Carbon taxing is another form of intervention that has proved ineffective and one that is leading down another rabbit hole. All that is needed is to start removing the handicaps, create a level playing field and watch fossil fuels face the music.
About the author:
Rudolph Peter
Sustainable Energy Technology Student
Rudolph's views on solving the climate crisis are often from a cynical mindset and he enjoys applying hints of satire in his writing. Being a foodie, sustainability in food and agriculture industries are his favorite topics.