Sustain6 BLOG
Do We Need A Carbon Tax?
By Steve Quirk
However, there is evidence to suggest that a carbon tax is not needed as a policy tool for climate change. For example, the United States had reduced overall carbon emissions to approximately 6 gigatons in 2017, fairly close to the 1990 level, primarily because of the large environmental pressure that has brought about the extensive closure of coal power plants. Unfortunately, 2018 showed a sharp reversal of this trend with an uptick of 3.4% according to research published by the Rhodia Group, though preliminary results in 2019 show levels appear to be down by about 2.1% due to continued coal reduction.
While the uptick is certainly alarming, should we take this to be a short term bump on the longer road to an inevitable clean energy future? Tony Seba, a prominent thought leader, author and entrepreneur believes this is the case. Hailing from a long line of energy “futurists” including Travis Bradford and Ray Kurzweil, Seba makes a compelling case for the natural, inevitable, and near term reduction of almost all fossil fuels at the hands of technology, namely solar (and wind) power, electric vehicles (EVs) and battery storage. He notes at the end of his presentation that “this is going to happen despite governments, not because of governments.”
Seba’s fascinating presentation, which also integrates the impact of autonomous electric vehicles, makes the argument that these clean technology genies are out of the bottle and are starting their ramp to mass adoption. These are revolutionary technologies and in sharp contrast to commodity fuels, which increase in price over time, this is technology driven energy that behaves like other computing technologies, namely they decline in price over time. By 2030 Seba posits that the game is over for fossil fuels and the iron horses they power. These technologies will follow the “S Curve” pattern; progress looks slow to start, but then all of the sudden they move from linear to exponential growth and in the process upend entire industries and their incumbents who are addicted to their dying business models and significant though ultimately decreasing cash flows.
There is a lot of debate over whether a carbon tax should be “revenue neutral,” which means that a new carbon tax should be offset by a decrease in other taxes like payroll or sales tax. This is the position that Exxon is taking and is generally seen as much more acceptable to conservatives that are wary about inefficient government spending and inefficient policy mechanisms like “Cap and Trade” or “Fee and Dividend”. Virtually all economists agree that a carbon tax is the most efficient and most effective policy tool to address climate change. The below graphic highlighting the impact of British Columbia’s carbon tax shows the powerful impact.
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