A Carbon Tax Would Get Us a Lot Closer to Where We Need to Be

(3BL Media/Justmeans) — We have seen impressive growth in renewables over the past several years, but much of that growth is based on the somewhat shaky foundation of continuing subsidies. So argues Eduardo Porter in the New York Times. Porter points out that while wind power added 13 GW of new capacity in 2012, only one additional GW was added in 2013. The reason why: expiration of the Production Tax Credit (PTC).

Referring to the rapid expansion in the market, Letha Tawney of World Resources Institute says, “any time there is uncertainty about the production tax credit, it all stops.”

According to the IEA’s Energy Technology Perspectives report, their “annual progress report on global efforts to engineer a clean-energy transformation,” says that despite best efforts in many areas, “the carbon intensity of our energy supply is stuck.” Gains in renewables are being offset by added fossil fuel capacity. Furthermore, even where wind and solar PV are thriving, some of the other technologies, like offshore wind, geothermal, and biofuels have been lagging.

According to IEA Executive Director, Maria van der Hoeven, we have the technology and it is cost effective, but the political will is still lacking. How do we get people and governments in particular, to spend the money?

Here’s an analogy. Let’s say you just moved into a house that was built 30 years ago. The furnace in that house is very inefficient but it is still working. If you replaced the furnace today, you’d begin saving the money (and helping the planet) immediately. But how many of you, despite the fact that the investment can be shown to be cost effective in terms of payback, would still wait until the furnace breaks down before replacing it. That’s exactly where we are today on the clean energy journey. Even though these technologies can be shown to be cost-effective without incentives, it seems to take that extra push to move people to action.


Costs have indeed been coming down. Wind is projected to hit $71 /MW in 2019, that’s $15 less than what had been projected for 2015 and could fall even further by 2040 to around $63, by which time natural gas prices will likely be going back up again. But according to IEA, despite all that, renewables will still only be contributing 16.5% of our electricity by then, and that’s not enough to keep the temperature gauge where we need it, which is less than a two degree Celsius rise.

Porter says that a carbon tax will go a long way towards closing the gap. It makes sense. Think about how a rise in fuel prices would influence your furnace decision. That rise may or may not come on its own, but a carbon tax will make it predictable.

Says the EIA, if a $25 per ton carbon tax were imposed next year that rose 5% per year, would lead US power plant emissions to fall to 419 million tons by 2040, about one-fifth of what they are today. Total US carbon dioxide emissions from energy would fall by about a third. Many economists feel this would be the most effective route, though it seems unlikely that anyone in this next Congress will want to mention the “T” word, no matter how much good it might do the country.

Just as you can expect that old furnace to start to give you trouble, we should expect no less from our climate system that we’ve knocked off course.

Even those reductions, which we are unlikely to see, won’t be enough to get us where we need to be, even as the IPCC continues to tell us that things are even worse than they first thought, but it would be one heck of a lot closer than we are now.

Image credit: otodo: Flickr Creative Commons