Quote:
Originally Posted by 13ball
This would only be true if consumers simply spent their entire dividends on extra carbon energy. That's not a realistic outcome. In addition, increased energy prices would lead to consumers adopting more efficient behaviors. Some consumers would choose greener energy as it becomes price-competitive. Higher emissions products would become less attractive as the cost of carbon is reflected in pricing.
This is most likely false.
At least in the short and medium term, price elasticity of fuel consumption is low. On the other hand, for lower income individuals, income elasticity of fuel consumption is high.
This on balance means, for the most part, higher fuel consumption when you hike costs by $97 but increase income by $200.
Quote:
Originally Posted by 13ball
A carbon tax isn't a long term solution, obviously, but it allows renewable energy to compete, encourages efficiency and is better, imo, than direct subsidies on research and development.
I actually think carbon tax has to be part of the long term solution.
I just don't think carbon tax alone would have led to the proliferation of solar and wind power to the extent we see today. In fact, we know carbon tax, even when fuel prices were sky high, did not lead to such developments. It wasn't until 2007 or 2008 when the government went all in that the solar industry began to take off. (btw, the industry as a whole still underperformed for the venture capital funds).
That strongly suggests there is over investment in solar and wind. They are viable under limited circumstances and can be stop gaps until we find a true (or accept nuclear) alternative to carbon fuels. This is why I think the money needs to be in R&D, and I mean basic R&D at universities and not the government as venture capitalist kind of R&D.
Quote:
Originally Posted by 13ball
First, an import/export adjustment is usually paired with a carbon tax. Second is a valid concern, especially when it comes to food and home electricity in certain areas. I don't think that's a fatal flaw, but any serious proposal would have to deal with that issue in some way.
You're talking about carbon tariffs. It's a pretty old idea that never gained traction and likely would be stuck in all kinds of trade courts.