Fossil fuel rationing

by Milan on December 10, 2011

in Climate change, Climate science, Economics, Ethics

Virtually everyone agrees that putting a price on carbon would be an efficient way to start the transition toward a low-carbon global economy. Right now, there is no cost whatsoever to a person or business who uses the atmosphere as a dumping ground for greenhouse gas pollution. Putting even a small price on doing that – through a cap-and-trade system, a carbon tax, or a fee-and-dividend scheme – could effectively discourage the most wasteful polluting practices.

Problematically, even when it is perfectly just to do so, it is often wildly politically unpopular to make people pay for something that used to be free. This is part of what makes it so hard to get carbon pricing introduced in the first place, as well as to keep carbon pricing laws on the books once they are established. Cap-and-trade systems could also ‘lose their bite’ if emissions fell below the level of the cap.

What might be even harder politically would be raising carbon prices to the point where they produce emission reductions on the necessary scale. The world needs to be pushing aggressively toward carbon neutrality, and heavily polluting nations like Canada have an enormously long way to go. Getting a high enough carbon price in place to cut emissions to virtually nothing by mid-century is certainly a political challenge.

Perhaps it would be more honest and effective to focus the policy on rationing fossil fuel use, with prices as the mechanism for allocation. This is basically what the fantasy climate policy I wrote about before does: it sets up a mechanism that guarantees that pollution reduction targets will be met, though the carbon prices necessary to achieve that may be extremely high.

It may be no more politically possible to impose high prices as part of a rationing scheme than it would be as part of a carbon pricing scheme not explicitly linked to fossil fuel abandonment. At least a rationing scheme would point clearly at the problem and the ultimate solution – the elimination of fossil fuels from the global energy system.

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{ 1 comment… read it below or add one }

Anon December 12, 2011 at 1:33 am

Problematically, even when it is perfectly just to do so, it is often wildly politically unpopular to make people pay for something that used to be free.

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