David Bergeron, the founder and president of a company that makes solar powered refrigerators, thinks that subsidies for on-grid solar power are a bad idea:
Here is the real problem: Subsidies make solar appear viable today, so where is the motivation for an entrepreneur to risk money, or even focus on developing real energy alternatives when solar is “almost” there? How can an inventor justify striving with the effort it takes to really develop something great when he is competing against a straw man technology which can provide power at almost the same cost of traditional power sources today? But of course it really doesn’t.
The answer is he can’t justify the effort, so the next great thing is not developing, at least not with the sense of urgency it should be. Why enter a contest when you are competing against someone with an unfair advantage? You may be the faster swimmer, but your competitor is using flippers.
Solar subsidies are a placebo which is giving the general public a sense of security about our energy future and is robbing the motivation of those entrepreneurs that could actually address our energy problems. Subsidies are much worse that just wasteful, they’re diabolical. They lull us into thinking we have almost solved the problem and they hinder us from seeking the real solutions.
I got this link via Dave Schuler, where the commenters come down on the side of a carbon tax, which I have historically been quite amenable to. I say “historically” not because I’ve changed my mind, but because some of the comments have me thinking about some stuff. The goal of a carbon tax of the revenue-neutral variety would be that it would actually take comparatively little money out of the economy while rewarding desirable behavior and condemning undesirable behavior.
Commenter TastyBits points out the potentially deleterious effect this would have on manufacturing. Manufacturing would likely be one of those areas hit the hardest. Previously, I’ve mostly thought of this in the context of “higher prices”… but that would be okay because we’d have more money. Those items that require more energy and result in more pollution would become more expensive, while other prices wouldn’t, and it would all even out to some degree due to the tax rebate or lower taxes.
Except that an obvious solution, from a manufacturing standpoint, would simply be to move more of the manufacturing offshore where they would not have the higher energy costs. The solution to this would be a carbon-based tariff. Which maybe is a good idea! But I don’t know what ramifications that would have on all sorts of trade agreements. Maybe it’s quite worth doing anyway, but a lot of it is out of my depth. A lot of the market sorts that think that a carbon tax (or cap and trade) is the best way to handle this seem to be steadfastly against tariffs of any kind. I don’t know if they make an exception here, and it seems like failing to make an exception would be problematic.
The other issue is how much decreased demand in the US would affect global demand and pricing. Assuming that the oil will be explored anyway, and that it will be refined somewhere, if they get more of it and we get less of it, what difference have we made? Maybe something in terms of air quality, or something else in terms of national security, but we could lose ground if (for instance) refining practices in China actually produce more emissions than refining practices here. If they’re buying, refining, and using more of it, that could be a net loss.
The next area of further thought involves coal. If we ween ourselves off of coal, will we still be mining it for export? If so, have we made any environmental gains? If not, and some relatively people in some relatively hard up places are sitting on a lucrative mineral that they can’t use, how exactly is that going to fly? On the other hand, if we push emission costs up high enough, perhaps clean coal burning would become more economically worthwhile. Or it might be more profitable for the miners to simply sell it abroad and let them burn it where such things aren’t so taxed.
Two of the primary arguments for taxing carbon, or subsidizing non-carbon, remain:
First, the extent to which we subsidize fossil fuels. This is an oft-made claim, though a lot of the things included are subsidizing something else which uses carbon. This is a distinction with a difference when roads, for instance, subsidize a Volt just as much as it subsidizes an Explorer (and the latter pay more in gas taxes). I also don’t consider “We accept money in exchange for them being able to explore on public lands” to be a subsidy, even though it is sometimes cited as one. Others we should consider correcting regardless of what we do elsewise, if I had a clearer idea of what they are (note: I am disinclined to include any tax breaks we give other industries as that becomes a business tax break/subsidy rather than an oil/coal one).
Second, carbon taxes simply internalize the externalities. The problem here is that we have comparatively little idea what the externalities are. It would seem more than fair, for instance, to tax the coal industry in accordance for what we spend cleaning up the environmental damage we do. A lot of it, though, is guesswork. Even if we agree that AGW is happening, man-caused, and a serious threat, we don’t completely know what the end-result will be. We have estimates that range from the optimistic to the pessimistic, and even within those estimates seem to be a variation on the particulars. There are no disinterested parties here. We don’t know how much of the damage can be mitigated with how much of a reduction in fossil fuels.
This isn’t my long way around of suddenly saying that I am against carbon taxes. I have, however, shifted away from my enthusiasm for them as one of the more obvious solutions involved. If subsidies are also problematic, and I have issues with the next round of CAFE standards, I haven’t a clue where that would leave me.