How the concept of leading sectors explains why a green energy transition can be better for growth than business as usual in a world without global warming.
I agree with you on a carbon tax, but think fee and dividend is the best approach. What level would you suggest? At $5 a tonne it's actually an economic good. At approaching $15 it becomes cost neutral. Simon Dietz at the LSE developed a climate economists approach to expenditure per tonne which included the potential future costs of failing to act sooner. His figure was $35 per tonne, and it created a huge shift in UK government investment policy which rapidly saw us eliminate coal in favour of natural gas and rapidly propelled us to the top of the global league tables on climate action. According to one set of metrics we now rank second.
Anything more than this is a waste, don't you think?
Carbon taxes make the most sense for dealing with this issue in an economically rational way. It political poisonous in the US and is a nonstarter at present, however. I have no idea on what the best level is.
My sense is one would introduce a gradually rising carbon tax with no preestablished maximum. This sends the message companies should have a plan to get off fossil fuels in the future. Once the tax has been established and starts to bring in revenue the government should stop raising the tax when increases stop bringing in more revenue. After that the tax rate is adjusted to maximize revenue. And then it will be a competition, with industry trying to minimize what they pay and the government trying to maximize it.
I agree with you on a carbon tax, but think fee and dividend is the best approach. What level would you suggest? At $5 a tonne it's actually an economic good. At approaching $15 it becomes cost neutral. Simon Dietz at the LSE developed a climate economists approach to expenditure per tonne which included the potential future costs of failing to act sooner. His figure was $35 per tonne, and it created a huge shift in UK government investment policy which rapidly saw us eliminate coal in favour of natural gas and rapidly propelled us to the top of the global league tables on climate action. According to one set of metrics we now rank second.
Anything more than this is a waste, don't you think?
Carbon taxes make the most sense for dealing with this issue in an economically rational way. It political poisonous in the US and is a nonstarter at present, however. I have no idea on what the best level is.
My sense is one would introduce a gradually rising carbon tax with no preestablished maximum. This sends the message companies should have a plan to get off fossil fuels in the future. Once the tax has been established and starts to bring in revenue the government should stop raising the tax when increases stop bringing in more revenue. After that the tax rate is adjusted to maximize revenue. And then it will be a competition, with industry trying to minimize what they pay and the government trying to maximize it.