Political, business and environmental leaders across the globe are coming to grips with the fact that the energy transition is failing to solve climate change. The truth is renewables, EVs and batteries can’t deliver meaningful reductions in carbon emissions without driving up energy prices, unreliability… or both.
There’s always been a better way forward. It’s still true today.
Broadly speaking, wealthier nations need plans that center around baseload nuclear energy, natural gas—and, as able, geothermal and hydro power—in lieu of coal, solar and wind. Peaker natural gas plants can handle daily and seasonal variability.
Permitting for energy infrastructure should be streamlined. Nations must prioritize reductions in fugitive methane emissions across all sectors, not just the oilfield, that could undermine natural gas’s environmental benefits. Grid inefficiencies should be reduced.
Electric vehicles, while fine additions to our menu of transportation options, should be made optional rather than mandated so as to not overload grids or force EVs on those for whom they’re bad fits. Automakers should have the freedom to offer hybrid vehicles and other innovative designs that suit their customers’ preferences and needs.
All nations, especially wealthier ones with advanced economies, should discontinue subsidies for all energy sources, including wind, solar and other renewables, as well as fossil fuels. Instead, they should focus on smaller investments in basic R&D to help develop by 2050 technologies more effective at reducing emissions than what we currently employ.
For their part, climate activists should stop agitating for endless green government spending, subsidies and mandates, and instead put carbon taxes to the test of democracy via referendums every four years. A share of proceeds from any carbon tax could go to R&D for energy innovation, road maintenance, efficiency upgrades, or to citizens as a dividend. Any carbon tax should replace and eliminate all national energy subsidies, mandates, etc. Nations may consider the impact of a carbon tax on trade and competitiveness, and explore border adjustments if they choose. Carbon taxes should automatically go to zero after four years, unless voters reapprove them.
When the inevitable pushback against any carbon tax arrives, the public needs to be reminded that the objective of carbon taxes is not that they be paid in full. The objective is that they be reduced and even avoided as consumers adjust behaviors.
Unless we develop better alternatives to address emissions, governments will continue to run massive deficits fueled by green subsidies and spending. Since voters won’t tolerate a high carbon tax, it will have to be set low. Even so, a $20/Mt carbon tax will prove a better solution than endless subsidies and mandates like those embedded in the Inflation Reduction Act—which by some estimates cost taxpayers $500 to $1,000 per Mt of carbon avoided.
Remember, voters won’t tolerate paying too-high carbon tax for long before it will need to be adjusted. But government can run deficits from subsidies for decades before the consequences are felt and understood by the public. As a result, politicians and voters must agree that the carbon tax is the tool used to address emissions, not subsidies and mandates.
We also believe carbon taxes can prove useful ways to demonstrate to politicians how low climate change is on the ladder of voters’ priorities. Whether the public votes for a carbon tax of $100 or $0, their votes should be honored. And there’s gonna be a lot of insight and leverage to be gained from that revelation.
These strategies and initiatives won’t get us to net zero—an unrealistic and unnecessary goal that’s done more harm than good. But they’ll bend the emissions curve enough to buy us time to make smarter decisions with better info and technology post 2050. More importantly, they’ll reduce the chance we effectively bankrupt ourselves paying for expensive non-solutions to a slow-moving threat.
Sooner or later nations—their leaders and voters—are going to have to wake up to the fact that climate change is neither the immediate nor solvable crisis they’ve been led to believe. And that means we need to adjust how we approach and respond to it.
