Political, business and environmental leaders across the globe are coming to grips with the flaws in their poorly conceived plans to deal with climate change through a renewables-centric energy transition. The fact is 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—as able, geothermal and hydro power—in lieu of coal, solar and wind. Nuclear, geothermal and natural gas-fired generation will provide baseload. Peaker natural gas plants will handle daily and seasonal variability.
All nations will need to further prioritize reductions in fugitive methane emissions across all sectors, not just the oilfield, that could undermine natural gas’s environmental benefits.
Electric vehicles, while worthy 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 wind, solar and other inadequate technologies. In their place should be more targeted investments in R&D designed to help develop by 2050 technologies much more effective at reduce carbon emissions than what we currently employ.
For their part, and in lieu of inefficient subsidies and expensive mandates, climate activists could better address demand for fossil fuels by putting democracy to the test via national referendums for carbon taxes. A certain share of proceeds from any modest economy-wide carbon taxes approved by voters should be guaranteed to go to R&D for energy innovation. The rest should be split between the federal and state governments as treasuring revenues, and their citizens in the form of a dividend rebate.
If passed, these carbon taxes should legally replace and cap most or all other national energy subsidies, mandates and taxes. Nations should also consider the impact of their taxes on trade and competitiveness and explore the possibility of border adjustments with other nations. Any resulting taxes should be required to be (re)approved by voters… not politicians… every few years.
When the inevitable pushback against any carbon tax arrives, supporters should be quick to point out that the objective of carbon taxes is not that they be paid in full… but reduced and even avoided. That is, a carbon tax is the most that would ever be paid if the economy never adjusts to them, with lower increased taxes and energy costs those companies and persons who invest to reduce or avoid them.
Taxpayers should also be reminded that in the U.S., for instance, a modest $20/Mt carbon tax is a better option 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.
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. But the important commonality is that nations and their citizens 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 steps won’t get the world to net zero—an unrealistic and unnecessary goal. But that’s okay, because they’ll bend the emissions curve enough to buy time to make smarter decisions post 2050 based on better info and better technology. More importantly, they’ll reduce the chances that nations bankrupt themselves throwing endless subsidies at non-solutions to climate change.
Sooner or later nations—their leaders and voters—are going to have to fully wake up to the fact that climate change simply isn’t the immediately solvable crisis they were led to believe. And that means we need to adjust how we approach and respond to it.