Also, forcing consumers to pay both the unsubsidized price for their energy, plus a hefty carbon tax, without offsetting that price hike with, for example, subsidized purchases of new, more efficient appliances, would constitute a massive confiscation of income that can only be described as cruel.

Shift subsidies, absolutely.  Eliminate subsidies, no.

John- I agree and disagree- yes, we need to eliminate all energy subsidies but also have a more progressive income tax system that ensures that low income people are ok- these are separate but related issues. As far as nuclear insurance, if private insurance won't step in then it should not exist- also, with a high enough price it would and this would include a rational calculus of the liabilities, which government insurance precludes by offering a lower value that doesn't represent the full liabilities.

J.S.

I teach environmental economics and blog at www.voicesofreason.info.

The Synthetic Fuels Corporation (SFC) was a technology commercialization program that subsidized the capital costs of constructing synfuel plants. It was not a technology R&D program. None other than the Heritage Foundation argued that, "Perhaps the best solution to the SFC dilemma would be to reorient the Corporation toward demonstrating the technical rather than the commercial, feasibility of various synthetic fuels processes."

NASA's R&D program accomplished more than putting 12 men on the moon. The research report NASA: Measuring the R&D Payoff by NASA policy director Sylvia K. Kraemer found that between 1976 and 1999, NASA was issued 2,620 patents. For most of the 80s and 90s, the number of NASA patents (as a percent of all gov't patents) exceeded the agency's R&D budget (as a percent of all gov't R&D expenditures). Kraemer wrote, "And the payoff is not in the consumer marketplace of popularly recognizable products and services, but in the capital goods marketplace, where one acquires instrumentation for research, development and manufacturing, biochemical and other chemical processes, new ways of harnessing energy, and in medicine, where we seek sophisticated new substances, mechanisms and instruments."

A level playing field in the energy industry and the elimination of all subsidies is an ideal that is chimerical. That's not to say we shouldn't eliminate the largest and most obvious fossil fuel supports; we should accomplish that immediately. But it will take a significant research effort merely to identify all the pervasive and entrenched energy market distortions at the local, state and federal levels. Then there's the task of figuring out politically feasible ways of eliminating the subsidies. The Oil Drum had a post about this today and some of the comments are right on target.

Ped Shed Blog

http://www.rushkoff.com/columns/the_shareware_universe.ht...

You'd have to update it slightly for Google, but not by much.

J.S.

I teach environmental economics and blog at www.voicesofreason.info.

I disagree.  This is all the same issue - the unrealism of small-government answers for societal problems.  For it to actually happen, outside of the pages of Reason Magazine, it needs to be politically palatable.  "Eliminate subsidies, tax carbon" is not a politically palatable solution.  Now, if the Reason article said "end subsidies for energy production, shift savings to subsidies for efficient end-use, a time-limited rebate program to help people transition, and spend the rest on funding basic research going to the public domain", I'd sign up in a hot second.  But Reason is congenitally opposed to proposing serious policy, and instead offers libertarian platitudes.

I've written on this blog about my suspicion of big-government fixes on the model of Apollo or Manhattan, but to say in the same article a) solar power is the wave of the future, but b) the Apollo program which spurred the R&D in solar power was a waste of money, is simply incoherent.

Intelligent policy need not be Apollo or Manhattan.  But the government absolutely has a positive, encouraging role to play in this sector.

"As far as nuclear insurance, if private insurance won't step in then it should not exist- also, with a high enough price it would and this would include a rational calculus of the liabilities, which government insurance precludes by offering a lower value that doesn't represent the full liabilities."

A fair point, and in either case I see nuclear going out of business - either the market won't insure it, or will price nuclear kilowatt-hours out of the market.  Either way, we win!

J.S.

I teach environmental economics and blog at www.voicesofreason.info.

The Oil Drum is the best source of discussion about peak oil and energy issues. (I have no direct connection with them.)

Bart
Energy Bulletin

Eliminating existing energy subsidies is also a very important step in the right direction, especially if we don't load up on a whole bunch of additional subsidies.  That step alone would help spur alot of conservation/energy efficiency investments.  I would also really prefer not to have the government trying to micromanage energy policy - it will just create alot of ineffective pork.

However, political reality may be that we do not have the political gumption to tax carbon in some way, unless we also have a mix of government subsidies.  The coalition of coal/oil producers and manufacturers that have blocked climate change action because the use of the atmosphere as a carbon dump has been free might require some sort of compensation to get them to accept a changed regime that will impose costs they didn't face before.  That may mean the government subsidizes sequestration investments, for example.

I am starting to lean in favor of a carbon tax as the chief policy tool, as opposed to emissions permits, which are looking like an administrative and enforcement nightmare.

Of course, what's funny about Jason's article is that he buys the argument by Nocera that we need crash energy programs to keep up with the growing demand.  While the market is broken as far as carbon emissions is concerned and is distorted by subsidies, growing demand will of course push up prices and call forth additional energy supplies and changes in demand (through changes in behavior and investments in energy efficiency).  We're not just simply going to run out of energy someday.  

Otherwise, Bailey is absolutely right.  The best thing the government can do is to get out of the way, after adding a CO2 tax, which revenues can be substituted for income taxes.

The government should also start focussing on what public investment in infrastructure and changes in laws will be needed to facilitate the adaptation that the built-in climate change will require.  Of course we also need to pay attention to the problem of third world infrastructure, economic development and environmental protection.

Archimedes wrote, "Give me a place to stand with a long enough lever and I can move the Earth.".

Give me a place to stand with enough money and I can solve anthropogenic global warming.

Can't spare a dime?  OK then plan B.

Assume nothing works, not politics, nor carbon taxes, nor the end of subsidies, nor new infrastructure.  Try survival with self-reliance... homes with local heat and hot water, cars that use little energy, vegetable gardens, community carpools and shared resources, and everything else required for family and tribal economic security.  

Plan B will cause more independence from expensive and distant carbon resources, like electrical power, natural gas, and gasoline.  Carbon mitigation then becomes a byproduct of using local renewable energy for self-reliant survival.

Like the fall of Rome, the end of the Empire will force survivors to be resourceful.  

Humans are too short-sighted. And those in positions of power lack curiosity. A bad combination.

A hefty carbon tax will send shockwaves through the world economy if it is put in place as soon as necessary. The suggested caps aren't even sufficient to halt global warming within the next 100 years. National governments will probably add a loophole allowing them to exceed limits if necessary for national security. And the wealthy -- both nations and individuals -- will find a way around it. The low-income fellow who wants to heat his house and needs a car to get to work will get left behind. Also, his food costs will skyrocket. Oh... and his housing costs and his clothing costs will skyrocket. But he'll still have the same !@#$ job... if he is lucky.

The free market could probably sort this out in a few decades, but after how much suffering?

Since humans are not willing to do the right thing -- cooperate to find a real solution for everyone, probably by investing tax dollars in increased efficiency and developing new technology -- I'm preparing to accept the inevitable rise in temperature and changes in weather patterns. It will be an interesting ride, if it does not kill us. Nature will sort it out in the end.

The tax break the top 5% of our society manages to pocket -- instead of our government investing in research -- will only buy them the opportunity to be the last to die.

I'm in a bit of a foul mood.

   If all subsidies for energy were eliminated, the sector would further monopolize into the hands of the few powerful players who have the capital to "compete".

   We already have an example of this in the oil sector.  

   Setting a price for carbon sounds pretty, but how would the price change?  

   Such a price would be open to manipulation by the large players, and if anyone thinks they would not manipulate, they are kidding themselves.

   The idea that we could protect the poor is lovely, but what usually happens is we help the rich monopolists first, and then, oops, somehow never get around to helping the poor.

   Which is one of the reasons for the growing income gap between the poor and the wealthy in the United States (and pretty much everywhere).

   Also, are we talking about doing this only in the United States or worldwide?

   If worldwide, we are deluding ourselves, the US killed Kyoto, what makes us think it would ever agree to such a plan worldwide?

   (Member of Congress BBBBBBB from SSSSSSS today inserted an exception to the subsidy elimination for company 999999 in his/her district, while another member added a subsidy complaining that foreign subsidies had not been eliminated, the bill seemed certain to pass with over 75,000 exceptions and additions).

   Looks pretty, but really, that dog won't hunt.

patrick

"As far as nuclear insurance, if private insurance won't step in then it should not exist- also, with a high enough price it would and this would include a rational calculus of the liabilities, which government insurance precludes by offering a lower value that doesn't represent the full liabilities."

A fair point, and in either case I see nuclear going out of business - either the market won't insure it, or will price nuclear kilowatt-hours out of the market.

world-nuclear.org/info/inf67.html

Germany has unlimited operator liability and requires €2.5 billion security which must be provided by the operator for each plant. This security is partly covered by insurance, to €256 million.
[...]
In Finland a 2005 Act requires operators to take at least €700 million insurance cover, and operator liability is unlimited beyond the €1.5 billion provided under the Brussels Convention.
[...]
Japan is not party to any international liability convention but its law generally conforms to them. Plant operator liability is exclusive and absolute, and power plant operators must provide financial security of 60 billion yen (US$540 million). Beyond that, the situation is unclear, though liability is unlimited. In relation to the 1999 Tokai-mura fuel plant criticality accident, insurance covered 1 billion yen and the parent company (Sumitomo) paid the balance of 13.5 billion yen.
[...]

The Swiss Federal Nuclear Safety Inspectorate (HSK) monitors and regulates both safety and radiological protection in nuclear installations.

Civil liability for nuclear damage is covered by the 1983 Nuclear Energy Liability Act. Operators have unlimited liability, and they need to maintain CHF 1 billion in insurance coverage.

Insurance companies do insure reactors. In fact, they stand to lose more money from a nuclear accident than from any other readily conceivable mishap. However, they are limited by law in the amount they can insure against any one event, because if an insurance company were to fail, many innocent policy holders would be left without protection.

Liability insurance for reactors is covered by an act of Congress which provides over $7 billion [now $10 billion] of no-fault insurance on each plant, paid for by the utilities. Because of this insurance, coverage in home owners' insurance would provide double coverage and is therefore excluded. If the liabilities from an accident should exceed the maximum, Congress has stipulated that it will provide relief as is customary in disaster situations. Few other disasters are covered by as much private insurance. For example, there is little or no coverage for dam failures or bridge collapses.

John McGrath wrote:

Either way, we win

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