Why governments need to pick energy “winners”

Nice report that challenges our ideas about carbon tax or cap and trade as the solution to both climate change and sustainable energy:


The report argues that although carbon pricing has an important role to play in reducing emissions, it is far from sufficient on its own to bring forward investment and accelerate cost reductions in emerging renewable technologies, or to avoid lock-in to high carbon infrastructure.

The Breakthrough Institute goes further and argues that we need to be “picking the right winners” and that carbon caps will only encourage more gas development:

One problem is that it is unlikely to be politically feasible to set a carbon price at a high enough level to encourage clean, emerging technologies.

Instead, a carbon price is much more likely to encourage gas.

The reality is that governments have always picked winners whether through research and development funding, repeated subsidies and cost write-offs for the nuclear industry, tax breaks for the North Sea oil and gas industry, or proposed tax breaks for shale gas. Fossil fuels and nuclear power have benefited from subsidies for decades.


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