IMF presents some new analysis of energy subsidies which I have previously wondered about. It is worth looking over:
$25/ton as the cost of CO2 seems low to me. $502 billion in US energy subsidies including this carbon tax.. I don’t think I’ve seen a figure like this calculated before.
The first step is to recognise that energy policy and climate policy are not the same thing. Although they are intimately related, neither can satisfactorily be reduced to the other. Energy policy should focus on securing reliable and sustainable low-cost supply, and, as a matter of human dignity, attend directly to the development demands from the world’s poorest people, especially their present lack of clean, reliable and affordable energy. One important reason that more than 1.5 billion people presently lack access to electricity is that energy simply costs too much. Obviously, if energy were free, then its provision would be simple. Even if such access could be supplied from fossil fuels – which is plausible but also debatable – this demand for access to energy, for reasons of cost and security should not be satisfied by locking in long-term dependence on fossil fuels.