August 1, 2011

Can Taxation Speed Our Energy Transition?

Kurt Cobb, Energy Bulletin


taxthe

Some time ago an economist with whom I had an extensive exchange suggested that the best way to incentivize an energy transition would be to tax what we don't want and let the market do the rest. It was really such an elegant approach and an impractical one, I thought.

The economist's view was that if we don't want people to burn carbon-based fuels, then we should just tax those fuels heavily. What he opposed was any direct subsidies to alternatives such as wind, solar, and biomass. This would only serve to distort the economy, he said, and it is too hard to figure out the quickest path to an energy transition from the vantage point of a central government.

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TAGGED: taxes, energy

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