Many examples of what not to do
Efforts to reduce emissions through cap-and-trade schemes have resulted in massive pay-offs and 'pork barrel' politics, wherever they have been introduced. Some countries -- such as Japan -- have made extraordinarily strong promises without any way of delivering.
European countries that have subsidized existing, inefficient green technology are often cited as examples for the rest of the world to follow. This does not bear scrutiny. An oft-repeated claim is that Denmark receives a fifth of its power from wind, making it by far the highest share in the world, and has easily generated green jobs and cheap energy.
The reality, shown by a recent study by the Danish Center for Political Studies, is that less than 10 percent of the nation's electricity demand is met by wind, because much of the power is produced when there is no demand, selling it at very low cost to other countries. This also means much less CO2 reductions in Denmark, where a ton of CO2 is reduced at a cost more than six times the current EU costs.
Danes pay the highest electricity rates of any industrialized nation, on average about US$.38 per kWh compared to US$.08 in the United States. The Danish wind industry is nearly completely dependent on taxpayer subsidies to support a modest workforce. Each new wind power job costs the Danish taxpayer at least $119,000 per year. The government subsidy has shifted employment to less productive employment in the wind industry, meaning that Danish GDP is approximately $270 million lower than it would have been if the wind sector work force was employed elsewhere.
Germany is often also quoted favorably for spending billions of dollars subsidizing solar energy, resulting in more solar panels than any other country on Earth. These panels contribute about 0.03 per cent of German energy usage. For every $3,700 Germany spends on solar energy, it does about $1 worth of good to the world in the form of CO2 savings. The solar panel program will cost Germany around $150 billion. In concrete terms, it does the equivalent of postponing global warming by the end of the century by one hour.
So far, few countries have really committed themselves to solving the technological challenge of ensuring that there is an affordable replacement for fossil fuels. If governments try to cut carbon through taxes and trading schemes without effective replacements, we will make virtually no difference to climate change in the future, while in the shorter term there will be significant damage to economic growth, leaving more people in poverty.
Nations need to commit to a dramatic increase in public funds on research and development. As the Copenhagen Consensus on Climate as well as the World Bank recently advocated, research and development investments to the order of at least $100 billion a year will be needed. That is fifty-fold more than is spent by governments now, but remains a fraction of the cost of proposed costly, ineffective carbon cuts.
Carbon taxes could play an important role in funding research and development. But so long as policy-makers focus first on how much carbon to try to cut through taxes, or on subsidizing existing technologies rather than focusing on the research spending that will be required for real breakthroughs, we will remain on the wrong path to effectively prevent suffering from global warming.
Posted by: Clyde4 | November 15, 2009 5:27 PM
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