If there are two things progressive environmentalists love it’s carbon taxes and so-called green energy. What’s ironic about this is that one of those things directly hampers the development of the other. A carbon tax is nothing more than an additional cost for emitting carbon into the atmosphere and almost every form of energy production and many forms of manufacturing emitting carbon into the atmosphere. Effectively carbon taxes increase the cost of energy and manufacturing in one fell swoop.
This cost increase is beneficially to currently established carbon emitters, namely it prevents new competitors from entering their markets. Unlike the already established carbon emitters who can afford to soak up the cost of another tax, new competitors in a market do not enjoy the same excess capital. The picture becomes more clear when we look at the currently established energy producers, namely coal and natural gas facilities. Current coal and natural gas-based power plants need not worry about carbon taxes because they will just forward the cost onto their customers, many of which are manufacturers.
By increasing the current costs of energy carbon taxes increase the cost of manufacturing solar panels and wind mills. Manufacturing solar panels isn’t a zero-sum carbon game either:
In the best case scenario, one square meter of solar cells carries a burden of 75 kilograms of CO2. In the worst case scenario, that becomes 314 kilograms of CO2. With a solar insolation of 1,700 kWh/m²/yr an average household needs 8 to 10 square meters of solar panels, with a solar insolation of 900 kWh/m²/yr this becomes 16 to 20 square meters. Which means that the total CO2 debt of a solar installation is 600 to 3,140 kilograms of CO2 in sunny places, and 1,200 to 6,280 kilograms of CO2 in less sunny regions. These numbers equate to 2 to 20 flights Brussels-Lissabon (up and down, per passenger) – source CO2 emissions Boeing 747.
According to the researchers, producing the same amount of electricity by fossil fuel generates at least 10 times as much greenhouse gasses. Checking different sources, this claim is confirmed: 1 kilowatt-hour of electricity generated by fossil fuels indeed emits 10 times as much CO2 (around 450 grams of CO2 per kWh for gas and 850 for coal). Solar panels might be far from an ideal solution, but they are definitely a better choice compared to electricity generated by fossil fuels. At least if we follow the assumptions chosen by the researchers.
The article then continues on to explain how the amount of carbon produced by generating electricity from solar panels isn’t necessarily lower than producing it by burning fossil fuels. You can continue reading the article if you’re interested but the main point I want to bring up is the fact that producing solar panels comes at a cost of carbon emissions, which will increase costs if carbon taxes are implemented.
Wind generators aren’t free of this issue either [PDF]:
Though CO2 emissions from wind are very small compared to coal, they are still responsible for some emissions. The amount of electricity produced per turbine, which is a factor of the number of years the nacelle operates and the capacity factor (which is a factor of both wind and nacelle availability), has the greatest impact on the CO2 emission factor of wind-generated electricity. The amount of CO2 emitted per GWh of electricity generated has a range of two, but it is still 50-100 times less than coal-generated electricity.
Although the amount of carbon emitted by generating electricity from wind (which includes everything from construction to decommissioning a windmill) is lower than burning coal the companies invested in producing electricity by burning coal are established and thus have the capital required to soak up the cost of any carbon taxes.
Let’s not forget that while “green” energy producers receive buckets of government money so do coal burning power plants [PDF] (man I love the progressive environmentalists’ sources against them):
The United States is the single largest contributor to the World Bank and a major supporter of other international financial institutions such as the Inter-American Development Bank and the African Development Bank. The United States also provides subsidized financing internationally through the Overseas Private Investment Corporation and the U.S. Export Import Bank. Together, international financial institutions have helped finance 88 new and expanded coal plants since the United Nations Framework Convention on Climate Change came into effect in 1994, providing more than $137 billion in direct and indirect financial support for new coal-fired power plants.
Obviously owners of coal burning power facilities are in favor with the state.
Carbon taxes will harm all forms of production, including those required for the new wave of “green” energy the progressive environmentalists want to bring in. Such additional costs will, like most taxes, favor currently established market actors (power producers that use fossil fuels) while hampering new market actors (power producers that use renewable sources of energy). If history is any indication we can also assume that the currently established fossil fuel industries will receive other forms of benefits that will hamper the well-connected but not as well-connected “green” energy industries.
When you rely on political solutions to solve your problems you enter a deadly game where victory isn’t determined by facts but by political connections and money. Of course one could increase the costs of polluting, which would increase the costs of generating power by burning fossil fuels, if they supported actual property rights.