Monday, May 2, 2016

Bill Gates is Wrong About Carbon Tax

I've written extensively about the carbon tax and the organizations, IMF, World Bank, that feel the need for it is urgent, here, here, here, here and here.

But there are people who feel that a tax is not needed, that in fact, technical advances in the production of green energy will be enough to forestall the worst of it.  One of those people is Bill Gates.  He's a brilliant man, but he's wrong.
Significantly, Gates explains, “The supply side is about funding basic government research, and then creating startup companies with that research.” For Gates, carbon prices and clean energy tax credits are “demand side” policies because they increase the demand for clean energy, whereas supply side policies in theory increase the supply of clean energy technologies available.
The difficulty here is that the
 “Globally, deployment costs will be in the trillions of dollars, while R&D costs might be in the tens of billions.”  
There isn't enough money to fully implement the supply side.  The only solution is to energize the demand side.  Gates' mistake is in the math.
Gates conceptualizes the CO2 problem through a formula that he claims credit for, but that in fact — as leading climatologist Michael Mann and others have pointed out — was developed by someone else two decades ago who has his own Wikipedia entry.
The math is explained here.  
If we had breakthrough technology miraculously pop out of the R&D pipeline really fast (by 2020) and then miraculously enter the market at half the price of new coal plants and then miraculously achieve mass penetration decades faster than every other major energy source in history — it still has essentially no impact on emissions reduction by 2050.
BOTTOM LINE: Gates is just wrong about everything here. He is wrong that energy miracles are needed by the industrialized countries to achieve CO2 levels in 2050 consistent with beating the 2°C target. He is wrong that achieving that target requires focusing on R&D rather than deployment. He is wrong that there is some sort of consensus to that effect. He is wrong that a carbon price isn’t important in achieving the rapid reduction the rich countries need. He is wrong to make it seem like boosting energy efficiency is not as vital a strategy as reducing carbon intensity.

Bottom, bottom line:  we have to implement a carbon fee, price, or tax, whatever you want to call it, right now.