Carbon Pricing Backfires

Carbon Pricing Backfires 

The basic premise of carbon pricing policies is simple, make fossil fuels more expensive to discourage and reduce their use and with that reduce CO2 emissions, pollution and other associated problems. A range of NGOs and political parties with an ecological mandate support such concepts. Off course even a simple sounding strategy involves some assumptions to make it work, some understanding of the situation. The one premise that appears to go without saying is the idea of a more or less functioning market place where punitive or subsidy measures would achieve their desired effect.
So what is the working order of the market mechanism in terms of oil, gas and coal extraction and use?
What stands out is that especially oil is already higher priced than the market can afford, and increasingly uncompetitive in a variety of road, rail, agricultural and other applications. Net energy returns and production in tired fossil fuel reserves are diminishing dramatically, shifting the focus to crazy energy. In the tar sands example net energy return is around zero. Far too much energy doesn’t benefit the economy but goes straight back into the brinksmanship of heavily subsidized, speculation prone energy operations like gas fracking, tar sands mining and deep sea drilling. Such a financially, ecologically and operationally instable and generally lawless bent translates into an energy volatility that causes jarring impacts to the world economy. It comes in a cyclical pattern since the big financial melt down and the preceding end of the critical oil production increases overall. Since then a cycle plays out starting with shortage and price spikes, then contraction and demand destruction before economic activity picks up following lower oil prices, and then deflecting back down again repelled by an energy and specifically transportation ceiling of high priced oil that is in short supply.

Now, what carbon taxes, carbon emission trade premiums and such achieve is to increase and destabilize the end user price for carbon even further and with that increase the economic volatility in economy and oil market. This is bad for infant industry initiatives like renewable energy, sustainable agriculture and for industrial and value adding sectors in general which need predictability and vitality for their business plans. Its one more way in which carbon pricing measures defeat their own stated purpose of reducing green house gas emissions. What about the unfairness of handing out free carbon permits to big polluters and a flat tax like burden to small businesses and families?

Then, among a host of problems, there is the mathematical near impossibility to minimize GHG emissions with an emissions credit trade system. What is capped are GHG reductions, naturally emissions increase under these regimes. Entities who emit less trade with those who emit more with the process aiming to remain under a ceiling of minimum effect. Futility of an ideological still picture unable to describe dynamic events. 

Unlike acid rain or ozone depletion the climate problem cannot be addressed with a bit of tinkering and regulation. Carbon pricing comes with a share of naivete regarding the inertia and depth of global energy systems which are much bigger even than in any other industrial sector that can be cited or remembered. It requires not just sustainable farming with soils that are alive and sink the carbon they lost through agribusiness mistreatment, also in the energy sector a generational change over of technology is overdue. And those technology waves like the coming on of computers, microsurgery, newspaper print etc. never happen by quota, conferences or agreements. 

Except for a few major centres, vehicle charge points for electric vehicles for example are not available and carbon taxes and fees are therefor perceived as cynical. There often simply are no low carbon options that can be reasonably accessed by people. Feed in tariffs and other democratic elements of energy industry that allow participation of renewable energy producers, small and large, to sell renewable power back to the grid only exist in Ontario, as far as Canada is concerned. There are close to 50 countries now that have a concept like Ontario where sustainability and energy security are spelled out in terms of action, not ideology. What an outdated energy policy of subsidizing the oil, gas and nuclear industry (oil and gas to the tune of 200 billion dollars annually according to the 2011 KAIROS report “Pumped Up”) and carbon pricing like cap and trade systems unfortunately have in common is this.
Carbon pricing and masked subsidizing of carbon, both imply to hide away the most basic of facts that carbon becomes increasingly too expensive as fuel; and this is before externalized environment and health costs are counted. This compares to renewable energies that in case of wind, geothermal and photovoltaics are unlimited and free with the harnessing gear getting cheaper, wind power now often beating out every alternative.

Its not that hard to see how carbon pricing ideas lock up the thinking inside the fossil fuel bubble. But this neoliberal failure in the method of phony market tools that do not tackle green house gas emissions also hands the political momentum to the extreme carbon fuel proponents. A reality gap on the side of ecologically minded community leaders could become a decisive weakness for Southern Yukon and other areas in the face of a proven to be consistently destructive gas fracking onslaught ready to sacrifice our surface and ground water.