Technological progress will solve any policy problem. If you make it so that wind, solar, and next generation nuclear power is cheaper than other alternatives and more desirable, the market will progressively switch. Most technological improvements did not wait for a policy to change to induce revolutions in their respective fields. Now everyone is investing in Energy, and there's hardly any need for policy when the market is already full steam in investment mode.
> If you make it so that wind, solar, and next generation nuclear power is cheaper than other alternatives and more desirable, the market will progressively switch.
Not necessarily. Lots of people have jobs in coal, oil and gas production, and those constituencies will often vote for politicians who promise to keep those jobs around. They can do this through heavily subsidizing the cost of fossil fuels (which they currently do) in order to reduce the extent to which the economic benefits of clean energy can influence the market.
In the long term, they probably can't keep this up, but we don't really have a "long term" anymore.
If you divide the total subsidies aluminum smelters in Germany receive by the number of jobs then you get 440,000€ of subsidies per job per year, the workers themselves only see a fraction of that. Unsustainability has never stopped politicians from doing stupid things.
Not needed work is kind of already dis-incentivezed -- if its not needed, generally there is less market demand for it, but it behoves me to ignore all the exceptions propped up by cultural events and/or clever and insidious marketing like MLM.
Funny you mention study, because that's what people do in university and college, but in America they get a fat student loan when they graduate...
But how does that relate to a 440,000€/job/year subsidy? On paper it seems wasteful but I'm no expert in the economics of propping up the aluminium industry in Germany. Maybe it's a strategic move for national defence.
We don't really subsidize fossil fuels. I thought that your comment was interesting, so I looked it up. These "subsidies" are just completely normal stuff that ordinary American businesses get.
Mostly it is tax deductions. Everybody is getting tax deductions. Everybody from your local hair salon to Microsoft is taking tax deductions. For the fuel companies this includes income tax, fees for shipping, and royalties for extracting the resources. The only really offensive one is a deduction for BP's punishment, which sort of undoes the punishment... though that is fair if the tobacco companies got to do likewise for their punishment.
The rest is just the unpaid share of the cost of running various government agencies. First of all this isn't generally something the companies feel they benefit from; ditching OSHA/EPA/etc. would probably please them. Second of all, again it is something we do for all American businesses.
As with any other American businesses, wind and solar providers get the subsidies. They also get special environmental subsidies, which are huge.
I think this dispute started because the abnormal subsidies being provided to wind/solar providers have become a political issue. The wind/solar providers respond by pushing the narrative that fossil fuels get subsidies, but that just isn't a reasonable conclusion. The supposed subsidies are just normal things provided to American businesses, unlike what wind and solar are getting.
If we allowed a restaurant to dump its trash for free in a public playground, we would be subsidizing that restaurant with taxpayer dollars.
When we allow fossil fuels to be burned and dump pollution for free into the public atmosphere, we are subsidizing the usage of fossil fuel.
In the trash scenario, we'd make the restaurant pay for cleanup, pay medical costs for the kids who got ill, and pay for its future trash disposal. Burning fossil fuels causes asthma, climate change, flooding, etc, and remediation costs should be borne by those who cause the damage.
If you consider the billions of dollars we all spend dealing with fossil fuel companies' waste, it's quite a subsidy. The least we can do is make them compete on a level playing field.
Perhaps this could be dismissed as semantics, but saying that we don't subsidize fossil fuels seems to not jibe with the reality that the only countries that have lower gasoline prices in world are countries whose economies are predominantly fossil-fuel based. See https://www.bloomberg.com/graphics/gas-prices/#20184:United-...
If the US gasoline costs were even close to EU levels, (say, 2x what we pay), there'd be an inversion in household energy consumption economics (and it'd be the difference between 2% and 5% of household incomes). EVs wouldn't be just for tree-huggers. Buying from 100% clean electrical sources might be cheaper than "standard" sources.
The US has a large well-unified market with good transportation and local sources of fuel. That cuts costs.
Other places, like the EU, don't have all that. They also apply some really extreme taxes. Lack of punitive taxes isn't a subsidy. If the taxes are never imposed in the first place, it isn't even a tax credit.
The average gasoline tax in the US is $0.53 per gallon total, combining all taxes. Just the excise tax in Turkey is $4.32 per gallon!!! The average gasoline-specific tax in the 34 advanced economies is $2.62 per gallon, but then a VAT is applied on top of that.
The federal coal leasing program has been a frequent target for overpricing coal with some estimates at around a billion a year in benefit. There's also things like opening new areas for drilling in areas that are only profitable when subsidized (and then the subsidies come in), which is not a normal tax policy arrangement, at least not the kind your hairdresser has with the federal government.
The cost of "unions protecting their job" increases further as the alternatives get cheaper over time. So it's not sustainable in any way. Additionally, fossil fuels are usually subsidized the most in local areas where they are mined/extracted so states/regions with no such natural resources can be expected to move way faster in adopting new forms of energy production.
While the UMWA certainly has a vested interested in keeping coal mining jobs around, blaming unions for protectionism here is a little far down the value chain.
> If you make it so that wind, solar, and next generation nuclear power is cheaper than other alternatives and more desirable, the market will progressively switch.
Not necessarily... it depends on if it's actually cheaper, or just fake government-subsidized cheaper. Sure, you'll get companies milking government subsidies for all they are worth while they last, but if solar isn't actually cheaper than coal, "the market" isn't going to switch.
There’s also fake externalities-subsidized cheaper. Coal is incredibly expensive when you account for the environmental and health costs. But those costs aren’t borne by the people burning coal, so it doesn’t cause markets to switch away.
Yeah, you could factor in the healthcare cost linked to burning coal and ask coal industries to pay for some or all of it. Would change incentives a lot.
Spot on. In other industries, the entrenched, established incumbents' products are only viable because they are "fake government-subsidized cheaper" (ah ehm...looking at you, corn). I'd not be surprised to see this happening with fossil fuels here in the U.S. one day – maybe it already is?
> If you make it so that wind, solar, and next generation nuclear power is cheaper than other alternatives and more desirable, the market will progressively switch
Not necessarily.. in the UK I've lots of good ideas get ditched early on because they're allegedly "not a good fit", or "uneconomic". What I suspect that really means in many cases is that someone in government or their family has a vested interest in a technology that this would replace, and it gets ditched. As long as we have elected "representatives" like this, nothing will change.
The government is not the only one to make decisions. Companies, individuals, communities, towns, regions can also decide to build their own infrastructure. Hardly every country is completely centralized from top to bottom.
> Technological progress will solve any policy problem. If you make it so that wind, solar, and next generation nuclear power is cheaper than other alternatives and more desirable, the market will progressively switch.
Two problems.
First, progressive switching is slower than needed to even decelerate warming. The system already has enormous momentum and it cannot be arrested easily and with gentle measures.
Second, technological path dependency is extremely strong. Historically the kinds of jolts to move from one systemic technological optimum to another (eg steam-rail-telegram to oil-road-radio) have been enormous. Wars and depressions, mostly. It would be nice to avoid these.
> First, progressive switching is slower than needed to even decelerate warming
Since climate models are certainly not as accurate as we would like them to be, this is hard to say.
Second, progressive switching can be really, really fast. Look how fast people moved away from feature phones to smartphones. Complete conversion within a decade. Energy production carries more lag but still, progressive does not mean slow. When options are more attractive economically it will be a landslide.
Tech improvememt is certainly not linked to war. Look at all the tech progress we made in so many areas in the past 60 years without any major conflict happening. There is no rationale for progress to be dependent on conflict, at least it is not a model that explains anything anymore.
> Since climate models are certainly not as accurate as we would like them to be, this is hard to say.
They don't have to be very accurate at this point. Matter is conserved, including atmospheric CO2. It takes time to put in, it takes time to get out. Given that the only "out" right now is natural processes, it will take decades for CO2 to return to previous levels even if emissions dropped to zero instantly.
Underestimation of momentum is also true for capital-intensive shifts in dominant technology mixes. These shifts do not happen overnight; capital plant and equipment has substantial lags for decision time, financing, construction and onlining. These lags are going to vary by region, industry and technology. That adds substantially to overall reaction time under the just-let-it-ride scenario.
Markets can and do dynamically adapt to circumstances, supply shocks, technological change so on. But they do not tend to overcome path dependency (we're all using QWERTY and standard gauge rail for no reason other than that's what locked in) and they do not have magical powers to ignore physics.
> we're all using QWERTY [...] for no reason other than that's what locked in
We are all using QWERTY because it's not bad. You could switch to anything else and it would not be so much better. It's a local maxima that is good enough and it happened for historical reasons.
Most people are not held down by the keyboard setting. They don't need to type faster, and if they did, they would need to think faster first - it's not the tool that is the bottleneck in this particular case.
