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It's not so simple. Until the EROI of other fuels improves dramatically a carbon dioxide tax is just going to make every fuel more expensive, since non-carbon fuels need carbon fuels as input.

Once the EROI goes up this isn't a problem. But until it does a carbon dioxide tax is pointless - it just makes everything more expensive.

And once the EROI does go up people will switch to those energy sources without prompting (they will simply be cheaper), so again a carbon dioxide tax does nothing.

A correctly-structured carbon tax would make a new NG plant relatively more attractive vs. continuing to operate a coal plant without the tax. (both fossil fuels, but NG is more efficient).

Also I think it shouldn't be a straight carbon tax, but an "environmental externalities tax". I personally care far more about other forms of pollution (especially localized) than CO2; I don't think global warming is a non-issue, but it's not the #1 environmental issue. Point sources of particulates, NO2, etc. should be taxed as well as maximum emissions specified (obviously a steel mill should be allowed to emit more, and pay for it, at full production in an efficient way, than a badly adjusted oil-fired school furnace, even if the school chooses to ignore economic rationality.)


And interestingly coal plants are already being shuttered due to the low price of natural gas. All that without any taxes - just new technology.

If you make all energy more expensive, people will use less of it than they would otherwise. That's already a win. You're also creating a pain point that people will innovate around, and improving the ROI on investing in better energy sources.

The fact is, once alternative energy sources are at par, or even slightly above par, with fossil fuels, it will be a net win to switch to them. But the economy won't do so unless the price of fossil fuels reflects that.

> people will use less of it than they would otherwise

The trouble is that the economy is directly tied to energy usage. Force lower energy usage, and the economy suffers.

The cost of virtually everything is directly tied to the cost of energy. What costs money in lettuce? Mainly the trucks used to plant, harvest, and ship it.

What's your cost with trucks? Energy. What costs money there? The metal, and the assembly. The metal is free - it's in the ground. What costs money is the energy used to get it out of the ground and refine it.

Assembly? That's more machines, trace it back and it boils down to the cost of energy.

Salary? Also energy, since people need money to buy stuff.

What costs money in making alternative energy? Energy again. So raise the cost of conventional fuel, and alternative also costs more. It's impossible to win!

Use the carbon dioxide tax to fund alternative energy and people will fake it, like in Germany. They outsource the carbon dioxide costs to China, then ship that energy to the country in the form of solar panels. Those solar panels will not pay back their energy costs for decades. (Although if they do last that long it will be a win. But in the medium term it's a loss.)

You just can't force this stuff. You have to let the energy sources develop naturally, and let people use them due to price, not because you force them.


A fair number of libertarians actually believe in this (modulo implementation issues, regulatory capture, corrupt politicians, etc.)

> You have to let the energy sources develop naturally, and let people use them due to price

That's exactly what a carbon tax does, except it allows the prices to reflect the externalities of CO2 emissions, rather than not doing so.

People will find ways of doing the same thing with less energy. What happened when oil prices went up? SUV's went out of fashion.

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