Getting from “Green Premiums” to “Green Dividends”

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I recently ran across a Facebook post from Bill Gates, which says: “We need to get greenhouse gas emissions down to zero. Here’s the single most important thing we need to solve.” The post links to a GatesNotes blog with the title:

“MY TOP PRIORITY The one thing I hope people take away from my climate book: Lowering the Green Premiums is the single most important thing we can do to avoid a climate disaster.”

Gates highlights the example of renewable aviation fuel, which costs $5.35 per gallon compared to $2.22 per gallon for fossil fuel. The difference, $3.13 per…


"Economist has estimated that if temperatures rose by 2 degrees Celsius, The world GDP would fall about 15%, if the temperature rose by 3 degrees, the world GDP would fall by 25%, if it rises by 4 degrees, GDP will fall by 30% by 2100."

What does that imply for the discounted Social Cost of Carbon (which the Biden administration currently sets at $51/ton-CO2 based on a 3% discount rate)?


The Green New Deal seems more like a broad vision, or an overarching strategy, than an actual plan. I don't know if anyone really has a comprehensive plan for getting to zero emissions, but maybe a consensus is starting to emerge on how we can do this.

https://www.sciencedirect.com/science/article/pii/S0360544221007167#!

https://www.youtube.com/watch?v=6zgwiQ6BoLA

https://www.renewableenergyworld.com/wind-power/a-decidedly-impartial-review-of-mark-jacobsons-100-clean-renewable-energy-and-storage-for-everything/

https://www-gs.llnl.gov/content/assets/docs/energy/Getting_to_Neutral.pdf

https://www.penguinrandomhouse.com/books/633968/how-to-avoid-a-climate-disaster-by-bill-gates/


Exxon and the American Petroleum Institute support a carbon tax.

https://energyfactor.exxonmobil.com/perspectives/supports-carbon-pricing/

From Exxon's perspective, a carbon tax basically buys them a license to pollute. They can just write off the cost as a business expense or pass it on to consumers, who won't be much affected by the price hike because it will be offset by their "carbon dividend". There's no need for Exxon to stop polluting after they've "paid the damages".

Any regulatory policy that constrains supply of a commodity with inelastic demand, like oil, will drive up prices just as effectively as if the oil producers had colluded…


Good article, especially the references. Here is another article of interest refuting Nordhaus:

Climate economics’ support for the UN climate targets

https://www.lse.ac.uk/granthaminstitute/news/climate-economics-support-for-the-un-climate-targets/

https://www.nature.com/articles/s41558-020-0833-x.epdf

I hope this message gets through to policy makers. President Biden’s "Interagency Working Group on the Social Cost of Greenhouse Gases" will be using the Nordhaus model to recommend a social cost of carbon for regulatory purposes. The underlying premise of carbon pricing, based on a "social cost of carbon", is that we can somehow "pay the damages" for future climate change. …


This appears to be a very significant study on this topic:

"Low-cost renewable electricity as the key driver of the global energy transition towards sustainability."

https://doi.org/10.1016/j.energy.2021.120467

Quoting from section 3.2:

... global electricity generation undergoes a rapidly evolving transition from predominantly fossil fuels in 2015 to 98% renewables in 2040, and entirely zero GHG emissions by 2050. ... PV emerges as the major electricity supply source in a cost optimal energy transition, increasing from a mere 1% in 2015 to around 32% by 2030 and further increases to 76% by 2050 ... Overall electricity supply increases from nearly 24 PWh in 2015, to 137 PWh in 2050, the main driving force is the fast growth of electricity demand from electrified heat, transport and desalination sectors, while the electricity demand from the power sector (excluding heat, transport and desalination) increase to just around 41 TWh by 2050.


Here is another notable recent study similar to RethinkX, but perhaps more realistic. Seems to be very thoroughly researched.

"Low-cost renewable electricity as the key driver of the global energy transition towards sustainability."

https://doi.org/10.1016/j.energy.2021.120467

Quoting from section 3.2:

... global electricity generation undergoes a rapidly evolving transition from predominantly fossil fuels in 2015 to 98% renewables in 2040, and entirely zero GHG emissions by 2050. ... PV emerges as the major electricity supply source in a cost optimal energy transition, increasing from a mere 1% in 2015 to around 32% by 2030 and further increases to 76% by 2050 …


Bob, thanks for the good article. As I understand it, the gist of your proposal (MDC) is a tradable performance standard, with the standard indexed to national emissions to ensure aggregate emission reductions. You said "A cap violation will signal regulators to tighten the performance standard", but I think more practically the indexing should be automatic and should be written into the standard. It shouln't require frequent regulatory intervention to adapt the standard to the cap. (Maybe that's what you meant.)

One problem with an incrementally declining national cap is that it could incentivize market responses and investments that make…

Ken Johnson

I am an engineer in the high-tech industry with an interest in climate policy.

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