A New Path to a Low-Carbon Economy

The time has come for the US, China, India, and other major economies to declare how they will foster their transition to a low-carbon economy. A small and gradually rising carbon tax that funds a feed-in tariff system could win political support in the US, and could help to foster consensus among the major coal-based economies, including China and India.

NEW YORK – The solution to manmade climate change depends on the transition to electricity production that, unlike burning oil, natural gas, and coal, emits little or no carbon dioxide – the main greenhouse gas responsible for global warming. Low-carbon electricity can be produced by solar, nuclear, and wind energy, or by coal-burning power plants that capture and store their CO2 emissions.  

The policy problem is simple. Coal is a cheaper and more easily used energy source than the alternatives. It is cheap because it is plentiful. It is easier to use than wind or solar power because it can produce electricity around the clock, without reliance on weather conditions. 

To save the planet, we need to induce power suppliers to adopt low-carbon energy sources despite coal’s lower price and greater ease of use. The obvious way is to tax coal, or to require power plants to have permits to use coal, and to set the tax or permit price high enough to induce a shift towards the low-carbon alternatives.

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