Comment Re:nice stats (Score 1) 334
The taxes from fossil fuels could be earmarked for renewable energy subsidies, making them cheaper directly.
I am leerier about that – and I say that as somebody who supports a carbon tax.
Taxes are distortive, so try to keep them as few and as simple as you can. Governments do need a revenue stream and you want to counter the negative externalities of carbon fuel, but one should still stick to good taxation principles.
So I ask, why subsidize renewable energy sources? The ethanol fuel subsidy has been a disaster both from a finical and green viewpoint. What is the fair split between wind and solar? That being asked, I would argue neither is going help until we upgrade our power grid. And why not subsidize home insulation or mass transit? Trying to figure out what to subsidize and how much is a very hard and tricky question. Taking with one hand and giving with another is a very tricky balancing act. Government should not pick winners or losers. Which is why I suggested in a different thread that one should drop income taxes by the amount a carbon tax would raise. On a side note, I would support more money going into government sponsored basic R&D into renewable energy.
However, economically speaking, a tax on a product is the same as a subsidy to a competitor. So if you don't like the results, don't try to come up with an elaborate subsidy scheme for green energy – just raise the carbon tax.