Questions and Comments

Q- How could renewables break even in 2020?

Von Goerne: The cost per kWh from wind is very expensive for a small installation. However, large installations are much less expensive. It is expected that the learning curve would drive down costs.

Mombaur: I agree with Cooper that we, the public, are all decision makers. However, we need political decision makers. My question is how do we get what you say is necessary for a worldwide tax?

Cooper: We need treaties between governments. This is their domain. However, governments are only intermediaries. They are not executing mechanisms. Governments need to impose taxes to affect market behavior. This is the way to reach the decision makers, households and firms.

Mombaur: How much taxation?

Von Goerne: We should have fixed taxes for specific purposes. If taxes on petroleum products are not uniform, then people would drive across the border to get the cheaper fuel, as happens now in some European states. Also some European taxes on gasoline go into the treasuries of retirement funds instead of renewable energy.

Cooper: My proposal would be a uniform incremental tax on carbon emissions. It would apply to coal as well as to oil and gas. The German tax system has very stark differences between rhetoric and reality. A uniform emissions tax would prevent distortion and movement of industries from one country to another to evade the tax. In terms of dedicated tax revenues, I would leave it up to each country.

Ramirez: I just want to add that a number of OPEC countries would not be opposed to a carbon tax based on the carbon content of the fuel. What we have today is no tax on coal in some coal-rich countries. There needs to be a level playing field.

Q: How can one ensure that tax on current energy use is dedicated to promote research and use of renewables?

Moniz: Tax per carbon atom is the most logical thing to do. It would be very interesting if there was coalescence around this idea by several countries.

Khadduri: Something Gabriella said this morning: Can we control our energy use if we continue this way of life? Suburbs do not have local grocery shops within walking distance. We need to drive to get food. If we maintain these standards of living, and improve on them, and have them spread to developing nations, even the addition of alternatives will not help meet future energy demand at current prices. We will require very significant resources that are not here today.

Cooper: My own view is that if you start talking about $200/ton carbon tax, this will go no place. You need to start talking at much lower levels. There are also macro reasons for moving slowly. We want to change behavior but we don't want to cause a recession. I would start at say $20 a ton, partially a political judgment, partially we can learn while we go. Climate change is an important issue, so we must start to deal with it, but it is not an urgent issue in that we can learn as we go. We are going to have to do that in any case. Regarding lifestyle change, we have changed lifestyles enormously over last half century. Some rural people have not because incomes have not gone up. Human beings are enormously adaptive if they have time and see something coming. If there is a $0.5/gallon tax on petrol, we will walk more unless it is raining. People will change without finding it terribly difficult.

Q: Between I960 and 1990 nearly every world city has seen densities and size and sprawl increase. In the US, people have spread everywhere because of cheap gas, cars, and roads. Can that be brought back? To the extreme, is there a point where the US might have a political revolt on its hand? Can the US move on carbon tax when its citizens would be so damaged by it.

Cooper: The damage has to do more with pace of change than magnitude of change. The office environment in 25 years will be different. Employees will need to come to the office two days per week. What you don't want to do is require quick unpleasant changes.

Von Goerne: The run for more and more oil causes a lot of problems, e.g. in the Middle East. We need to pull away from oil as soon as possible not only for safety concerns but also because of climate change reasons. The oil industry, making a big profit out of oil, should compensate for their contribution to climate change and its increasing impacts.

Ramirez: The problem is not oil. It's not the resource. It is the way we deal with the problem.

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