Saturday, August 28, 2010

A balanced energy playing field

We've built our civilization on cheap fossil fuels, but their bang for the energy buck is declining. When oil just flowed out of the ground it didn't take much energy to collect it and take it to market.

Oil is locked up under the boreal forest and at the bottom of the oceans. It takes much more money and energy to get this oil than it did when oil was flowing free.

You could tell similar stories for natural gas (which needs hydraulic fracking) and coal (mountaintop removal). Fossil fuels are getting harder and harder to obtain, and it won't get any easier. The easy stuff has already been burned off.

The market has a solution, but the market for energy is unbalanced. The current price of energy doesn't include the externalities like the cost of using the atmosphere as a carbon sink. Those externalities are coming back to bite us in the form of ocean acidification and climate change.

To solve the problem we need to insist that government level the playing field. Carbon extracted from the earth and going into the atmosphere and the oceans is the problem.

To balance the market, we need to add the cost of equivalent carbon abatement to the price of the resource as it's being extracted (or imported). The government should collect this money and distribute it evenly to all Canadians.

These fees would be revenue neutral. All the money from the fees will be distributed to Canadians and those funds will cover any increased costs in the marketplace.

Some people will buy low-carbon goods and be better off, and some will continue to buy higher-carbon goods and spend proportionally more. The balanced market signals would favour people who pollute less.

At it's core, this would pay the public back for the private use of a common resource, restoring the imbalance without being punitive.

Cost-effective alternatives will emerge, and will allow us to reduce our dependance on fossil fuels.

This particular strategy is called Fee and Dividend. The government will send you the money it collects from energy companies. Ask your friendly neighbourhood political leader to adopt a market solution to energy security. Ask them to adopt a Fee and Dividend approach to energy security.

You might also like:

Fee & Dividend: Make money while saving the planet

EROEI: Bang for your energy buck

Can you dump your gas company?

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